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
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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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