MANAGING

HUMAN
RESOURCE
S
GLOBALLY
Learning Objectives
01 Identify recent changes companies expand into international
markets.

02 Factor that influence HRM in international market.

03 List different categories of international employees.

04 Identify 4 level of global participation & HRM issues faced.

05 Companies attempt to select, train & reintegrate expatriate

managers
 HRM in a Global Environment

The environment in Foreign countries Companies set up Technology makes

which organizations can provide a operations it easier for
operate is rapidly business with new overseas because companies to
becoming a global markets of lower labor spread work around
one. costs the globe
Global activities As these trends and arrangements
are simplified encourage international trade, they
and increase and change demands on
encouraged by
trade human– resource management.
agreements
among nations
Organizations need
employees who understand
the customers and suppliers
in foreign countries.
Organizations need to
understand the laws and
customs that apply to
employees in other
countries.
 Employee in an International Workforce
Host-country national Expatriates
Employee who is a citizen Employees
of the country (other assigned to work
than parent country) in in another
which an organization country.
operates a facility.

Parent-country national Third-country national When organizations operate

Employee who was born overseas, they hire a
and works in the country Employee who is a citizen combination of parent-country
in which an of a country that is neither nationals, host-country
organization’s the parent country nor the nationals, or third-country
headquarters is located. host country of the nationals
employer
 Employers in The Global Marketplace

International
organization 1
Multinational
company
2 Global
3
organization

An organization that An organization that builds An organization that chooses to

sets up one or a few facilities in a number of
facilities in one or a different countries in an
few foreign effort to minimize
countries. production and distribution
costs.
locate a facility based on the
ability to effectively, efficiently,
and flexibly produce a product or
service using cultural differences
as an advantage.
Transnational HRM system:
– makes decisions from a global
perspective
– includes managers from many
countries
– based on ideas contributed by
people
representing a variety of cultures
• Decisions that are the outcome of a
transnational HRM system balance
uniformity with flexibility.
 Factors
Affecting
HRM in
Internation
al
Markets
 CULTURE
• Community’s set of shared assumptions about how the world works and what
ideals are worth striving for.
• Culture can greatly affect a country’s laws.
• Culture influences what people value, so it affects people’s economic systems
and efforts to invest in education.
• Culture often determines the effectiveness of various HRM practices.
• Cultural characteristics influence the ways members of an organization behave
toward one another as well as their attitudes toward various HRM practices.
• Cultures strongly influence the appropriateness of HRM practices.
• Cultural differences can affect how people communicate and how they
coordinate their activities.
 Hofstede’s Five Dimensions of Culture
1. Individualism/Collectivism
2. Power Distance
3. Uncertainty Avoidance
4. Masculinity/Femininity
5. Long-term/Short-term
Orientation
Describes the strength of the relation
between an individual and other individuals
in the society.
Concerns the way the culture deals with
unequal distribution of power and defines the
amount of inequality that is normal.
Describes how cultures handle the fact that
the future is unpredictable.
The emphasis a culture places on practices or
qualities that have traditionally been
considered masculine or feminine.
Suggests whether the focus of cultural values
is on the future (long term) or the past and
present (short term).
CULTURE

• Organizations must prepare managers to

recognize and handle cultural differences.
– Recruit managers with knowledge of other
cultures
– Provide training
• For expatriate assignments, organizations may
need to conduct an extensive selection process to
identify individuals who can adapt to new
environments.
 Education and Skill Levels
• Companies with foreign operations locate in countries
where they can find suitable employees.
• The educations and skill levels of a country’s labor force
affect how and the extent to which companies want to
operate there.
• In countries with a poorly educated population,
companies will limit their activities to low-skill, low-
wage jobs.
 Economic System
• The economic system provides many of the incentives or
disincentives for developing the value of the labor force.
• In developed countries with great wealth, labor costs are
relatively high. This impacts compensation and staffing
practices.
• Income tax differences between countries make pay
structures more complicated when they cross national
boundaries.
 Political-Legal System
• The country’s laws often dictate the requirements for
HRM practices: training, compensation, hiring, firing, and
layoffs.
• An organization that expands internationally must gain
expertise in the host country’s legal requirements and
ways of dealing with its legal system.
• Organizations will hire one or more host- country
nationals to help in the process.
 Human Resource Planning in a
Global Economy
• Human resource planning involves
decisions about where
and how many employees are needed for
• each
international facility.
• Decisions about where to locate include considerations
such as the cost and availability of qualified workers.
• These considerations must be weighed against financial
and operational requirements.
 Cross-Cultural Preparation
This is training to prepare
employees and their
family members for an
assignment in a foreign
country.

3. Preparation for the return home

2. The assignment itself

1. Preparation for departure

International Labor Relations
Labor relations on an international scale involves
01 differences in laws, attitudes, economic systems,
and differences in negotiation styles.
Organizations establish overall policies and goals
02 for labor relations, overseeing labor agreements,
and monitoring labor performance.
The day-to-day decisions about labor relations
03 are
usually handled by each foreign subsidiary.
 Managing Expatriates:
Selecting Expatriate Managers
• Expatriate managers need technical competence in the area of
operations.
• In addition, many other skills are necessary to be successful in
an overseas assignment:
– Ability to maintain a positive self-image and feeling of well-being
– Ability to foster relationships with host-country nationals
– Ability to perceive and evaluate the host country’s environment
accurately
 Preparing Expatriates
Pre-assignment Country
site visit orientation
Job orientation Culture
orientation
Housing counseling Lang
Health care / schools uage
/ shopping / traini /
recreation ng
counseling Comp
ensat
Counseling by ion
returning benef
expatriates its /
taxes
Compensating Expatriates
Balance sheet approach – this approach adjusts the
manager’s compensation so that it gives the manager
the same standard of living as in the home country
plus extra pay for the inconvenience of locating
overseas.
This approach involves an effort by the global
organization to ensure that its expatriates are “made
whole.”
After setting the total pay, the organization divides
this amount into the four components of the total pay
package: Base salary, Tax equalization allowance,
Benefits, Allowances
 Helping Expatriates Return Home
Communication: the
expatriate receives
information and recognizes
changes at home while
abroad Repatriation – the
process of preparing
expatriates to return
home from foreign
assignment. Validation: giving the
expatriate recognition
for the overseas
service when this
person returns home.
THANK YOU