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McGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 1McGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 24McGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 3Integration of the worlds economies and the globalization of business continue unabated at the beginning of the 21st century.McGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 4lInternational trade is growing at a more rapid rate than world outputlForeign direct investment (FDI) flows have set record levels in recent yearslCross-border inter-firm agreements have risen dramatically during the last 20 yearslSocial, economic, and political developments throughout the world have changed the way global business is conductedMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 5lFirms need to strengthen their presence, involvement, and relative positions in the domestic and global marketplacelThis can be done by utilizing their global human resources in a manner that helps them establish and sustain competitive advantageMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 6lRefers to the policies and practices related to managing people in an internationally oriented organizationlIncludes the same functions as domestic HRMlThere are many unique aspects to human resource management in the international organizationMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 71.Selecting and training local managers2.Companywide loyalty and motivation3.Speaking local language and understanding local culture4.Appraising managers overseas performance5.Planning systematic management succession6.Hiring local sales personnelMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 87.Compensating local foreign managers8.Hiring and training foreign technical employees9.Selecting and training American managers for overseas10.Dealing with foreign unions and labor laws11.Promoting or transferring foreign managers12.Compensating American managers for an overseas assignmentMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 9McGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 10lThe cultural differences between nations influence the effectiveness of HRM policies and practiceslOf critical importance:lunderstanding these differenceslensuring that HRM and the cultural orientation of workers are congruent with one anotherMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 11Avoidance ofUncertaintyMasculinityLong-termversusShort-termOrientationIndividualismversusCollectivismPowerDistanceMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 12Internal FitlConcerned with making sure that HRM policies facilitate the work values and motivations of employeeslPolicies must be structured in ways that allow headquarters and foreign subsidiaries to interact efficientlyExternal FitlThe degree to which HRM matches the context in which the organization is operatinglThe organization must understand the cultural and socioeconomic environment of the foreign subsidiaryMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 13HRM PhilosophyCorporate StructureCritical HRM FocusEthnocentricMultinationalExpatriate AdjustmentGeocentricGlobalUtilizing Global Managerial TalentSelection & Training Appraisal & Compensation RepatriationThe International DecisionLocal Recruiting Methods Managing Cultural DiversityMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 14lHost Country Nationals (HCNs)lemployees from the local populationlreferred to as local nationalslParent Country Nationals (PCNs)lemployees sent from the country in which the organization is headquarteredlreferred to as expatriatesMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 15lThird Country Nationals (TCNs)lemployees from a country other than where the parent organizations headquarters or operations are locatedMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 16lSelection processes that focus too much on technical skills and too little on cultural factorslLack of systematic training for the overseas assignmentlToo little involvement of family members in the selection processlLack of clear expectations about the role of the overseas assignment in the managers career plansMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 17lTechnical competency is necessary but not sufficient for the managers successlExpatriate manager selection should focus on three other major categories of skills:1. Managers self-image2. Managers normal way of interacting with others3. Managers perceptual orientationMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 18High Probability for SuccesslStrong analytical skillslGood language skillslStrong desire to work overseaslSpecific knowledge of overseas culturelWell-adjusted family situationlComplete support of spouselBehavioral flexibilitylAdaptability and open-mindednesslGood relational abilitylGood stress management skillsLow Probability for SuccesslUncertain technical competencylWeak language skillslUnsure about going overseaslFamily problemslLow spouse supportlBehavioral rigiditylUnadaptability closed to new ideaslPoor relational abilitylWeak stress management skillsMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 19lCulture Shock the frustration and confusion that result from being constantly subjected to strange and unfamiliar cues about what to do and how to get it donelDoes not typically occur during the earliest days of an overseas assignmentMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 20McGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 21lMaintaining an expatriate manager on an overseas assignment is very expensivelBase salarylForeign service premiumslCost-of-living premiumlHome maintenance allowancelTransportation differential allowanceslEducational allowanceslHardship premiums for hazardous assignmentsMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 22Monthly ExpensesAccompanied(2-bedroom, 2 adults)Unaccompanied(1-bedroom, 1 adult)HousingUS $3,718US $2,091Food1,524791Car Rental and Fuel1,9861,986Miscellaneous343216Total monthly living expenses$7,571$5,084Total annual living expenses$90,852$61,008McGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 23lManagers who are host country nationals have distinct advantages over expatriateslcultural sensitivitylunderstanding of local employees motivations and needslCareful recruitment, selection, and training of HCNs can reduce or eliminate the potential problems with using HCNsMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 24lBusiness practices that are considered unethical or illegal in the U.S. might be considered part of the national conduct of business in other countrieslForeign Corrupt Practices Act of 1977 (FCPA)lEmployment discriminationMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 25lNonsegregation of the races in all work facilitieslEqual and fair employment practices for all employeeslEqual pay for all employees performing equal workMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 26lTraining programs to prepare (in substantial numbers) Blacks and other nonwhites for supervisory and technical jobslIncreasing the number of Blacks and other nonwhite minorities in managementlImproving the quality of employees lives outside the work environmentMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 27lLabor laws and relations are unique and vary across every nation in which an organization wishes to do businesslDifferences in how much participation employees are entitled tolGovernment regulation of businesslEstablishment of global organizations to represent laborMcGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc. All rights reserved.4 - 28lGlobal human resource management is an important component of an organizations success in a global marketplacelOrganizations must be sure that their HRM policies can accommodate a culturally diverse workforce
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