Transcript Human Resources Selection and Development

Human Resources
Selection and Development
Chapter 14
Sources of Human Resources
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Home country nationals
Host country nationals
Third-country nationals
Inpatriates
Outsourcing
Expatriate
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Any person who lives and works outside the
country of which he/she is a citizen
Includes home-country nationals, thirdcountry nationals, and inpatriates
In most countries, expatriates must have
work visas from the government of the
country where they live & work
Home-country Nationals
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Are citizens of the country where the MNC is
headquartered but live & work elsewhere
Often used
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To start up operations (most common reason)
To provide technical expertise
To help the MNC maintain financial control over
the operation
In top management positions
Host-country Nationals
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Citizens of the country where they live & work
They are familiar with the culture and know the
language
They are less expensive than home-country personnel
Host-country governments often prefer use of hostcountry nationals and some require it (nativization)
Hiring them is good public relations
U. S. companies tend to rely heavily on host-country
nationals
Third-country Nationals
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People who are citizens of neither the home
country or the host country
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Example: A Mexican, employed by an American
company, working in Argentina
The employee's native country and the country
where he works are often in the same geographic
region
Advantages of Third-Country Nationals
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They often require less compensation than homecountry nationals
If they are from the same geographic region as the
host country and also know the company's culture,
they can often achieve objectives better than other
types of managers
Have cross-cultural skills
Provide a global or transnational image
Inpatriates
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Persons who work in the home country and
are citizens of a different country
Advantages of inpatriates
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Help to develop global core competencies
Provide diversity and an international perspective in
the home office
Improve career opportunities for company
managers who are not from the home country
Outsourcing
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Buying goods or services from a firm in one country
for use in another
Can significantly reduce overhead & labor costs
Quality and timeliness are sometimes problems
Can create public relations problems in the home
country
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Job losses in the home country
Abuse of foreign workers by overseas contractors
Liability issues from unsafe products
Criteria for Selecting Managers
for Overseas Assignments
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Adaptability to change
Independence
Self-reliance
Physical & emotional health
Age
Experience
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Education
Knowledge of local language
Motivation
Adaptability of spouse and
family
Leadership skills
Adaptability to Cultural Change
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Work experiences with cultures other than
one’s own
Previous overseas travel
Knowledge of foreign languages
Recent immigration background or heritage
Ability to integrate with different people,
cultures, and types of business organizations
Adaptability to Cultural Change (2)
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Ability to sense and accurately evaluate events in the
host country
Ability to solve problems within different frameworks
and perspectives
Sensitivity to differences of culture, politics, religion,
and ethics
Flexibility in managing operations on a continuous
basis despite lack of assistance and gaps in
information
Indicators of Successful Adaptation
to Another Culture
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Feeling comfortable that their work challenges can be
met
Being able to adjust to new living conditions
Learning how to interact well with host-country
nationals outside of work
Feeling reasonably happy and being able to enjoy
day-to-day activities
Adjustment to Another Culture
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Anticipatory adjustment occurs before the
foreign assignment begins
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Results from training and previous experience
In-country adjustment starts when the
employee begins to work in the new country.
Factors in In-country Adjustment
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Individual’s ability to adjust effectively
Ability to maintain a positive outlook, interact well
with host nationals, and to perceive and evaluate the
host country’s cultural values and norms correctly
Clarity of expatriate’s role in the host management
team
Expatriate’s adjustment to the organizational culture
Non-work matters, such as how well the expatriate's
family adapts
Selection Procedures
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Both technical competence and adaptability should
be considered
Interviews are a common selection tool.
 Both the employee and the spouse may be
interviewed
 Home-country and host-country interviewers may
be used
Adaptability screening: the process of evaluating how
well the employee's family is likely to stand up to the
stress of overseas life
Selection Procedures (2)
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Adjustment model: explains the factors in successful
adjustment to the employee and sometimes the
spouse
 Some employees withdraw from consideration
Psychological testing of the employee
 Used less often than interviews
 Many managers believe that interviews are more
effective than testing.
Compensation
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Compensating expatriates can be difficult
because there are many variables to consider
Most compensation packages are designed
around four elements:
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Base salary
Benefits
Allowances
Taxes
Compensation Details
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Base salary: the amount of money that an
expatriate would receive for doing the same
job in the home country
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Used as a basis to establish salary in the host
country
Serves as benchmark against which bonuses and
benefits are calculated
Salary may be paid in home country currency,
host country currency, or a combination of the
two
Compensation Details (2)
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Benefits: a substantial portion of expatriate
compensation
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Is the home country or the host country
responsible for the expatriate's social security
benefits?
Should home-country benefits programs be
available to host-country nationals?
Compensation Details (3)
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Allowances
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Relocation allowance
Cost-of-living allowances are paid when the
employee must incur extra costs that he would not
pay in the home country
 Examples: housing allowance, and the costs of
private schools for the employee's children
Hardship allowance: Often paid to employees who
work in a country with difficult living conditions
Compensation Details (4)
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Allowances (continued)
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Foreign service premium
 In the past, a foreign-service premium was
often a monthly payment that continued as long
as the employee worked overseas
 Many firms have eliminated the ongoing
foreign-service premium.
 Today, a one-time, lump sum foreign service
premium is often paid at the start of the
overseas assignment to provide cash for
immediate expenses.
Compensation Details (5)
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Taxes
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An expatriate may be required to pay
income taxes to both the host country and
his/her native country
The company compensates the employee
for the extra amount of tax
Compensation Details Summary
The cost of an expatriate employee =
salary costs
+ benefit costs
+ allowance costs
+ tax costs
Compensation Approaches
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The compensation package must be costeffective and should be seen as fair
Balance-sheet approach: ensure that the
expatriate does not lose money from the
foreign assignment
Complementary (negotiation) approach:
Negotiate compensation with each employee
Localization: Pay the expatriate a salary
comparable to local nationals
Compensation Approaches (2)
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Lump sum method: give expatriate a pre-determined
amount of money. Employee decides how to spend it.
Cafeteria approach: Offer the employee a choice
among various compensation options, with a limit on
total costs
Regional system: Set up a compensation system for
all expatriates who are assigned to a particular region
Expatriate Motivations for
Accepting a Foreign Assignment
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Greater demand for their talents abroad than
at home
Enhancement of an international business
career
Attraction of living overseas
Motives are affected by occupation and by
the home country of the employee
Desires of Host-Country Employees
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Usually prefer local managers
They set such high levels of expectation
regarding the desired characteristics of
expatriates that anyone sent by the MNC is
unlikely to measure up
Repatriation of Expatriates
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Reasons for returning to the home country
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Most expatriates return home when their agreedon tour of duty is over
Some want their children educated in a homecountry school
Some are not happy in the overseas assignment
Some return early because they failed to do a
good job
Repatriation of Expatriates (2)
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Readjustment problems
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“Out of sight, out of mind” syndrome: the
expatriate may not have been considered for jobs
that he/she could do well
Organizational changes may have:
 eliminated the jobs for which the expatriate is
well-qualified
 reduced the importance of the expatriate's
position or department
The new job may be seen as a demotion.
Repatriation of Expatriates (3)
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Readjustment problems
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Technological advances may have made the
expatriate's skills obsolete
The former expatriate may not have an
opportunity to use skills gained abroad.
The former expatriate's salary and benefits may
be lower than they were abroad.
The former expatriate has to readjust to homecountry culture and adjust to a new job
Repatriation of Expatriates (4)
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Transition strategies: Help smooth the adjustment
from an overseas to a home-country assignment
 Repatriation agreement: addresses the concerns
of the individual and the company before the
foreign assignment begins.
 Keep the expat involved in home office
communication and projects during the foreign
assignment.
 Appoint a higher-level manager as a career
mentor for the expatriate (helps to avoid "out of
sight, out of mind" problem).