International Human Resource Management

MGMT414 Assoc. Prof. Dr. Cem Tanova

1. Bic pens are

2. Godiva chocolate is 3. Algidas owner is 4. Haagen-Dazs ice cream is made by a(n) company 5. Firestone (Bridgestone) tires are 6. RCA televisions are made by a(n) company 7. Atari Video games are 8. Jaguar cars made by a(n) company 9. Holiday Inns are owned by 10. The parent company of Braun household products is

1. French, Bic;
2. American, Campbell Soup; 3. Anglo-Dutch, Unilever 4. British, Grand Metropolitan; 5. Japanese, Bridgestone Corp;

6. French, Thompson;
7. American, Atari Corp; 8. American, Ford Motor Co.; 9. British, Bass; 10. American, Gillette Co.;

Introduction to International Human Resource Management

How the world is changing, Importance of globalization, IHRM as a key factor in the success of international business. An overview of domestic HRM and discussion on what is different in IHRM.

Questions to consider
What are the key elements of best practice in HRM? Can the best practices be applied on a global level? To what extent are the principles of managing people universal and to what extent culture specific?

 Inter-cultural or International? What is the difference? (Our focus will be international)

Motivations and Perspectives Shaped by Administrative Heritage Inter War Period

- National market differences - Transport/communication barriers - Rising protectionism * Internationalize through rationally differentiated and responsive strategies - European MNC expansion

Immediate Post-War period

- Post-war reconstruction - Transfer of new technologies - Leverage management skills * Internationalize through transfer of technological and managerial innovations - American MNC expansion

Mid 1960s to late 1970s

- Falling trade barrier

- Homeogeniziing markets - Improved transport, communications * Internationalize by capturing global scale advantages and global competitive games
Irwin/McGraw-Hill

- Japanese MNC expansion

STRATEGIC PERSPECTIVES IN MNCs AN EVOLVING MANAGEMENT MENTALITY

INTERNATIONAL PERSPECTIVE
DOMESTIC COMPANIES WITH FOREIGN APPENDAGES OPPORTUNISTIC APPROACH TO FDI PORTFOLIO APPROACH TO MANAGEMENT OF FOREIGN OPERATIONS

MULTI-NATIONAL PERSPECTIVE

INCREASED REALIZATION OF IMPORTANCE OF INTERNATIONAL MARKETS

MANAGE OVERSEAS OPERATIONS AS A FEDERATION OF INDEPENDENT COMPANIES

GLOBAL PERSPECTIVE - GROWING CONCERN ABOUT INTERNATIONAL COMPETITION AND INEFFICIENCIES OF MULTI-NATIONAL RESPONSE - DRIVE FOR COST COMPETITIVENESS THROUGH PRODUCT STANDARDIZATION AND ORGANIZATIONAL CENTRALIZATION MANAGE WORLWIDE OPERATIONS AS SINGLE ENTITY

TRANS-NATIONAL PERSPECTIVE

- NEED TO RESPOND TO HOST COUNTRY PRESSURES AND GLOBAL COMPETITIVE DEMAND SIMULTANEOUSLY
- MANAGEMENT CHALLENGE TO COORDINATE RESPONSIVE NATIONAL UNIT IN A Irwin/McGraw-Hill GLOBALLY EFFICIENT SYSTEM

Strategies of international, multinational, global & transnational organizations

International company transports its business outside home country; each of its operations is a replication of the company's domestic experience; structured geographically; and involves subsidiary general managers Companies offering multiple products often find it challenging to remain organized e.g. need to have a common information systems for accounting, financial and management controls, and marketing. Most evolve to become multinational companies

Copyright 2003-2006, Chris Chan

Strategies of international, multinational, global & transnational organizations

Multinational company grows and defines its business on a worldwide basis, but continues to allocate its resources among national or regional areas to maximize the total.

Copyright 2003-2006, Chris Chan

Strategies of international, multinational, global & transnational organizations

Global organizations treat the entire world as though it were one large country; may be the entire company or one or more of its product lines; may operate with a mixture of two or more organizational structure simultaneously.

Copyright 2003-2006, Chris Chan

10

Strategies of international, multinational, global & transnational organizations

Transnational organization - Use specialized facilities to permit local responsiveness; more complex coordination mechanism to provide global integration

Copyright 2003-2006, Chris Chan

11

Global efficiency and local responsiveness of different types of firms

High Global efficiency Low

Global International

Transnational Multinational
High

Local responsiveness

Copyright 2003-2006, Chris Chan

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Evolving Motivations: Changing Perspectives

High
Global TransNational

Global Coordination Integration

Low

International Low

MultiNational National differentiation, Responsiveness High

Irwin/McGraw-Hill

MNCs STRATEGIC AND ORGANIZATIONAL TASK: DEVELOPING MULTIPLE CAPABILITIES

NEED FOR GLOBAL COORDINATION, INTEGRATION

TOYOTA

- DRIVEN BY SCALE
AND TECHNOLOGY - REINFORCED BY GLOBAL COMPETITION

G.M FIAT

- DRIVEN BY SCOPE AND MARKETS

Irwin/McGraw-Hill

- REINFORCED BY GOVERNMENTS

NEED FOR NATIONAL DIFFERENTIATION, RESPONSIVENESS

Key Trends
63,000 transnational companies account for more than half (2/3) of world trade. The top 100 companies account for 14% of worldwide sales, 12% of assets, and 13% of employment. Physical location of value creation is very difficult to determine. Much of the force of globalisation comes through mergers and acquisitions.

Impact of globalisation on the nature of work

Outsourcing to low labor countries
First manufacturing, then processing services, now white collar work.

Questions for HR professionals

Do we have a strategy for becoming an international firm? What type of managers will we need to be successful? How can I find out about the way that HRM is conducted in other countries (laws, trade unions, labor market). What will be the impact of cultural norms on our HR policies. How will we choose whether to send expatriates or use local employees. How do we move people to different locations How do we manage transfer of knowledge across borders

Parent-country Nationals
Advantages Control and co-ordination by HQ is maintained. Promising managers get international experience. PCNs may be the best people for the job. Assurance that the subsidiary will comply with company objectives policies etc.
Disadvantages HCNs promotion opportunities are limited. Adaptation to host country may take a long time. PCNs may impose an inappropriate HQ style. Compensation differences between PCNs and HCNs may cause problems.

Host-country Nationals
Advantages No problems with language and culture. Reduced hiring costs. No work permits required. Continuity of management improves since HCNs stay longer in positions. Govt. policy may force hiring of HCNs. Promotional opportunities not limited - so higher morale among HCNs. Disadvantages HQ may have less control over operations. HCNs may still have limited career opportunities outside the subsidiary. Hiring HCNs limits opportunities for PCNs to gain overseas experience. Hiring HCNs may encourage a federation of disintegrated national units rather than one integrated global unit.

Third-country Nationals
Disadvantages Transfers must Advantages consider national Salary and animosities. compensation may be Host government lower than for PCNs. may resent TCNs as much as PCNs. May be more familiar with host country than TCNs may not comply with HQ style of the PCNs. management. TCNs may not want to return after assignment.

International Recruitment and Selection

A selection program for international assignments involves assessing prospective candidates on certain criteria thought to be associated with assignment effectiveness. In order to have a successful selection program there needs to be a broad range of prospective candidates from which to choose criteria of effectiveness and valid procedures for assessing candidates on them.

empathy flexibility patience openness reliability confidence emotional stability communication skills tolerance for differences humor resourcefulness sensitivity teaching skills

ability to handle alcohol curiosity positive regard for others acceptability of assignment desire to be abroad non ethnocentrism high motivation courtesy adaptability tolerance for ambiguity language skills interest in host culture

International Training and Development

Empirical literature give guarded support to the proposition that cross cultural training has a positive impact on cross cultural effectiveness. Cultural awareness training is not just for the employee going overseas. It has numerous applications domestically that will increase organizational effectiveness. Findings indicate that it should be a regular part of personnel training especially management development. The realities of a more pluralistic society and international business make this a necessity.

International Training and Development

Area studies programs Culture assimilator programs Language training programs Sensitivity training programs Field experience programs

International Compensation
If compensation is high then problems may be encountered on return to head office. If compensation is not adequate then there may be no incentive to go for the international assignment given the hardships that are usually involved in doing so.

International Compensation
Expatriation Premium Cost of Living Allowance Swamp Pay Allowance Shelter Allowance Educational Allowance Home Leave

Repatriation
Virtually all repatriated personnel experienced some personal difficulty in reintegrating on return home. The main complaints were loss of status loss of autonomy lack of recognition of the value of the experience and lack of career direction.

Repatriation: Reverse Cultureshock

JOB RELATED FACTORS Out of sight out of mind International experience devalued Loss of status and pay relatively peaking Changes in the HQ SOCIAL FACTORS Expat assignment - different type of social interaction (going from a very close expat community to where everyone is very busy with their own lives) Problems of spouse returning to the workforce Lack of peer support for teenagers