International Human Resource Management-A learning Resource
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This document discusses key issues in international human resource management. It begins by outlining the objectives of understanding different organizational forms used internationally, factors companies must consider in different countries, how domestic and international HRM differ, staffing processes for international employees, training needs, compensation plans, performance reviews between countries, and labor relations globally. It then defines types of corporations and how international business affects the world economy.
International Human Resource Management-A learning Resource
- 1. International Human Resources Management(IHRM) Issues-A learning Resource Jayadeva de Silva.M.Sc ,FIPM ,FITD Objectives After following this lesson, you should be able to: Identify the types of organizational forms used for competing internationally. Explain the economic, political-legal, and cultural factors in different countries that HR managers need to consider. Explain how domestic and international HRM differ. Discuss the staffing process for individuals working internationally. Identify the unique training needs for international assignees and their employees. 1
- 2. Identify the characteristics of a good international compensation plan. Reconcile the difficulties of home- and host-country performance appraisals. Explain how labor relations differ around the world. Increasing Importance of Global Human Resource Understanding Managing Across Borders Types of Corporations • International corporation Domestic firm that uses its existing capabilities to move into overseas markets. • Multinational corporation (MNC) Firm with independent business units operating in multiple countries. • Global corporation Firm that has integrated worldwide operations through a centralized home office. • Transnational corporation Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units. How International Companies Affect the World Economy 2
- 3. o Their production and distribution extend beyond national boundaries, making it easier to transfer technology. o They have direct investments in many countries, affecting the balance of payments. o They have a political impact that leads to cooperation among countries and to the breaking down of barriers of nationalism. How Does the Global Environment Influence Management? Unified Economies Closely partnered nations such as the European Union (EU) have developed into strong competitors. Promotes job growth in trading nations. Cultural environment The communication patterns, religion, values and ideologies, education, and social structure of a host country influence how HR is conducted in that country. Cultural Environment of International Business 3
- 4. Domestic versus International HRM Issues in international HRM in helping employees adapt to a new and different environment outside their own country: Relocation Orientation Objective Translation services International Staffing Expatriates, or Home-country Nationals Employees from the home country who are on international assignment. Host-country Nationals Employees who are natives of the host country. Third-country Nationals Employees who are natives of a country other than the home country or the host country. Changes in International Staffing over Time Hiring Host-Country Nationals 4
- 5. Three main advantages: Hiring local citizens is generally less costly than relocating expatriates. Since local governments usually want good jobs for their citizens, foreign employers may be required to hire locally. Most customers want to do business with companies they perceive to be local versus foreign. Recruiting Internationally Work Permit, or Visa Government document granting a foreign individual the right to seek employment. Guest Workers Foreign workers invited to perform needed labor. Apprenticeships Vocational training programs in skilled trades. Transnational Teams Teams composed of members of multiple nationalities working on projects that span multiple countries. Selecting Global Managers Global manager A manager equipped to run an international business Skills Categories Ability to seize strategic opportunities Ability to manage highly decentralized organizations Awareness of global issues Sensitivity to issues of diversity Competence in interpersonal relations Skill in building community Selecting Global Managers •Begin with self-selection. •Create a candidate pool. •Assess core skills. 5
- 6. •Assess augmented skills and attributes. Measured Expatriate Characteristics Core Skills Skills that are considered critical to an employee’s success abroad. Augmented Skills Skills that are helpful in facilitating the efforts of expatriate managers. Failure rate Percentage of expatriates who do not perform satisfactorily. Comparison of Advantages in Sources of Overseas Managers Host Country Home country Third country Less costly Talent available within company Broad experience Preferred by host-country Greater control International outlook Intimate knowledge of Company experience Multilingualism environment and culture Language facility Mobility Experience provided to Corporate xecutives Expatriate Selection Criteria Causes of Expatriate Assignment Failure 6
- 7. • Family adjustment • Lifestyle issues • Work adjustment • Bad selection • Poor performance • Other opportunities arise • Business reasons • Repatriation issues Training and Development Essential training program content to prepare employees for working internationally: Language training Cultural training Assessing and tracking career development Managing personal and family life Repatriation Culture shock Perpetual stress experienced by people who settle overseas. Preparing for an International Assignment To prepare for an international assignment, one should become acquainted with the following aspects of the host country: 1. Social and business etiquette 2. History and folklore 3. Current affairs, including relations between the host country and the United States 4. Cultural values and priorities 5. Geography, especially its major cities 6. Sources of pride and great achievements of the culture 7. Religion and the role of religion in daily life 8. Political structure and current players 9. Practical matters such as currency, transportation, time zones, hours of business 7
- 8. 10 The Language Training Methods o Reviewing available information about the host company: books, magazines, video tapes. o Conversations with host country natives. o Sensitivity training to become familiar with the customs and overcome prejudices. o Temporary assignments to encourage shared learning. A Synthesis of Country Clusters Returning from an Overseas Assignment Repatriation 8
- 9. The process of an employee transitioning home from an international assignment. Throw a “welcome home” party. Offer counseling to ease the transition. Arrange conferences and presentations to make certain that knowledge and skills acquired away from home are identified and disseminated. Get feedback from the employee and the family about how well the organization handled the repatriation process. Compensation Different countries have different norms for employee compensation. Financial (money) incentives versus nonfinancial incentives (prestige, independence, and influence) Individual rewards versus collectivist concerns for internal equity and personal needs General rule: match the rewards to the values of the local culture— create a pay plan that supports the overall strategic intent of the organization but provides enough flexibility to customize particular policies and programs to meet the needs of employees in specific locations. Forces Driving Global Pay CULTURAL PREFERENCES Importance of status Role of individual vs. organization vs. government Equality vs. disparity Achievement vs. relationships ECONOMIC CONDITIONS Size of economy Types of industries, natural resources Inflation, unemployment Protectionism vs. open market 9
- 10. PERSONAL PREFERENCES Attitudes toward risk Quality of life vs. work Short- vs. long-term Competitiveness vs. solidarity SOCIAL CONSTRAINTS Income tax rates, social costs Laws and regulations Collective bargaining, worker participation Skills, education of workforce Compensation of Host-Country Employees o Hourly wages vary dramatically from country to country. o Pay periods are different. o Seniority may be an important factor. o High pay rates can upset local compensation practices. o Bonuses, profit-sharing, benefits and paid leave may be more extensive and legally required. Hourly Wages in Different Countries* in US Dollars Norway 31.55 Germany (former West) 31.25 Switzerland 27.87 Belgium 27.73 Sweden 25.18 United States 21.97 France 21.13 Britain 20.37 Japan 20.09 Australia 20.05 Canada 19.28 Italy 18.35 Spain 14.96 Israel 11.73 10
- 11. Korea 10.28 Portugal 6.23 Taiwan 5.84 Brazil 2.67 Mexico 2.48 China 0.63 Sri Lanka 0.49 Compensation of Expatriate Managers o Provide an incentive to leave the United States o Allow for maintaining a U.S. standard of living o Provide for security in countries that are politically unstable or present personal dangers o Include provisions for good healthcare o Provide for the education of children o Consider foreign taxes the employee is likely to have to pay (in addition to domestic taxes) and help with tax forms and filing o Allow for maintaining relationships with family, friends, and business associates. o Facilitate reentry home o Be in writing Expatriate Compensation Systems Home-Based Pay Pay based on an expatriate’s home country’s compensation practices Balance-Sheet Approach A compensation system designed to match the purchasing power in a person’s home country Calculate base pay Figure cost-of-living allowance (COLA) Add incentive premiums Add assistance programs 11
- 12. Expatriate Compensation Systems (cont’d) Host-Based Pay Expatriate pay comparable to that earned by employees in a host country to which the expatriate is assigned. Localization Adapting pay and other compensation benefits to match that of a particular country Other Issues Adequacy of medical care Personal security Education Performance Appraisal of International Managers Who Should Appraise Performance? Home-country evaluations Host-country evaluations Adjusting Performance Criteria Augmenting job duties Individual learning Organizational learning Providing Feedback Debriefing interview Boosting ROI of Expatriates Major initiatives planned to improve assignment return on investment (ROI): Better candidate selection 32% Career-planning skills 26 Communicating objectives 24 Assignment preparation 20 Monitoring program 17 Cross-cultural training 10 Developing or expanding intranet 7 Communication/recognition 6 Web-based cultural training 5 Mandating destination support 4 12
- 13. Other 17 International Organizations and Labor Relations International Differences in Unions The level at which bargaining takes place (national, industry, or workplace) The degree of centralization of union-management relations The scope of bargaining (parties and issues) The degree to which government intervenes The degree of unionization and union strength. Key Terms augmented skills balance-sheet approach codetermination core skills cultural environment culture shock expatriates, or home-country nationals failure rate global corporation global manager guest workers home-based pay host-based pay host country host-country nationals international corporation localization multinational corporation (MNC) repatriation third-country nationals transnational corporation transnational teams work permit, or visa 13
- 14. Your Notes 14