Managing Global Human Resources

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HR and The Internationalization of Business :

HR and The Internationalization of Business Increasingly, US based companies are doing business abroad Keys to success for firms like P&G, IBM, and Citicorp New challenges Coordinate plans on a worldwide basis Create organization structures providing balance Extend HR challenges, systems abroad Answer these questions: Managing Global Human Resources

HR Challenges of International Business :

HR Challenges of International Business Deployment Knowledge and innovation dissemination Identifying and developing talent globally Researchers asked “What are the key global pressures affecting human resource management practices in your firm currently and for the projected future?” Responses were:

Global Staffing Pressures :

Global Staffing Pressures Candidate selections Assignment terms Relocation Immigration Culture and language Compensation Tax administration Handling spouse and dependent matters

How Intercountry Differences Influence HRM :

How Intercountry Differences Influence HRM How do cultural, political, legal, and economic differences of other countries influence HR policies? Cultural factors address the ethos of a country Management styles vary US China Hong Kong

Power Distance Effect:

Power Distance Effect In Mexico, Managers keep their distance Formal rules Individualism and self-sufficiency German workers never arrive late

Economic Differences:

Economic Differences Translate into differences in HR practices: Espousing ideals of free enterprise Wage costs vary Other labor costs vary Mexico $2.46 Taiwan $5.98 UK $15.88 Germany $29.01 US $19.86

Legal and Industrial Relations Factors :

Legal and Industrial Relations Factors Industrial relations means the relationships among the worker, the union, and the employer The US practice of employment at will does not exist in Europe Work councils Codetermination Definition

European Union:

European Union EU formation caused: Tariffs disappeared Free movement between jobs Use of the Euro as single currency Union consulting

Intra-EU Differences :

Intra-EU Differences Some countries have no minimum wages Workweeks vary Minimum number of annual holidays Termination advance notice length No limit 48 hours Employment contracts vary

Failure Rates of International Assignments:

Failure Rates of International Assignments International assignment failure can cost hundreds of thousands of dollars

Why International Assignments Fail:

Why International Assignments Fail Personality Person’s intentions Family pressures Lack of cultural skills Other non-work conditions like living and housing conditions, and health care

Improving Failure Rates/ Solutions:

Improving Failure Rates/ Solutions Provide realistic previews Have a careful screening process Improve orientation Provide good benefits Test employees fairly Shorten assignment length 32% 23%

International Staffing :

International Staffing Multinational corporations (MNC’s) use several types of international managers: Locals Expatriates Home-country nationals Third-country nationals

Reasons to Hire Locals:

Reasons to Hire Locals Working in a foreign country Cost Being a “better citizen” Short-term projects Security

Reasons to Use Expatriates:

Reasons to Use Expatriates Technical competence Know company culture Climbing the corporate ladder

Avoiding Pitfalls in Hiring Multinationals:

Avoiding Pitfalls in Hiring Multinationals Don’t rush Always obtain originals Confirm existence of institution Write or fax Have applicant sign and notarize documents Verify foreign credentials Telltale signs of fraudulent credentials

Value Systems and Staffing Policies:

Value Systems and Staffing Policies If you were an executive manager in an ethnocentric run firm, who might you hire? Why? Ethnocentric Polycentric Geocentric

Selecting International Managers:

Selecting International Managers Test for traits that predict success in adapting to new environments Job knowledge and motivation Relational skills Flexibility and adaptability Extracurricular openness Family situation Predictive trait breakdown

Important Predictors of Success:

Important Predictors of Success Family situation tops the list Flexibility/adaptability screening was high on results Use paper and pencil tests like the Overseas Assignment Inventory Previewing what changes an international assignee can expect

General Selection Procedures:

General Selection Procedures Use of structured interviews varies widely by country 10.3% 12.1% 17.1% 22.9 % 29.2 % 33 % 34.6% 37.5% 54.8 % 59.1% Can you name each country?

The New Workplace: Sending Women Abroad:

The New Workplace: Sending Women Abroad Only 6% filled overseas positions compared to 49% domestic One survey found inaccurate stereotypes Not as internationally mobile Might have a tougher time building teams 80% Would take foreign assignment 77% Effective at building teams

Orienting and Training:

Orienting and Training More form than substance Little or no systematic selection and training Only 42% have formal briefings

What Special Training Do Overseas Candidates Need? :

What Special Training Do Overseas Candidates Need? Impact of cultural differences Understanding attitude formation Factual knowledge about target country Language and adjustment/adaptability skills Level 1 Level 2 Level 3 Level 4

Continued Training and Development :

Continued Training and Development IBM offers rotating assignments Have worldwide management development centers INSEAD in France provides educational opportunities

Training Trends:

Training Trends Trends in expatriate training and development: Use of cross-cultural training Use returning managers as resources for new assignees S oftware and internet programs like Bridging Cultures for cross-cultural training

International Compensation:

International Compensation Determining international pay scales is no easy task Expensive locales require additional pay else no one will take position What to do when relocating to less costly locale Tokyo $3000/week Madrid $1500/week

Determining Equitable Wages:

Determining Equitable Wages Lots of compensation data available in US but not overseas conducts an international study of Used to determine next year’s compensation KRAFT compensation

Balance Sheet Approach:

Balance Sheet Approach 85% of US firms use it Has 4 main home-country expense groups: Income taxes Housing Goods and services Discretionary expenses Expatriate receives base pay + additional for each group Sample balance sheet approach


Incentives To have expatriates accept and stay on international assignments : Foreign service premiums Hardship allowances Mobility premiums Non-monetary rewards

Performance Appraisals:

Performance Appraisals Who appraises the expatriate is key Stipulate the assignment’s difficulty level Favor the on-site manager’s appraisal Home-office manager writing the appraisal consults a former expatriate Modify the normal performance criteria

International Labor Relations:

International Labor Relations Union membership varies widely worldwide 14% 29% 44% 39% 80% 24% 23% 39%

International Labor Relations Continued:

International Labor Relations Continued Areas of differences in labor relations practices include: Centralization Union structure Employer organization Union Security Content and scope of bargaining Grievance handling Strikes Worker participation

Safety and Fair Treatment Abroad:

Safety and Fair Treatment Abroad Raises some unique safety issues Provide general training Blend in Arrive at airports at departure time Security systems Vary departure/arrival times and routes to work

Safety and Fair Treatment Abroad:

Safety and Fair Treatment Abroad Keep current on crime and other problems Remain confident at all times Companies working to combat AIDS – HR Information Systems: – HR Information Systems HRIS is an automated system by which interrelated components work together to collect, process, store, and disseminate information to support decision- making, coordination control, analysis, and visualization of an organization’s human management activities Definition

HRIS Benefits:

HRIS Benefits Get an accurate head count of employees worldwide Select for overseas assignment K eep track of pay plans and benefits Integrate and update HR systems and reports Monitor global HR activities in real time

Repatriation Problems :

Repatriation Problems Leaving the firm prematurely Mediocre or makeshift jobs Finding former colleagues promoted Reverse culture shock 50% leave within 2 years

Repatriation Solutions:

Repatriation Solutions Shorten time abroad – have written agreement Assign a sponsor Provide career counseling Keep communications open Develop reorientation programs Have returnees advise future expatriates

Strategic HR – Seimens Basic HR Strategy:

Strategic HR – Seimens Basic HR Strategy A living company is a learning company Global teamwork is the key to realizing potential Redefine management to meet globalization challenges A climate of mutual respect Growth Profit

Strategy and Strategic HR:

Strategy and Strategic HR Strategic human resource management is the linking of HRM with strategic goals and objectives HR strategies are the courses of action the company uses Definition

Management Values and Philosophy:

Management Values and Philosophy Do your assumptions and values influence your decisions? How do organizations demonstrate their philosophy?

Employee Commitment :

Employee Commitment Employee commitment - An employee’s identification with and agreement to pursue the company’s or the unit’s missions—to act like an owner rather than as an employee Good managers use employee commitment as their guide Definition

Commitment Building:

Commitment Building Establish people-first values Guarantee fair treatment Use value-based hiring Encourage employees to actualize

Auditing the HR Function:

Auditing the HR Function Process involves 5 questioning steps: Define What should our HR functions be? Rate How important is each function? Grade How well are functions performed? Improve What needs improvement? Feedback How effectively does each use resources?

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