Prentice Hall (c) 20059-1 Chapter 9 Staffing, Training, and Compensation for Global Operations PowerPoint By Kristopher Blanchard North Central University

Prentice Hall (c) 2005 9-1

Chapter 9 Staffing, Training, and Compensation for Global

Operations

PowerPointBy

Kristopher BlanchardNorth Central University


Introduction

[In the new millennium], the caliber of the people will be the only source of

competitive advantage.—Allan Halcrow, Personnel Journal

Of the top 100 UK firms surveyed by Cendant International Assignment Services, 63 reported failed foreign assignments.

- www.expat.FT.com


Staffing Philosophies for Global Operations

Firms using an ethnocentric staffing approach fill key managerial positions with people from headquarters – that is, parent-country nationals (PCNs).

In a polycentric staffing approach, local managers – host-country managers (HCNs) – are hired to fill key positions in their own country.


Staffing Philosophies for Global Operations

In the global staffing approach, the best managers are recruited from within or outside of the company, regardless of nationality.

In a regiocentric staffing approach, recruiting is done on a regional basis – say within Latin America for a position in Chile.


Problems with Expatriation

Selection based on headquarters criteria rather than assignment needsInadequate preparation, training, and orientation prior to assignmentAlienation or lack of support from headquartersInability to adapt to local culture and working environment


Problems with Expatriation

Problems with spouse and children – poor adaptation, family unhappiness

Insufficient compensation and financial support

Poor programs for career support and repatriation


Training and Development

Challenges faced by expatriates– China: a continuing problem for expatriates; one complained that

at his welcome banquet he was served duck tongue and pigeon head

– Brazil: expatriates stress that cell phones are essential because home phones don’t work

– India: returning executives complain that the pervasiveness of poverty and street children is overwhelming

– Indonesia: here you need to plan ahead financially because landlords typically demand rent two to three years in advance

– Japan: expatriates and their families remain concerned that although there is excellent medical care, the Japanese doctors reveal little to their patients.


Cross-Cultural Training: Culture Shock

Culture shock is a state of disorientation and anxiety about not knowing how to behave in an unfamiliar culture. The cause of culture shock is the trauma people experience in new and different cultures, where they lose the familiar signs and cues that they had used to interact in daily life and where they must learn to cope with a vast array of new cultural cues and expectations.


Cross-Cultural Training: Culture Shock

Honeymoon – when positive attitudes and expectations, excitement, and a tourist feeling prevail

Irritation and hostility – the crisis stage when cultural differences result in problems at work, at home, and in daily living

Gradual adjustment – a period of recovery in which the “patient” gradually becomes able to understand and predict patterns of behavior, use the language, and deal with daily activities, and the family starts to accept their new life

Biculturalism – the stage at which the manager and family members grow to accept and appreciate local people and practices and are able to function effectively in two cultures


Cross-Cultural Training: Sub-Culture Shock

Subculture shock occurs when a manager is transferred to another part of the country where there are cultural differences – essentially from what she or he perceives to be a “majority” culture to a “minority” one.


Training Techniques

Area studies, that is, documentary programs about the country’s geography, economics, sociopolitical history, and so forth

Culture assimilators, which expose trainees to the kinds of situations they are likely to encounter that are critical to successful interactions

Language training

Sensitivity training

Field experiences – exposure to people from other cultures within the trainee’s own country


Training Host-Country Nationals

We found that the key human resource role of the MNC [in Central and

Eastern Europe] was to expose the local staff to a market economy; to

instill world standards of performance; and provide training and functional

expertise.Richard Peterson, “The use of Expatriates and Inpatriates in

Central and Eastern Europe Since the Wall Came Down,”

Journal of World Business, 2003.



Continuous training and development of HCNs and TCNs for management positions is an important factor for long-term success of the multinational corporation

Ongoing development will facilitate the transition to an indigenization policy

The company will have a well-trained management staff with broad international experience



Training to facilitate e-business adoption is taking on increasing importance

Training in information and communication technologies is particularly critical for firms in new economy and emerging markets

List of training needs for managers in Eastern Europe


Compensating Expatriates

Compensation is a crucial link between strategy and its successful implementation– Must be a fit between compensation and the

goals of the firm

Maintaining an appropriate compensation package is more complex than it would seem– Little variation in typical salary but there is a

wide variation in net spendable income


Compensating Expatriates

Salary – Local salary buying power and currency translation, as compared with home salary; bonuses or incentives for dislocationTaxes – Equalize any differential effects on taxes as a result of the assignmentAllowances – Relocation expenses; cost-of-living adjustments; housing allowance for assignment and allowance to maintaining house at home; trips home for family; private education for childrenBenefits – Health insurance; stock options


Compensating Host-Country Nationals

A number of variable apply including local market factors and pay scales, government involvement in benefits, unions, and the cost of living must all be considered

Eastern Europeans spend 35% to 40% of their disposable income on food and utilities– East European managers must have cash for about 65%

to 80% of their base pay

– US managers must have cash of about 40%


Compensating Host-Country Nationals

To be competitive, MNCs can focus on providing goods and services that are either not available at all or are extremely expensive.

It is important to make clear what benefits, as well as salary, come with a position because of the way compensation is perceived and regulated around the world


Comparative Management in Focus: Compensating Russians

Korean companies are cashing in by signing up low-cost Russian

engineers.www.Businessweek.com, March 8, 2004

Russia is our No.1. destination for technology outsourcing.

Cha Dae Sung, Samsung, March 8, 2004


Comparative Management in Focus: Compensating Russians

Select Russian employees who are achievement-oriented and willing to take risks Tie individual bonuses to initiative and personal accountability (to encourage individual goal setting).Organize social events and other group activities.Provide small-group incentivesProvide a mix of short- and long-term incentives Tailor the compensation package to individual preferences


Looking Ahead

Chapter 10 – Developing a Global Management Cadre– Preparation, Adaptation, and Repatriation– Global Management Teams– The Role of Women– Working within Local Labor Relations Systems

Documents

Prentice Hall (c) 20059-1 Chapter 9 Staffing, Training, and Compensation for Global Operations PowerPoint By Kristopher Blanchard North Central University