Global Human Resource

Management

MIM 564 Spring, 2010

Sully Taylor and Berrin Erdogan

Week 2, Global Human Resource Management

The Global Labor Pool: Coloplast and the expansion into Hungary and China The potential and problems of offshoring

The Quest for Global Talent: Peter Hanson and offshoring to China

Career Management and the Role of Effective Expatriation: Celtic Tiger

The Human Side of Globalizing a Company The Global Work Force and Offshoring Adapting the organization to globalization

The Global Labor Pool

What does a company need to consider when thinking about offshoring or outsourcing employment (or any corporate value chain activity)?

How do you determine the suitability of a labor pool in another country?

An application…. Coloplast A/S

Outsourcing….is part of analyzing a business process to identify those activities that can be done external to the firm. A source can be either domestic or international.

Offshoring….is placing a part of a business activity in a foreign location. If kept within the firm, it can be called international in-house (out)sourcing.

Offshore outsourcing is using a supplier based in a foreign country on a recurrent basis.

Offshoring (in-house production) Full control over quality of products Leveraging of best practices across

subsidiaries. High short-term flexibility, allows

adjustments to changing market (e.g., changes in import tax)

Know-how protection (IP) Stable pricing and lower supply risk

Outsourcing to a Third Party Lower lead time due to use of existing

infrastructure Specialized outsourcing companies Exploit the advantages of using a subcontractor

more focused on a particular task High long-term flexibility because fewer asset-

specific investments have been made Lower investment costs – tend to be variable

costs Often cheaper production Integrating binds (human and capital) resources

and distracts managerial focus from other activities (such as marketing and branding)

The outsourcing decisionDecision depends on vulnerability & costs of outsourcing. Four factors that make an activity a target for outsourcing

(vulnerability):a. Fungibilityb. Is not tacitly specialized

c. Is measurable d. Is stand-alone activity Also must consider outsourcing costs (high/low) around:

Product/service delivery Coordination Control Enforcement

Adapted from Ungson & Wong, 2008; Weidenbaum, 2005.

Peter Hanson case…. Offshoring to increase the talent pool

Peter Hanson case presents us with several questions: What is the goal of the PDC, and what will

it take to make it successful? What strategic imperatives does it have to contend with?

What are the cultural and institutional forces it must take into account?

How can it reconcile (bridge) the conflicting cultural and institutional forces?

How can the differences be bridged?

Once you know whether you are going to look locally or globally, internally or externally for the people you need, then what?

Recruitment….Methods….

Talent Management and Global Career Management Selecting People for Overseas Positions

How, and based on what criteria, was Peter Hanson selected for the PDC post in China?

Selection process Gather information about the people in the

pool of qualified recruits: Evaluate the qualifications of each

applicant Make the decision about which to hire

Key question: what criteria will you use, and why? How do you know that the person meets that criteria?

Typical Selection Criteria Education & experience Skills and abilities (often subjective) Personal characteristics – including the Big

5 personality traits (neuroticism, extraversion, openness to experience, agreeableness, conscientiousness)

Hiring for fit (personal values or personality fit)

What techniques can you use to select candidates for global positions? What are the strengths and weaknesses of each?

Major Selection Instruments used in Selection for all Jobs Application blanks and resumes Selection tests: e.g. mental or cognitive

ability, psychomotor ability, work samples, personality, etc.

Interviews – structured/unstructured; situational (or behavioral)

Physical examinations References and background checks Assessment centers

Two important concepts in Selection Tools: Reliability: the consistency of a measurement.

Will you get about the same results if you use this instrument again with this person? E.g. test-retest.

Validity: how well does the instrument really tell you whether the person will do well in the job? Deals with the issues of (1) whether the test is an adequate measure of the characteristic it supposedly measures and (2) whether inferences and actions based on test scores are appropriate. E.g. predictive or concurrent validation.

One method of recruitment ….that is also a kind of selection tool….

Realistic job previews……. What do they get you? Why do they work?

Common errors in interviews First impression Similarity error Contrast error Halo error Non-relevancy error

Making the final determination of who to hire Use multiple indicators – allows you to

counterbalance the measurement error in any one selection technique

Expatriates and Global Staffing of Managerial positions in Global Companies

Broadly speaking, there are two categories of expatriates: “Agents” – the agency motive for using

expatriates is to fix a problem, or to control, or to transfer knowledge or corporate culture.

“Learners” – the reason for this is to develop the professional capabilities of managers, often at younger ages.

Three Key Roles of Expatriates

Alignment (helps to decentralize decisions while keeping the global perspective; WHO makes the decisions, not where)

Standardization (global standardization of practice, e.g. focus on operating procedures, or education and training)

Socialization – (inculcating the cultural code of the company in others, e.g., in Intel, have to be able to argue your point forcefully; in HP, teamwork is important).

In other words, using expatriates: Permits decisions to be made locally but

with the global perspective in mind. Permits the transfer abroad of the

standards of the parent company. Permits the diffusion abroad of shared

values – a key element in global integration.

Selecting people for global positions: the case of expatriation What approach does the company have towards

staffing in its affiliates overall? What criteria does it use or should it use? What instruments should it use to select among

different candidates? E.g. assessment centers, past performance, interviews, psychological tests. An examination of the reliability and validity of

interviews.

Four general approaches to staffing of affiliates: Ethnocentric Polycentric Geocentric Regiocentric

Ethnocentric approach to staffing All key positions filled by parent country

nationals. Advantages: easy communication with HQs;

overcomes a lack of good local managers; good in early stages of internationalization.

Disadvantages: limits promotion opportunities of host country nationals; there is low productivity while the expatriate adjusts; often leads to inequitable pay packages.

Polycentric approach: All key positions in parent country operations filled by

parent country people; all key positions in host country affiliate by host country nationals.

Advantages: eliminates language barriers and adjustment problems; lowers the political profile of the affiliate; less expensive (usually); provides continuity of management.

Disadvantages; communication gap between host country and HQs; limits host country nationals’; career paths because can’t get necessary experience to go to highest reaches of the firm; limits international experience among top HQ executives.

A geocentric approach: The best people are sought for key jobs throughout the

organization, regardless of nationality. Advantages: develops an international cadre of executives;

deploys best talent for a particular situation; reduces identification with local unit.

Disadvantages: most host countries want foreign affiliates to employ their citizens; increases the training and relocation expenses; creates a need for standardized compensation structure; requires longer lead times and more centralized control of the staffing process.

Regiocentric Approach: Is a modified geocentric approach, based

on regional selection and deployment.

Assessment centers for international postings are: Used to determine managerial potential of

employees that evaluates individuals as they take part in a large number of activities conducted in a relatively isolated environment. It is also useful for identifying potential training needs. (e.g. tasks such as dealing with a sudden disruption to

supply chain; conflict between employees; government representative with a beef with the company; team work with others on a problem).

Criteria for Selecting Expatriates Depends on the role the expatriate is expected

to assume. E.g. for agency-type assignments, clear managerial

qualifications and the relevant professional skills are key. Also the ability to improvise, impart confidence and motivate. (agency = control or knowledge transfer)

In learning-oriented assignments, relationship abilities and cultural awareness may be more key as they open access to new knowledge. (career enhancement, development of young people)

The decision to take a global position…. The Celtic Tiger case….