Human Resource Management and Functions

Human resource management (HRM): deals with the entire relationship of the employee with the organization Recruitment: process of identifying and attracting qualified people to apply for vacant positions Selection: process of filling vacant positions in the organization

Basic HRM Functions

Training and development: giving employees the knowledge, skills, and abilities to perform successfully Performance appraisal: system to measure and assess employees work performance

Basic HRM Functions

Compensation: organization s entire reward package, including financial rewards, benefits, and job security Labor relations: ongoing relationship between an employer and those employees represented by labor organizations

International Human Resource Management (IHRM)

All HRM functions, adapted to the international setting Two added complexities compared to domestic HRM
- Must choose a mixture of international employees - Must decide the extent of adaptation to local conditions

Types of Employees in Multinational Organizations

Expatriate: employee from a different country Home country nationals: expatriate employees from the parent firm s home country Third country nationals: expatriate workers who come from neither the host nor home country

Types of Employees in Multinational Organizations

Host country nationals: local workers who come from the host country where the unit is located Inpatriate: employees from foreign countries who work in the country where the parent company is located Flexpatriates: employees who are sent on frequent but short-term international assignments

The Expatriate or the Host Country Manager

Multinationals must decide whether to use expatriates or home country nationals Need to look at some questions
- Given the firm s strategy, what is the preference for the position?

The Expatriate or the Host Country Manager

Using expatriate managers
- Do parent country managers have the appropriate skills? - Are they willing to take expatriate assignments? - Do any laws affect the assignment of expatriate managers?

Using host country managers

- Do they have the expertise for the position? - Can we recruit them from outside the company?

Is the Expatriate Worth It?

Decisions must take into account costs of such assignments
- High cost - High failure rate

Strategic Role of Expatriate Assignments

Helps managers acquire international skills Helps coordinate and control operations dispersed activities Communication of local needs/strategic information to headquarters In-depth knowledge of local markets Provide important network knowledge

International Cadre
International cadre (or Globals): Separate group of expatriate managers who specialize in a career of international assignments
- Have permanent international assignments - Move from international assignments to international assignments - Recruited from any country - Sent to worldwide locations to develop crosscultural skills

Flexpatriates
The frequent flyers who travel on short notice for shorter time durations while maintaining their family and personal lives at the homecountry location Key functions
- Sent to explore markets - Consider problem areas in the foreign subsidiary - Manage projects - Help with transfer of technology

Flexpatriates
Advantages
- Do not experience many of the family and personal difficulties and stress associated with expatriate assignments - Much less expensive than expatriate no relocation or repatriation costs

Flexpatriate
Disadvantages
- Taxation issues can become complicated if the assignment exceeds six months he company may end up paying the tax - Does not fully integrate into the local work environment and does not learn low to adapt locally - May be resented for neglecting the host-country culture

Key Success Factors for Expatriate Assignments

Technical and managerial skills Personality traits Relational abilities Family situation International motivation Stress tolerance Language ability Emotional intelligence

Exhibit 11.2: Expatriate Success Factors and Selection Methods

Priority of Success Factors

Assignment length
- Technical and professionals skills are key for short assignments

Cultural similarity Required interaction with local people Job complexity and responsibility

Exhibit 11.3: Selecting Expatriates: Priorities for Success Factors by Assignment Characteristics

Training and Development

Cross-cultural training: increases the relational abilities of future expatriates and their spouses and families Training rigor: extent of effort by both trainees and trainers required to prepare the trainees for expatriate positions

Training and Development (cont.)

Low rigor training
- Short time period - Lectures and videos on local cultures - Briefings on company operations

High rigor training

- Last over a month - Experiential learning - Extensive language training - Includes interactions with host country nationals

Exhibit 11.4: Training Rigor: Techniques and Objectives

Exhibit 11.5: How the Rigor of Training Relates to the Basic Expatriate Assignment Conditions

Expatriate Performance Appraisal

Conducting reliable performance appraisal for the expatriate is very challenging Challenges
Fit of international operation in multinational strategy Unreliable date Complex and volatile environments Time difference and distance separation Local cultural situation

Steps to Improve the Expatriate Performance Appraisal

1.Fit the evaluation criteria to strategy 2.Fine-tune the evaluation criteria 3.Use multiple sources of evaluation with varying periods of evaluation

Exhibit 11.6: Evaluation Sources, Criteria, and Time Periods for Expatriate Performance Appraisals

Expatriate Compensation
Compensation packages tend to include many common factors includes:
- Local market cost of living - Housing - Taxes - Benefits

Exhibit 11.7: Average Rent of Two-Bedroom, Unfurnished Apartments in Selected European Cities

The Balance-Sheet Approach

Provides a compensation package that equates purchasing power Allowances for cost of living, housing, food, recreation, personal care, clothing, education, home furnishing, transportation, and medical care

Exhibit 11.8: Balance Sheet Approach To Expatriate Compensation

Additional Allowances and Perquisites

Foreign service premiums Hardship allowance Relocation allowances Home-leave allowances

Expatriate Manager Compensation: Other Approaches

Headquarters-based compensation: paying home country wages regardless of location Host-based compensation system: adjusting wages to local lifestyles and costs of living Global pay systems: worldwide job evaluations, performance appraisal methods, and salary scales are used

Repatriation Problem
Difficulties faced coming back home Three basic cultural problems reverse culture shocks
- Adapt to new work environment and culture of home - Expatriates must relearn own national and organization culture - Need to adapt to basic living environment

Strategies for Successful Repatriation

Provide a strategic purpose for the repatriation Establish a team to aid the expatriate Provide parent country information sources Provide training and preparation for the return Provide a home-leave policy to encourage expatriates to make regular visits to the home office Provide support for the expatriate and family on return

International Assignments for Women: Two Myths

Myth 1: Women do not wish to take international assignments. Myth 2: Women will fail in international assignments because of the foreign culture s prejudices against local women. Successful women expatriates
- Foreign not female emphasize nationality not gender

International Assignments for Women: Advantages

More visible Strong in relational skills Wider range of interaction options

International Assignments for Women: Disadvantages

Face the glass ceiling
- Isolation and loneliness - Constant proving of themselves, working harder than male

Need to balance work and family responsibilities Need to worry about accompanying spouse

More Women in the Future?

Women expatriate managers are expected to grow Acute shortage of high-quality managers Increasing number of women provide role models

What Can Companies Do To Ensure Female Expatriate Success?

Provide mentors Provide opportunities for interpersonal networks as a form of organizational support Remove sources of barriers Provide support to cope with dual-career issues

Multinationals and Electronic Human Resource Management

Electronic human resources (e.HR): automation of various aspects of the human resources system of a company

Strategic Benefits of e.HR Systems

Reduce HR and administrative system cost Improve HR services to employees Employees take control of their own data Repository of the wealth of knowledge and skills of expatriates Employee tracking for career management and other HR purposes

Proper Steps to e.HR Implementation

Develop business case to justify using e.HR or upgrade to e.HR Make the system customer-focused Be proactive Organize collected data in ways that is useful to the organization

Multinational Strategy and IHRM

IHRM orientation: company s basic tactics and philosophy for coordinating IHRM activities for managerial and technical workers

Exhibit 11.9: IHRM Orientation and IHRM Practices for Managers and Technical Workers

Exhibit 11.9: IHRM Orientation and IHRM Practices for Managers and Technical Workers

Exhibit 11.9: IHRM Orientation and IHRM Practices for Managers and Technical Workers

Multinational Strategy and IHRM

Ethnocentric IHRM: all aspects of HRM for managers and technical workers tend to follow the parent organization s home-country HRM practices

Benefits of Ethnocentric IHRM

Little need to recruit qualified host country nationals for higher management Greater control and loyalty of home country nationals Key decisions centralized

Costs of Ethnocentric IHRM

May limit career development for host country nationals Host country nationals may never identify with the home company Expatriate managers are often poorly trained for international assignments and make mistakes Expatriates may have limited career development

Regiocentric and Polycentric IHRM

Regiocentric IHRM: region-wide HRM policies are adopted Polycentric IHRM: firm treats each countrylevel organization separately for HRM purposes Greater responsiveness to host country differences

Benefits of Polycentric and Regiocentric HRM Policies

Reduces costs for training of expatriate managers from headquarters No investment in language training Fewer problems with adjustments to local cultures Less expensive

Costs of Polycentric and Regiocentric IHRM Policies

Coordination problems with headquarters
- based on cultural, language, and loyalty differences

Limited career-path opportunities for host country and regional managers Limited international experience for home country managers

Global IHRM Orientations

Recruiting and selecting worldwide Assigning the best managers to international assignments regardless of nationality

Global IHRM Orientations

Benefits
- Bigger talent pool - Develops international expertise - Helps build transnational organizational cultures

Costs
- Importing managerial and technical employees not always possible - Added expense

IHRM Orientation and Multinational Strategy

Early stages of internationalization ethnocentric IHRM Multilocal strategies ethnocentric or regiocentric Regional strategy regiocentric, polycentric or global

Exhibit 11.10: IHRM Orientations and Multinational Strategies

Conclusion
When basic HRM practices are applied to a company s international operations, they become International HRM Chapter focused on HRM practices as applied to the expatriate employees Expatriates present special challenges for multinationals It is important for multinationals to find ways to properly manage expatriates to benefit from their experiences