IAF 605 - International Business Management

Week 13

Human Resource Management

Agenda

review Chapter 15

Tel-Comm-Tek (TCT) Case

Chapter 20 – HR Management

TCT – Case Questions

Which candidate should the committee nominate for the assignment? Why?

What challenges might each candidate encounter in the position?

How might TCT go about minimizing the challenges facing each candidate?

TCT – Case Questions

Should TCT offer all candidates the same compensation package? If not, what factors should influence the features of each package?

Returning to material covered in Chapter 15, specifically that dealing with the idea of a matrix organization, do you see any benefit to appointing two of the individuals described here to the post? Operationally, one individual would be in charge of internal affairs, and the other would manage external affairs. What might be the benefits and problems with this arrangement?

Chapter Objectives

To discuss the importance of

human resource management

To profile the staffing

frameworks used by MNEs

To explain the types and

competencies of expatriates

To examine how MNEs select,

prepare, compensate,

and retain expatriates

Human Resource Management (HRM) - activities necessary to staff the organization…more difficult for the international company than it’s domestic counterpart due to:

environmental differences and organizational challenges due

to leadership styles and management practices.

Expatriate - an employee

who leaves her or his native

country to live and work in

another.

Third-country national - an

employee who is a citizen

of neither the home

nor the host country.

Source: zimbio.com

Definitions

The strategic function of international HRM – creates superior value

MNE whose HRM policies support its chosen strategy creates superior value but many MNEs struggle to develop effective HRM policies

Trends in Expatriate Assignment – demand in

developing countries; short-term more common

The Young, The Old, and The Restless – more

females; more developing to richer countries vs

sending expats to a host nation

The Impact of Market Disruption – trying to

reduce expenses / less “permanent assignments”

The Perspective of Expatriates

Three perspectives describe how companies set about staffing their international operations:

• fills management positions with home-country nationals

ethnocentric

• uses host-country nationals to manage local subsidiaries

polycentric

• seeks the best people for key jobs throughout the organization, regardless of their nationality

geocentric approaches

Discussion and Debate

ethnocentric polycentric geocentric

Managing Expatriates

Selecting Expatriates

Expatriate Failure

Preparing Expatriates

Compensating Expatriates

Repatriating Expatriates

Selecting Expatriates – objective measures are rough estimators!

technical competence

•often the strongest determinant of who is selected for an international assignment

adaptiveness

•self-maintenance & personal resourcefulness

•developing satisfactory relationships

•sensitivity to host environment

leadership ability

• top managers in subsidiaries usually assume a greater range of leadership roles and broader duties

Expatriate Failure

operationally costly and professionally detrimental

a leading cause of expatriate failure is the inability of a spouse to adapt to the host country (NOT their technical skills)

see more short-term assignments, “commuter” assignments and young or old expats

Image source: http://www.flickr.com/photos/carbonnyc/

Preparing ExpatriatesFocusing on Adaptiveness and

Related Characteristics

General Country Understanding

Cultural Sensitivity

Practical Skills – schooling,

socializing and shopping

culture

shock

Compensating Expatriates

The Pay-Performance Link

Types of Compensation Plans –

• Home Based

• Headquarter Based

• Host Based Methods

In designing compensation packages for expatriates, HRM considers the following topics

Base Salary

Foreign Service Premium

Allowances – COL; Housing; Spouse; Hardship

Fringe Benefits

Tax Differentials

Image source: http://www.flickr.com/photos/symic/

Complications posed by National Differences – pay based on standards in the host country or on a global basis? Legal, cultural and regulatory factors.

• may pay someone more than necessary to persuade them to go abroad

polycentric and

ethnocentric

• manager performs the same job but in different locations – paid the same salary?

geocentric

Repatriating Expatriates - act of returning home from a foreign assignment

Repatriation stress: financial | work | social

The principal cause of repatriation frustrations is finding the right job for someone to return to!

International Labor Relations

Labor union -association of workers who have united to represent their collective views for wages, hours, and working conditions.

Collective bargaining -negotiations between labor union representatives and employers to reach agreement on a work contract.

Source: http://www.flickr.com/photos/ellafunnt/

Labor claims it is disadvantaged in dealing with MNEs because:

It is hard to get full data on MNEs’ global operations.

MNEs can manipulate investment incentives.

They can easily move value activities to other countries.

Ultimate decision making occurs in another country.

How Labor Responds To The MNE:

tries to strengthen its bargaining power through

cross-national cooperation

Future: Which Countries Will Have the Jobs of the Future?

Worker populations will grow faster in developing countries.

Wealthier countries will continue to grow in the number of retirees

Image sources: http://www.flickr.com/photos/aheram/; http://www.flickr.com/photos/ngoaengaf/

Adjustments for developed economies:Nationalism | Men vs. Machines | Brains: Drains, Recycle, or Halt