Transcript Slide 1
19 McGraw-Hill/Irwin
Human Resource Management
This chapter covers: •Differences in labor conditions •The growing role of women •The “Global Mindset” •The relationship between strategy and HR approaches •IC executives •The difficulties of finding qualified IC executives •Expatriates and the trailing spouse
International Business by Ball, McCulloch, Frantz, Geringer, and Minor
Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Objectives
Remember cultural differences in labor conditions Realize the growing role of women in international business Recognize the importance of creating a company “Global Mindset” Understand the relationship between competitive strategies and HR management approaches
Compare home country, host country, and third country nationals as IC executives Understand the difficulties of finding qualified executives for international companies (IC) Understand what an expatriate is and the challenges of and opportunities of an expat position
Realize the increasing importance of accommodating the trailing spouse of an expatriate executive Remember some of the complications of compensation packages for expatriate executives 19-2
Human Resource Management
Human Resource Management includes
Estimation of work force needs
Recruitment and selection Training and development Motivation
Compensation Discipline Employment termination 19-3
Worldwide Labor Conditions
In 2004
47% of the world’s six billion people under the age of 24 6.2% of the total population unemployed and looking for work 11% decline in manufacturing jobs worldwide
Global industrial output up 30% Worldwide increased participation of women in the work force
Largest pool of skilled workers in the U.S.
Still only represent 11.2% of corporate officers in the U.S.
59% of business worldwide include women in senior management More women starting their own business Attitudes toward women vary tremendously worldwide 19-4
Worldwide Labor Conditions
Immigrant Labor
Large movement of unskilled labor between nations
Significant illegal immigrant populations
In U.S. number of immigrant workers increasing EU has huge influx from Eastern Europe 19-5
Child Labor
One out of six children worldwide work
Often dangerous or filthy conditions and little or no compensation
Majority in Asia and Africa Have no other option in poor countries ILO and UNICEF campaign against
Worldwide Labor Conditions
Forced Labor
Most common in Asia, Africa and Latin America
Generally women, children, and low-income men
Rural to Urban Shift
Difficult to teach workers from farms and villages how to adjust to factory life
Regional or Cultural Differences in Labor Conditions
Too many to discuss all
Japan versus China example 19-6
Staffing: The Good News and the Difficulties
The successful manager of a foreign affiliate must be able to
Understand the home country and the host country
Speak the language
Such managers exist, and may be found in
The home country
The host country
A third country 19-7
19-8
The Global Mindset
Combines an openness to and awareness of diversity across cultures and markets with a propensity and ability to synthesize across this diversity
Open minds
Respect other cultures
Push the limits of the culture Find opportunities to innovate
The International HRM Approach
Ethnocentric Staffing
International strategic orientation
Most decisions made at headquarters Utilize citizens of their own country in key foreign positions May encounter difficulties overcoming cultural biases Broadens their experience 19-9
Polycentric Staffing
Multidomestic orientation
Use HCNs for subsidiaries and and PCNs for HQ HCNs familiar with local customs, culture and language Generally lower cost Some countries require hiring of local nationals
The International HRM Approach
Regiocentric Staffing
Regional strategic approach
Regional employees selected for key positions
Can use Third Country Nationals (TCNs) Salaries may actually be higher Similarity in language does not mean similarity of culture 19-10
Geocentric Staffing
Transnational strategic orientation
Select the best person for each job without regard for national origin
Capitalizes on each staffing policy
HRM strategy consistent across all subsidies
Training
Home or PCN
Encouraged to study the language and culture of the country to which they are going Sent on short trips for exposure Can send to business school Families of executives transferred overseas a major problem 19-11
Training
Host Country National (HCN)
Hired in the home country
Students graduating from home country business schools First sent to IC headquarters Hired in the host country
May set up in-house training programs in the host country May use business courses in the host country’s universities May send to home country school or training 19-12
Training
Third Country National (TCN)
Third country nationals may accept lower wages and benefits than will employees from the home country
They may also come from a culture similar to that of the host country May have worked for another unit of the IC and be familiar with policies, procedures and people
Common approach in developing countries May not be welcome by host country May come from an international agency Will see greater use of TCNs as companies take the geocentric view 19-13
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Expatriates
A person living outside of his or her country of citizenship
Arrange mentor
Cleary define expectations
Learn the new market Learn the language Network Excellent training opportunity
Expatriates
Family
Nine out of ten expatriate’s failures are family-related Unhappy spouses are the biggest reason for employees asking to go home early The company will be losing a “million-dollar corporate-training investment” in the executive 19-15
Children
Can wreak havoc with children’s lives
Personal computers and email help Trailing Spouses
Two-career families complicate matters More companies trying to help spouses with job search Spouse may not be allowed to work
Language Training
The English speakers are stuck in a language trap
The English language has become the lingua franca of the world
English is everybody’s second language
Always better to speak language of potential customer
Customers can hide behind language during negotiations 19-16
Repatriation
When expatriate returns home
Reverse culture shock
Can also prove traumatic for the family
Company should provide counseling and assistance before family heads home 19-17
Expatriate Services
Health care programs
Claims administration Language translations Currency conversions
Service standardization Banking services
Online, 24-hour assistance Training
Culture and language 19-18
House hunting
Grocery and hardware shopping
Utilities hook up
Maid service
Schools
Organizations
Cultural items
Best Practices
Provide cross-cultural and language training Provide benefits package suitable to assigned region Provide cross-cultural assistance for family members Provide regular communication regarding health and safety issues Provide assistance in balancing personal and professional needs 19-19
19-20
Compensation
Salaries
Paying home country nationals the same salaries as their domestic counterparts permits worldwide consistency
Because of increasing use of third country nationals, those personnel are generally treated in the same way
Some pay same base pay to HCNs
Allowances
Housing Allowance
Permits executive to live at same standard as at home Cost-of-Living Allowance
Based on differences in price of food, utilities, transportation, entertainment, clothing, personal services, and medical expenses as compared to home 19-21
Allowances for Tax Differentials
Ensures expatriates will not have less after-tax pay than they would at home Education Allowances
Insures children receive education equal to that at home Moving and Orientation Allowances
Household effects and language instruction
Compensation
Bonuses
Expatriate employee compensation payments in addition to base salaries and allowances because of hardship, inconvenience, or danger
Bonuses include
Overseas premiums
Contract termination payments
Home leave reimbursement 19-22
Compensation Packages Can Be Complicated
What Percentage?
All allowances and a percentage of the base salary are usually paid in the host country currency
In practice, the percentage varies from 65 to 75 percent, and the remainder being banked where the employee wishes
What Exchange Rate?
An exchange rate must be chosen Harder in countries with exchange controls and nonconvertible currencies
Stock Plan Problems 19-23
Compensation of Third Country Nationals
Trend toward applying the same compensation plan to third country nationals as home country expatriates
Problems can arise in
The calculation of income tax differential when American expatriate compared with expatriate from another country
Home leave bonuses 19-24
Perks
Perks are symbols of rank in the corporate hierarchy and are used to compensate executives while minimizing taxes
Common perks include
Private pension plan
Retirement payment
Life insurance
Health insurance
Company house or apartment 19-25
10 Leading Occupations of Employed Women Full-time Wage and Salary Workers 2003
Secretaries and administrative assistants Elementary and middle school teachers Registered nurses Nursing, psychiatric, and home health aides Cashiers Customer service representatives First-line supervisors/managers of office and administrative support First-line supervisors/managers of retail sales workers Bookkeeping, accounting, and auditing clerks Receptionists and information clerks