Transcript Chapter 14

Chapter 14
Establishing HRM Practices
Overseas
Competitive Advantage
• Problem: Trying to “Americanize” a Newly
Purchased French Firm
– GE restructured its corporate identity, it defined “
medical technology” as one of its core business
areas—purchased a French medical equipment
manufacturing firm, Cie Generale De Radiologie
(CGR)
– “Americanize” the firm by establishing management
systems based on the “American values” that worked
well for GE in the United States (French managers
would be indoctrinated in the “American way”)
Competitive Advantage
• Solution—”Americanizing GE-CGR
– Planned seminars for the host-national managers
were given to socialize French counterparts into “GE
culture”
– “Go for One” T-shirts –Our goal as GE managers is to
be number one in the industry
– French wore t-shirts but were highly insulted—Hitler
was back forcing us to wear uniforms
– English posters from GE—bragging we are the best—
our methods work
– Problem with GE-CGR’s accounting system
Competitive Advantage
• GE lost 25 million in its first year—cost
cutting measures of layoffs and closing of
plants
– Many managers and engineers left and took
jobs elsewhere (workforce shrank from 6,500
to 5,000)
– GE lost competitive advantage to crosscultural misunderstandings and a poor human
resource management strategy
Staying Competitive
• Increasing foreign competition has force
many American firms to seek overseas
markets
– 350 billion in overseas assets
– 700 out of 1,000 largest U.S. industrial firms
expect overseas growth will exceed domestic
growth within five years
– Overseas sales of U.S. companies increased
at a rate of 10% per year during the last
decade
Staying Competitive
• Wholly-owned subsidiaries—American
companies operating in a foreign country
• Joint venture—a company operating in a foreign
country that is dually owned by an American
foreign firm
– Local laws of some countries do not allow
subsidiaries to be wholly owned by foreign
companies—local operations have at least 51%
ownership
– Allow companies do draw on others expertise
(marketing, selling, manufacturing)
Impact on International HRM
Practices
• As businesses globalize their efforts
further we need to focus on properly
selecting, training, managing,
compensating, and developing employees
to work in cross-cultural environments
(cannot superimpose American human
resource practices)
– Company cannot compete when it
experiences internal conflict within its
management ranks—productivity will suffer
Understanding Cultural Differences
• Culture—dance, music, paintings—tangible
things do represent superficial aspects of
culture, called artifacts—but you also have
values and assumptions
– Values—rules of societal proprietary and impropriety
that are shared by people within a culture
– Assumptions—a society’s beliefs that have evolved
from its attempts to adjust to the world around them
– Culture—a society’s set of assumptions, values, and
rules about social interaction—provides people with a
mental roadmap and traffic signals (road map—goals)
– “cultural software” is programmed in
Cross-Cultural Differences in the
Workplace
• Part of one’s cultural software involves rules and
expectations about how people are to act in the
workplace
• Rules concern work activities:
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How interviews are conducted
How managers should act with their subordinates
How negotiations should be conducted
How new info should be packaged for training
purposes
– How people should be paid for their work (Discuss
Exhibit 14-1 page 440)
Cross-Cultural Differences in the
Workplace
• Due to different behavioral expectations,
cultures sometimes clash
– Japanese abhor interpersonal confrontation and
conflict, assuming that conflict is a negative part of
human life that should be avoided at all costs—
conflict occurs needs to be resolved so we do not
lose respect of our peers (“lose face”)
– U.S. culture dictates that conflicts should be brought
out into the open and discussed public face to face
– Culture allows us to predict fairly accurately how
others “should” behave in a variety of situations
Cultural Improprieties
• When cultural rules are violated, people
usually feel uneasy, anxious, and
threatened and the “guilty party” is often
condemned or punished depending on two
factors:
– The extent to which the broken rule is widely
shared among a cultural group’s members
– The extent to which the rule is deeply held
and viewed as being important or sacred
(discuss Figure 14-1 page 441)
Use of Expatriates
• Expatriate—a professional/managerial
employee moved from one country to, and
for employment in, another country
– Transported overnight into new and alien
social and business cultures (35% to 70% of
American expatriates perform poorly in their
overseas jobs
Use of Expatriates and Competitive
Advantage
• Do you fill key management positions with
expatriates or with managers from the host
country—many fill at least some positions
with expatriates due to competitive
advantage for the following reasons:
– Succession planning
– Coordination and control
– Informational needs
Use of Expatriates and Competitive
Advantage
• Succession Planning
– Planned development of managerial talent for the
future—understand many international aspects of
business—managers must learn international aspects
of their businesses through a real-world overseas
experience (not through the classroom)
• Coordination & Control Systems
– Open new markets, facilitate a merger or acquisitions,
set up new technologies and systems, and
strategically coordinate and control foreign operations
Use of Expatriates and Competitive
Advantage
• Informational Needs
– Corporate headquarters need info about important
business functions overseas to assess and update
global strategic plans. Expatriates can become
important sources of this information (communicate
back to corporate headquarters in a timely and
effective manner)
– Assignments for three to five years so they can
become very knowledgeable about their foreign
markets
Expatriate Rights Under the Civil
Rights Act
• Exclude females from high level positions?
– Civil Rights Act affords EEO protection to expatriates
(Discuss Exhibit 14-2 page 443)
– March 26, 1991 the Supreme Court reverse this trend
by ruling that Title VII does not afford EEO protection
to U.S. citizens working overseas
– U.S. Congress placed a provision in the Civil Rights
Act 1991—to be covered under this provision the U.S.
citizen must be employed overseas by a firm
controlled by an American employer (interrelation of
operations, common management, centralized control
of Labor Relations, or common ownership or financial
control of the corporation and the employer
Expatriate Rights Under the Civil
Rights Act
• American expatriates may sue their
American employers for age
discrimination, sex discrimination, and
race discrimination
Selecting Expatriates
• Hiring many companies place too much
emphasis on technical skills and not enough on
personality
– Selected based on track record with the company
– Personality traits are more important in adapting to
the new culture (adjust to living, working, and
business conditions in host countries)
– Successful personality traits: ability to handle stress,
reinforcement substitution, ability to develop
relationships, and perceptual skills (need a high
stress tolerance—Stress reduction training programs)
Selecting Expatriates
• Reinforcement Substitution– the ability to
find substitutes for pleasurable pursuits
that are unavailable in a new culture
– Sports—friends mail videotapes of NFL
games
– Adjust to culture by studying rules of rugby,
attending matches with coworkers, learning to
appreciate the finesse and strategy of the
sport, and thus become a fan
Selecting Expatriates
• Ability to develop relationships
– Need to develop relationships with host nationals as
opposed to interacting exclusively with host nationals
(gain mentors and guides—people who assist them in
living happily and working productively in the host
culture)
– Two skills very important to adjustment process:
• Willing to communicate in host language (fluency is not as
important)
• Conversational currency—a relationship skill in which an
expatriate inserts social and cultural tidbits and trivia into
conversations with hot national employees
Selecting Expatriates
• Perceptual Skills
– Flexibility of one’s belief systems
• Ability to avoid being judgmental about the belief
and value systems of the host culture
– Ability to make flexible attributions about why host
nationals behave the way they do
– High tolerance for uncertainty
Research shows that expatriates with these skills
adjust better to their overseas experience than
those without them
Training Expatriates
• Effective training programs can help
people adjust to living and working
conditions in new cross-cultural situations
• Taught how to:
– Understand and work effectively with people
from different cultural, religious, and ethnic
backgrounds
– Manage multicultural teams
– Understand global markets, global customers,
global suppliers, and global competitors
Training Expatriates
• Most companies fail to train expatriates
• Only 35% of U.S. firms offer any pre-departure
cross-cultural or language training for their
expatriate managers
• When training is offered it is very rigorous—
degree of mental involvement and effort that
must be expended by the trainer and the trainee
in order for the trainee to learn the required
concepts (need in depth skill development
training)
Appraising Expatriates’ Job
Performance
• Invalid Performance criteria
– Performance criteria common to the U.S. are often
superimposed onto an expatriate manager even
though those criteria might not make sense in the
foreign culture
– Less control over profit levels (profits are heavily
influenced by such extraneous factors as exchange
rate fluctuations, price controls, depreciation
allowances, general overhead charges, and
availability of local debt financing (Discuss 14-2 page
447)
– Build criteria to each subsidiary’s unique situation
Appraising Expatriates’ Job
Performance
• Rater Competence
– Home office superiors conduct the reviews but they
have never worked or lived overseas—lack an
understanding of the social and business contexts in
which the work is performed
• Rater Bias
– If a hot-national manager completed the review we
may still have issues because individuals from
different cultures consistently misinterpret each
other’s behavior—bias the review
– Use multiple raters and that some raters have lived
and worked in the country in which the expatriate is
working
Compensating Expatriates
• Receive handsome compensation packages
– Base salary
– Variety of financial incentives to accept overseas
assignments (Discuss Exhibit 14-3 page 448)
– Allowances they live better overseas than in the U.S.
– Used to lifestyle difficult to go back to their old ways
– Hinder consistency of company’s pay system, causing
morale problems
Repatriation
• Repatriation are expatriate managers
returning home
– 60-70% not told of what job assignments will
be when they return home
– Return to jobs with less autonomy and
authority than job held overseas
– Difficulty to adjusting to native culture when
returning home
– Used to a higher quality of life
HRM Interventions
• Need programs to deal with the
deployment of expatriates
– Mentoring—assign mentors to expatriates
taking overseas assignments
• Keep track of expatriate’s performance
• Keep expatriates updated regularly about what is
going on in the parent company
• Assist the repatriate in finding a job in the parent
company that would make good use of their
international expertise
HRM Interventions
• Formalized Career Planning
– Integrate overseas assignments into their succession
planning systems—if they need international
experience in order to be in top executives roles they
must be properly selected and trained using the
methods discussed in chapter 7
• Communication Systems
– Good flow of info back and forth between expatriate
managers and the parent company to ensure
expatriate managers are not forgotten
Adjusting HRM Practices to the Norms
and Culture of the Host Country
• Ignorance of local custom invites disaster;
knowledge of the laws, practices, and
employer obligations in each country
should form the basis for all international
human resource practices
• We must adopt to the host culture’s norms
and values that guide human resources
practices in the country
Developing Training Programs
• U.S. companies operate subsidiaries overseas
they must train their host-national workers (do
not apply U.S. training programs)—GE issue
• Before one sets up a training program they
must..
– Understand how culture views the educational
process (Asian cultures, education is considered to
be a very authoritarian phenomenon—teach is seen
as expert and someone students should respect.
Teacher tells and the students listen—Students do not
ask questions—and teacher do not solicit students’
opinions—U.S. less formal and students participate
Developing Compensation
Systems
• People all over the world desire fair compensation for
their work
– Cultural values and norms determine what people consider
appropriate remuneration for their labor (Discuss figure 14-2
PAGE 452)
– Key to designing a compensation system is to understand what
motivates employees in each culture and to design the system
around those motivators
– Money, praise, or external symbols (a corner office, a personal
parking space) although attractive to American workers may not
hold true in another culture
– A recipe for failure is simply superimposing American
compensation and reward systems onto a foreign subsidiary—it
could damage the productivity of the workers in that subsidiary