International

Business
9e
By Charles W.L. Hill
McGraw-Hill/Irwin

Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 19
Global Human
Resource Management
McGraw-Hill/Irwin

Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

What Is Human
Resource Management?
Human resource management (HRM) - the
activities an organization carries out to utilize its
human resources effectively
more complex in an international business

These activities include determining human

resource strategy, staffing, performance
evaluation, management development,
compensation, labor relations
expatriate managers

Firms need to ensure there is a fit between their

human resources practices and strategy
19-3

What Is The Strategic

Role Of HRM In
International Firms?
The Role of Human Resources in Shaping Organizational Architecture

19-4

What Is A Staffing Policy?

Staffing policy - the selection of employees
who have the skills required to perform a
particular job
Three main approaches to staffing policy
1. The ethnocentric approach - fill key management
positions with parent-country nationals
2. The polycentric approach recruit host country
nationals to manage subsidiaries in their own
country, and parent country nationals for positions at
headquarters
3. The geocentric approach seek the best people,
regardless of nationality for key jobs

19-5

Which Staffing
Policy Is Best?
Comparison of Staffing Approaches

19-6

What Is Expatriate
Failure?
Firms using an ethnocentric or geocentric
staffing strategy will have expatriate managers
expatriate failure is the premature return of an
expatriate manager to the home country

The main reasons for Japanese expatriate failure

are
the inability to cope with larger overseas responsibility
difficulties with the new environment
personal or emotional problems
a lack of technical competence
the inability of spouse to adjust
19-7

What Is Expatriate
Failure?
The main reasons for U.S. expatriate failure are
the inability of an expatriate's spouse to adapt
the managers inability to adjust
other family-related reasons
the managers personal or emotional maturity
the managers inability to cope with larger overseas
responsibilities

The reason for European expatriate failure is

the inability of the managers spouse to adjust

19-8

How Can Firms Reduce

Expatriate Failure?
Firms can reduce expatriate failure through improved
selection procedures
Four dimensions that predict expatriate success are
1. Self-orientation - the expatriate's self-esteem, selfconfidence, and mental well-being
2. Others-orientation - the ability to interact effectively with
host-country nationals
3. Perceptual ability - the ability to understand why people
of other countries behave the way they do
4. Cultural toughness the ability to adjust to the posting

19-9

Why Is A Global
Mindset Important?
A global mindset may be the fundamental
attribute of a global manager
cognitive complexity
cosmopolitan outlook

A global mindset is often acquired early in life

from
a family that is bicultural
living in foreign countries
learning foreign languages as a regular part of family
life
19-10

What Is Training And

Management
Development?
After selecting
a manager for a position, training
and development programs should be
implemented
Training focuses upon preparing the manager
for a specific job
Cultural training
Language training
Practical training

Management development is concerned with

developing the skills of the manager over time
historically, most firms focus more on training than on
management development
19-11

What Happens When

Expatriates Return Home?
Training and development should include
preparing and developing expatriate
managers for reentry into their home
country organization
need good programs for
re-integrating expatriates back into work life within
their home country organization
utilizing the knowledge they acquired while abroad

19-12

How Should
Expatriates Be Evaluated?
Evaluating expatriates can be especially complex
typically, both host nation managers and home office
managers evaluate the performance of expatriate
managers

But, both types of managers are subject to

unintentional bias
home country managers tend to rely on hard data
when evaluating expatriates
host country managers can be biased towards their
own frame of reference

19-13

What Are The Key Issues

In Compensating
Expatriates?
Two key issues on compensation
1. How to adjust compensation to reflect
differences in economic circumstances
and compensation practices
there are substantial differences in executive
compensation across countries

2. How to pay expatriate managers

most firms use the balance sheet approach

19-14

What Are The Key Issues

In Compensating
Expatriates?
A compensation
package has five components
1.
2.
3.
4.
5.

Base salary - normally in the same range as the base

salary for a similar position in the home country
Foreign service premium - extra pay the expatriate
receives for working outside his country of origin
Various allowances - hardship, housing, cost-of-living,
education
Tax differentials - may have to pay income tax to both
the home country and the host-country governments
no reciprocal tax treaty exists
Benefits many firms provide the same level of
medical and pension benefits abroad that employees
receive at home
19-15

Why Are International

Labor Relations
Important?
Organized labor is concerned that
1. Multinationals can counter union bargaining power
by threatening to move production to another
country
2. Multinationals will farm out only low-skilled jobs to
foreign plants making it easier to switch production
locations
3. Multinationals will import employment practices and
contractual agreements from their home countries
and reduce the influence of unions

19-16

Why Are International

Labor Relations
Important?
Organized labor
has responded to the
increased bargaining power of multinational
corporations by

1. Trying to set-up their own international organizations

2. Lobbying for national legislation to restrict
multinationals
3. Trying to achieve regulation of multinationals through
international organizations such as the United
Nations

Many firms are centralizing labor relations to

enhance the bargaining power of the
multinational vis--vis organized labor
19-17