INTERNATIONAL

HRM

International HRM
Differences
Greater Number of
Services
Special Services to
Unique Group
Compensation
Complexity
Foreign Exchange Rate
Attention
Language and Cultural
Differences

Increasing Importance of Global

Human Resources Understanding
International
Mergers and
Acquisitions

Foreign
Human
Resources

Importance of
Global Human
Resources
Management
Market
Access
Opportunitie
s

Global
Competition

Composition of the Cultural

Environment of International Business
Language
spoken
written language
official language
linguistic pluralism
language hierarchy
international
languages
mass media

Religion
sacred objects
philosophical
systems
beliefs & norms
prayer
taboos
holidays
rituals

Education
formal education
vocational training
primary education
secondary education
higher education
literacy level
human resources
planning

Law
common law
code law
foreign law
home country law
antitrust policy
international law
regulation
Politics
nationalism
sovereignty
imperialism
power
national interests
ideologies
political risk

Values and Attitudes

Toward:
time
achievement
work
wealth
change
scientific method
risk-taking

Technology and
Material Culture
transportation
energy systems
tools & objects
communications
urbanization
science
invention

Social Organization
kinship
social institutions
authority structures
interest groups
social mobility
social stratification
status systems

Key Issues in International

HRM
1. Worldwide Human Resources
Planning

Recruiting and Selection

Expatriate orientation and training
Repatriation
Performance appraisal

2. Compensation

Dealing with inflation and

unexpected changes in exchange
rates
Providing sufficient pay to keep
individuals
Should company pay hardship
allowance?
Dissatisfaction with cost of living
allowances

3. Housing (Complex problems at

home and overseas)

Key Issues in International

HRM
4. Benefits Planning

Developing equity among employees

Several plans necessary for different
categories of personnel

5. Taxation (Proliferation of new

laws)
6. Communication of HR Policies and
Programs Worldwide

Treat communication as a continuous

process
Face-to-Face contact frequently
Make policy manuals brief and simple
Be sensitive to needs of receiver
Send regular written explanations of
policy changes
Periodic rotation of overseas HR
managers desirable
Security

Global Manufacturing

International Corporation
Domestic firm that
uses its existing
capabilities to move
into overseas markets.

Multinational Corporation
(MNC)
Firm which
independent business
units operating in
multiple countries.

Global Corporation
Firm that had
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.

Types of Organizations
Global
High
Global
Efficiency

Views the world as a

single market;
operations are
controlled centrally from
the corporate office.

International
Low

Uses existing
capabilities to expand
into foreign markets.
Low

Transnational
Specialized facilities
permit local
responsiveness;
complex coordination
mechanisms provide
global integration.

Multinational
Several subsidiaries
operating as standalone business units in
multiple countries.
High

Local Responsiveness

The Multi-National
Corporation (MNC)
Home Country
Employment
External Country
Employment

Managing in a Foreign
Environment
Attitudes Vary
Motivational Tools
are Distinctly
Different

Cultural Environment
of International Business

Clustering Nations
Approach

Geography
Languages
Religion
Job Attitudes

Work
Goals
Values
Needs

Managerial Values

Role of Competition
Role of Blame
Role of Shame
Role of Participation:
Japan (hi)
Role of Autocratic:
Europe (hi) and South
America (hi)

Sources of Managerial
Talent
Home Country
Nationals (Expatriates)
Host Country Nationals
(Natives)
Third Country
Nationals (NonHome/Host)

Advantages of Different Sources

for Overseas Managers
Host
Country
Less cost
Preference of
host country
government

Home
Country
Talent
available
within
company

Greater
Knowledge of control
environment
Company
experience
Language
facility
Mobility
Experience

Third
Country
Broad
experience
International
outlook
Multilingualism

SOME OF THE LARGEST U.S.

MULTINATIONALS
AT&T

General Electric

Microsoft

Cisco

General Motors

Procter and
Gamble

Citicorp.

Hewlett-Packard

RJR Nabisco

Coca-Cola

IBM

Texaco

DuPont

Intel

United
Technologies

Exxon/Mobil Oil

J.P. Morgan

Wal-mart

Ford Motor

Johnson & Johnson

Xerox

Motorola

6 Major Reasons for American

Expatriate Failures in Foreign
Environment
Inability of the managers spouse
to adjust to a different cultural
environment.
The managers inability to adapt
to a different physical or cultural
environment. Other familyrelated problems.
The managers personality or
emotional immaturity.
The managers inability to cope
with the responsibilities posed by
the overseas work.
The managers lack of technical
competence.
The managers lack of motivation
to work overseas.

Selection Methods
Interviews (executives
and psychologists)
Assessment Centers
(exercises)
Tests (language and
special tests)
Role of Family

Flowchart of the Selection-Decision

Process
Start the Selection Process

Can the position be filled by a local national?

YES

Select local national and subject him/her to

training basically aimed at improving technical
and managerial skills.

NO
Identify degree of interaction required with
local community using a 7- or 9- point scale,
ranging from low to high, indicate the degree of
interaction with local community required for
successful performance on the job.

Emphasis* on tasks variables.

LOW

Second but by no means unimportant question

is to ask whether the individual is willing to
serve abroad.

HIGH
Is candidate willing?

NO
Probably not suitable for
position

VERY SIMILAR
Emphasis* on task variables

YES
YES

Identify degree of similarity /

dissimilarity between cultures
using a 7- or 9-point scale,
ranging from similar to highly
diverse, indicate the magnitude
of differences between the two
cultures,

HIGHLY

DIVERSE

Emphasis* on relational
abilities factor.
Start orientation
(moderate to high rigor)

Family situation factor must

also be taken into consideration.
Start orientation (most
rigorous)

NO

Probably not suitable for

position

Start orientation
(moderate to high rigor)

Preparing for an International

Assignment
Study the following subjects:
Social and business etiquette.
History and folklore.
Current affairs, including relations between
the country and the United States.
The cultures values and priorities.
Geography, especially the cities.
Sources of pride: artists, musicians,
novelists, sports, great achievements of the
culture, including things to see and do.
Religion and the role of religion in daily life.
Political structure and current players.
Practical matters such as currency,
transportation, time zones, hours of
business.
The language.

Cultural Shock
"A Disorientation that
Causes Perpetual
Stress"
Disorienting Incidents
Impossible
Communication
Telephone Difficulties
Family Frustrations

Special Considerations
Career Development
Risks
Reentry Problems
Managing Family Life
Terrorism

Recruitment
Government
Regulations
Work Permits
Universally Required
Recruitment of Locals
Varies
Guest Workers
Role of Church, Family,
Politics

Selection
Merit Versus Best
Family
Family Ties
Social Standing
Origin
Industrialized versus
Less Developed

Training Issues
Local Resources
Less Technical
Capabilities
Apprenticeship
Strengths in Europe
Management
Development (US
Leader)
Language (English
Need)

Compensation
Host Country
Employees
Production Standard or
Time or Combination
Benefits (often higher
than U.S.)
Profit Sharing (may be
Required)

Managers
Narrowing of Salary
Gap with USA

Expatriate Compensation

Base Pay
Differentials
Incentives
Company Assistance
Cost: 3-4 times USA
Rate

Compensation of Expatriate
Managers
To be effective, a compensation
program must:
1.
2.
3.
4.
5.

Provide an incentive to leave

the united states.
Maintain an American
standard of living.
Facilitate reentry into the
united states.
Provide for the education of
children.
Maintain relationships with
family, friends, and business
associates.

Compensation Elements of an
Expatriate
Programs used by most U.S.
Based MNCs have four elements:
Base pay equal to pay of
domestic counterparts in
comparably evaluated jobs.
Differentials to offset the higher
costs of overseas goods, services,
and housing.
Incentives to compensate the
person for separation from family,
friends, and domestic support
systems.
Company assistance programs
to cover added costs such as
moving and storage costs,
automobile, and education
expenses.

The Price of an Expatriate

Note: Additional
costs often incurred
arent listed above,
including language
and cross-cultural
training for
employee and
family, and costs of
selling home and
cars in the U.S.
before moving.
*Figures take into
account payments
by employee to
company based on
hypothetical U.S.
income tax and
housing costs.

An employers typical first-year expenses

of sending a U.S. executive abroad.
Direct Compensation Costs
Base Salary

100%

Foreign-service premium

15%

Goods and services differential

20%

Housing costs

20-40%

Transfer Costs
Relocation allowance

5%

Air fare

2%

Moving household goods

25%

Other Costs
Company Car

15%

Schooling (two children)

20%

Annual home leave (four people)

Personal income tax abroad
Total = Salary plus

5%
50%
187-207%