CGE25111

Globalization and Business

Lecture 11
Hiring and Managing Employees
 Chapter Preview
• Explain the three different types of staffing policies
used by international companies.
• Describe the recruitment and selection issues
facing international companies.
• Discuss the importance of training and
development programs, especially cultural
training.
• Explain how companies compensate managers and
workers in international markets.
• Describe the importance of labor-management
relations and how they differ around the world.
 Human Resource Management

The activities an organization carries out

to utilize its human resources effectively.
HRM activities include :
- determining HR strategy
- staffing
- performance evaluation
- management development
- compensation
- labor relations
 Human Resource Management
The mandate for HRM is to develop the
means and methods for a firm to build and
retain the cadre of managers that can lead
an organization to even greater
performance in the age of globalization.
 International HRM

HRM is more complicated

in an international business
because of :
the differences between
countries in labor markets,
culture, legal systems,
economic systems etc.
the challenges of convincing
highly-skilled executives to
go abroad.
 International HRM

Expatriate managers

Recruitment and selection

Training and development
Culture affects Compensation
Labor relations

Staffing policy
Expatriates: Citizens of one country who are living and working in another country
 International HRM
•Human resource management is the process of
staffing a company and ensuring that employees
are as productive as possible.
•Many unique issues arise when managing
expatriates, or people who live and work outside
their home country.
•Culture is central to the tasks of managing
people in an international business, including
recruitment and selection, training and
development, compensation, and labor relations.
 International HRM
•Staffing policy is the means by which a firm staffs
its offices.
•As we cover the three main approaches to
international staffing, keep in mind that the policy
a company selects is influenced by its level of
international involvement, and that companies
often blend these policies together.
 Ethnocentric Staffing
Individuals from home country manage operations
abroad, usually for top managerial posts.

+ Tight control over subsidiaries

+ Locally qualified people not always available
Advantages
+ Re-create local operations in home-office imag

– Relocations are expensive

Disadvantages
– Create “foreign” image for the business
 Polycentric Staffing
Individuals from host country manage operations
abroad.
However, it does not mean that host-country managers
can run operations any way they see fit.

+ Responsibility on those knowing local busines

Advantages + Avoid expensive relocations from home nation

– Potentially lose control of subsidiary, especial

Disadvantages for companies following global strategies
 Geocentric Staffing
Best-qualified individuals, regardless of
nationality,
manage operations abroad.
+ Develop global managers who can
adjust
Advantages easily to any business environment,
particularly to cultural differences

– These individuals command high salaries,

Disadvantages because of the high demand for their skills
and short supply of qualified staff
Comparison of Staffing Approaches
 Expatriate Failure Rates

Each expatriate failure can cost between $250,000 and $1 million

About 40% of European expatriates in developed countries fail and
almost 70% of Americans assigned to developing countries fail
Main reasons for U.S. expatriate failure

the inability of an expatriate's

spouse to adapt.
the manager’s inability to
adjust.
other family-related reasons.
the manager’s personal or
emotional maturity.
the manager’s inability to cope
with larger overseas
responsibilities.
 Main reasons for European expatriate
failure
 the inability of the manager’s spouse to
adjust.
Main reasons for Japanese expatriate
failure
the inability to cope with
larger overseas responsibility.
difficulties with the new
environment.
personal or emotional
problems.
a lack of technical
competence.
the inability of spouse to
adjust.
 Human Resource Planning

Forecasting human resource needs and supply.

Phase 1 Phase 2 Phase 3

Develop plan to
Take inventory of Estimate firm’s recruit and select
current human future human people for vacant
resources resource needs and anticipated
new positions
 Recruiting Human Resources
Process of identifying and attracting a
qualified pool of applicants for vacant
positions.
• Current employees

• Recent college graduates

• Local managerial talent

• Non-managerial workers
 Selecting Human Resources
Process of screening and hiring the best-qualified
applicants
with the greatest performance potential.
 Ability to bridge cultural
differences is key

 Expatriates must adapt

to new ways of life

 Cultural sensitivity raises

odds for success
 Culture Shock
Psychological process affecting people living abroad that
is characterized by homesickness, irritability, confusion,
aggravation, and depression.

Stage I:
Thrilling experience
Stage II:
Downward slide
Stage III:
Recovery begins
Stage IV:
Embrace local culture
 Culture Shock Stages
Stage I :
- Fascinated by local sights,
pleasant hospitality and
interesting habits.
- Thrilled about their opportunity
and optimistic about prospects
for success.
Stage II :
- Unpredictable quirks of the
culture become annoying.
- Begin mocking the locals and
regarding of their native culture
as superior.
 Culture Shock Stages
Stage III :
- Emotions hit bottom and recovery
begins.
- Begin to interact more with locals
and form friendship.

Stage IV :
- Better understand local customs
and behavior and appreciate them.
- Treat differences as “unique”
solutions to familiar problems in
different cultural contexts.
 Reverse Culture Shock

Psychological process
Methods of
of re-adapting to one’s
reducing its effects 
home culture 

•• Once-natural
Once-naturalthoughts
thoughtsand
and
•• Home-culture
Home-culture reorientation
reorientation
feelings now strange
feelings now strange programs
programs
•• Can
Canbebemore
more unsettling
unsettling than
than
•• Career-counseling
Career-counseling session
session
culture shock
culture shock •• Career-development
Career-development progr
progr
•• Many
Manycompanies
companies reabsorb
reabsorb before
beforeposting
postingabroad
abroad
expatriates poorly
expatriates poorly
 Compiling a Cultural Profile

Background
CultureGrams
(People, customs Notes
courtesies and society)
Country (Human rights and
related issues)

Studies Area
Handbooks
(Politics, economics,
society and
national security)
 Labor-Management Relations

Positive or negative condition of relations between

a company’s management and its workers/

• Rooted in local culture/

• Often affected by
political movements.

• Directly influences
workers’ lives.
 Importance of Labor Unions

Can
Can affect
affect Can
Can affect
affect company
company
selection
selection performance
performance
of
of aa location
location in
in aa market
market

Popularity
Popularity of
of Union
Union power
power
emerging
emerging markets
markets declining
declining across
across
in
inAsia
Asia much
much of
of Europe
Europe
 Germany : Co-determination

Despite declines in union

membership, German workers
enjoy a direct say in the
strategies and policies of their
employers.
This plan allows labor
representatives to participate
in high-level company
meetings by actually voting on
proposed actions.
 International Labor Movements
International activities of unions are making progress in
improving treatment of workers and reducing child labor.

But generating support

can be difficult because :

• Events in distant lands

difficult to comprehend

• Workers in different
nations often compete
 Reasons for the declining union
membership
the increase in white-collar works as a
percentage of total workers.
the increase in service employment in
relation to manufacturing employment.
the rising portion of women in the
workforce.
the rising portion of part-time and
temporary workers.
the trend toward smaller average plant
size.
the decline in the belief in collectivism
among younger workers.
Trade Union Decline in Industrialized
Countries
End of Lecture 11