Transcript Document

Chapter 20:
International
Human
Resource
Management
and Labor
Relations
International Business, 4th Edition
Griffin & Pustay
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©2004 Prentice Hall
Chapter Objectives_1
 Describe the nature of human resource
management in international business
 Detail how firms recruit and select
managers for international assignments
 Explain how international businesses train
and develop expatriate managers
 Describe labor relations in international
business
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Chapter Objectives_2
 Discuss how international firms conduct
performance appraisals and determine
compensation for their expatriate managers
 Analyze retention and turnover issues in
international business
 Explain basic human resource issues
involving non-managerial employees
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Human Resource Management (HRM)
 Set of activities directed at attracting,
developing, and maintaining the
effective workforce necessary to
achieve a firm’s objective
 Differences in culture, levels of
economic development, and legal
systems among countries may force
changes in HRM systems
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Figure 20.1 The International Human Resource
Management Process
HRM’s Strategic Content
Recruitment and Selection
Training and Development
Performance Appraisal
Compensation and Benefits
Labor Relations
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Contribution to Organizational Effectiveness
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International Managerial Staffing Needs
 Staffing Issues
– Recruiting
– Training
– Retaining
 Staffing Categories
– Managerial and Executive Employees
– Non-managerial Employees
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Scope of Internationalization
 Size of staffing tasks depends on scope
of firm’s international involvement
– Export department
– International division
– Global organization
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Centralization versus Decentralization
of Control
 Centralized firms
– Favor home country managers
– Most common amongst international
division form
 Decentralized firms
– Favor host country managers
– Most common amongst multidomestic
firms
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Staffing Philosophy
 Parent Country Nationals (PCNs)
 Host Country Nationals (HCNs)
 Third Country Nationals (TCNs)
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Strategies for Staffing
 Ethnocentric staffing model
 Polycentric staffing model
 Geocentric staffing model
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Figure 20.2 Necessary Skills and
Abilities for International Managers
Skills and Abilities
Necessary to Do
The Job
Skills and Abilities
Necessary to Work
In a Foreign Location
•Technical
•Functional
•Managerial
•Adaptability
•Location-specific skills
•Personal characteristics
Improved Chances of Succeeding in
An International Job Assignment
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Recruitment
 Experienced Managers
 Younger Managers
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Selecting expatriates in an important element in
international human resource management
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Managerial Selection
 Managerial competence
 Appropriate training
 Adaptability to new situations
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Table 20.1 Questions from AT&T’s Questionnaire
for Screening Overseas Transferees_1
 Would your spouse be interrupting a career to
accompany you on an international assignment? If
so, how do you think this will affect your spouse
and your relationship with each other?
 Do you enjoy the challenge of making your own
way in new situations?
 Securing a job upon reentry will be primarily your
responsibility. How do you feel about networking
and being your own advocate?
 How able are you in initiating new social contacts
 Can you imagine living without a television?
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Table 20.1 Questions from AT&T’s Questionnaire
for Screening Overseas Transferees_2
 How important is it for you to spend significant
amounts of time with people of your own ethnic,
racial, religious, and national background?
 As you look at your personal history, can you
isolate any episodes that indicate a real interest in
learning about other peoples and cultures?
 Has it been your habit to vacation in foreign
countries?
 Do you enjoy sampling foreign cuisine?
 What is your tolerance for waiting for repairs?
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Culture Shock
Psychological phenomenon
that may lead to feelings
of fear, helplessness,
irritability, and disorientation
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Figure 20.3 Phases in Acculturation
Honeymoon
Disillusionment
Adaptation
Biculturalism
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Honeymoon Phase
 New culture seems exotic and
stimulating
 Excitement of working in new
environment makes employee
overestimate ease of adjusting
 Lasts for first few days or months
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Disillusionment Phase
 Differences between new and old
environments are blown out of
proportion
 Challenges of everyday living
 Many stay stuck in this phase
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Adaptation Phase
 Employee begins to understand
patterns of new culture
 Gains language competence
 Adjusts to everyday living
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Biculturalism
 Anxiety has ended
 Employee gains confidence in ability
to function productively in new culture
 Repatriation may be difficult
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Overseas Success
 Likelihood of managers being successful at
overseas assignment increases if the managers
– Can freely choose whether to accept or reject the
assignment
– Have been given a realistic preview of the job and
assignment
– Have been given a realistic expectation of what their
repatriation assignment will be
– Have a mentor back home who will guard their interests
and provide support
– See a clear link between the expatriate assignment and
their long-term career path
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Training and Development
 Assessing training needs
 Basic training methods
– Standardized
– Customized
 Developing younger managers
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Performance Appraisal
 Process of assessing how effectively people
are performing their jobs
 Purpose
– To provide feedback to individuals about how
well they are doing
– To provide a basis for rewarding top performers
– To identify areas in which additional training
and development may be needed
– To identify problem areas that may call for a
change in assignment
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Compensation Packages
 Include salary and nonsalary items
 Determined by
–
–
–
–
–
–
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Labor market forces
Occupational status
Professional licensing requirements
Standards of living
Government regulations
Tax codes
©2004 Prentice Hall
Table 20.2 Annual Cost of Living in Selected
Locations Worldwide, 2003
Rank
City
Index
Rank
City
Index
1
Tokyo, Japan
126.1
11
Shanghai, China
98.4
2
Moscow, Russia
114.5
12
St. Petersburg, Russia
97.3
3
Osaka, Japan
112.2
13
Oslo, Norway
92.7
4
Hong Kong
111.6
14
Hanoi, Vietnam
89.5
5
Beijing, China
105.1
15
Copenhagen, Denmark
89.4
6
Geneva, Switzerland
101.8
16
Ho Chi Minh City,
Vietnam
88.5
7
London, UK
101.3
17
Milan, Italy
87.2
8
Seoul, South Korea
101.0
18
Shenzhen, China
86.7
9
Zurich, Switzerland
100.3
19
Guangzhou, China
86.7
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10
New York City, USA
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100.0
20
White Plains, NY, USA
86.2
Differential Compensation
 Cost-of-living allowance
 Hardship premium or foreign-service
premium
 Tax equalization system
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Figure 20.5 An Expatriate Balance Sheet
Foreign and
Excess U.S. Taxes
Paid by company
Foreign Service
Premium/ Hardship
Added by company
Excess Foreign Costs
Paid by company
U.S. Domestic Base Salary
Taxes
U.S. Hypothetical
Tax and
Social Security
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Consumption
U.S. Spendable
Income
U.S. Hypothetical
Housing and Utilities
U.S. Auto Purchase
Savings
U.S. Levels
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Labor Relations
 Labor relations in a host country often
reflects laws, culture, social structure,
and economic conditions
 Union membership may be high
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These striking South Korean workers are
picketing government offices in Seoul
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