GHRM

Session 5 & 6
 2

Chapter 9 Prentice Hall

2003

Staffing Philosophies for Global Operations

• Ethnocentric staffing approach
▫ Firms using an ethnocentric staffing
approach fill key managerial positions with
people from headquarters – that is, parent-
country nationals (PCNs).
▫ Example-Panasonic, Sony, Hitachi
Table 5.1a

Advantages & disadvantages of using PCNs

 4

Chapter 9 Prentice Hall

2003

Staffing Philosophies for Global Operations

• Polycentric staffing approach
▫ In a polycentric staffing approach, local
managers – host-country managers (HCNs)
– are hired to fill key positions in their own
country.
▫ Example SKF
 6

Chapter 9 Prentice Hall

2003

Staffing Philosophies for Global Operations

(contd.)

• Regiocentric staffing approach

▫ In a regiocentric staffing approach,
recruiting is done on a regional basis – say within
Latin America for a position in Chile.
Advantages & disadvantages of using TCNs
 8

Chapter 9 Prentice Hall

2003

Staffing Philosophies for Global Operations

(contd.)

• Global staffing approach

▫ In the global staffing approach, the best
managers are recruited from within or outside of
the company, regardless of nationality.
▫ Example HUL
Staffing attitudes of
internationalizing firms
• Ethnocentric – PCNs are favored
• Polycentric – HCNs manage subsidiaries
• Geocentric – Ability is more important
than nationality
• Regiocentric – Similar to geocentric, but
limited to a given region
• Analyse staffing practice for Walmart
• Krish Iyer is President and CEO Walmart India.

• He joined Walmart International as a Senior Vice President in 2012.

Prior to this, he served as Managing Director, A.S. Watson Group, a
leading international health, beauty and lifestyle retailer. During his
six years tenure at A.S. Watson Group, Krish handled the business
in Thailand, Taiwan and the Philippines as Managing Director, and
as Regional Business Development Director and Regional Director
of Store Design and Development for Asia and eastern Europe.
Walmart India Private Limited
• It is a wholly owned subsidiary of Wal-Mart Stores Inc. Walmart
India owns and operates 21 Best Price Modern Wholesale stores in 8
states across India.
• The first store opened in Amritsar in 2009. Best Price stores, a
membership-based wholesale store, offers best prices with
unmatched convenience, choice, quality and hygiene. The mission of
Best Price is to “Enable small businesses to prosper.” 

• Walmart India President & CEO: Krish Iyer

• Number of Associates: 4,000* 
Walmart Japan
• Seiyu is one of the largest supermarket chains in
Japan, established in 1963. In 2002, Walmart
acquired a 6.1% stake in Seiyu.
• In 2005, we acquired a majority interest, making
Seiyu a Walmart subsidiary. Walmart proceeded
with additional steps to acquire all of the remaining
shares, which resulted in the delisting of Seiyu
shares from the Tokyo Stock Exchange in 2008.
• Later that year, Seiyu became a wholly-owned
subsidiary of Walmart.
• Walmart Japan President & CEO: Takeshi
Kamigouchi
• Total Number of Associates: 34,429* 
Figure 5.1
Determinants of staffing choices
Reasons for
international assignments
• Position filling
lack of available skills  PCN works abroad
• Management development
- training, development, common corp. values

• Organization development
- transfer of knowledge, competence, practices
- exploit global market opportunities
Types of international assignments
• Short term up to 3 months
• Extended up to 1year
• Long term 1 to 5 years
(traditional expatriate assignment)
Some non-standard assignments:
• Commuter go home every one to two weeks
• Rotational commute for set period followed by break
in
home country
• Contractual specific skills employees hired for
6-12 months on specific projects
• Virtual employee manages international
responsibilities from base in
home country
Figure 5.2
Determinants of staffing choices
 19

Chapter 9 Prentice Hall

2003

Maintaining a Globalization Momentum Through a Global

Staffing Policy
(Exhibit 9-1) Top management
commitment
B
a Search for global
r operators
r Global Momentum
Globalization i
Momentum Staff transfers staffing Maintained
e
r policy
s Int’l team

Staff availability
Time and cost constraints
Host government
requirements
HRM policies
 20

Chapter 9 Prentice Hall

2003

Categories of Success for Expatriate

Managers
• Job factors
• Relational dimensions such as cultural empathy
and flexibility
• Motivational state
• Family situation
• Language skills
 21

Chapter 9 Prentice Hall

2003

Major Causes of Expatriate Failure

• Selection based on headquarters criteria rather
than assignment needs
• Inadequate preparation, training, and
orientation prior to assignment
• Alienation or lack of support from headquarters
• Inability to adapt to local culture and working
environment
• Problems with spouse and children – poor
adaptation, family unhappiness
 22

Chapter 9 Prentice Hall

2003

Major Causes of Expatriate Failure

(contd.)

• Insufficient compensation and financial support

• Poor programs for career support and
repatriation
 23

Chapter 9 Prentice Hall

2003

Expatriates’ Pet Peeves Based on Their

Experiences
• China: a continuing problem for expatriates; one
complained that at his welcome banquet he was served
duck tongue and pigeon head
• Brazil: expatriates stress that cell phones are essential
because home phones don’t work
• India: returning executives complain that the
pervasiveness of poverty and street children is
overwhelming
 24

Chapter 9 Prentice Hall

2003

Expatriates’ Pet Peeves Based on Their Experiences

(contd.)

• Indonesia: here you need to plan ahead financially

because landlords typically demand rent two to three
years in advance
• Japan: expatriates and their families remain concerned
that although there is excellent medical care, the
Japanese doctors reveal little to their patients.
 25

Chapter 9 Prentice Hall

2003

Culture Shock
• Culture shock is a state of disorientation and
anxiety about not knowing how to behave in an
unfamiliar culture. The cause of culture shock is
the trauma people experience in new and
different cultures, where they lose the familiar
signs and cues that they had used to interact in
daily life and where they must learn to cope with
a vast array of new cultural cues and
expectations.
 26

Chapter 9 Prentice Hall

2003

Stages of Culture Shock

• Honeymoon – when positive attitudes and expectations,
excitement, and a tourist feeling prevail
• Irritation and hostility – the crisis stage when cultural
differences result in problems at work, at home, and in daily living
• Gradual adjustment – a period of recovery in which the “patient”
gradually becomes able to understand and predict patterns of
behavior, use the language, and deal with daily activities, and the
family starts to accept their new life
• Biculturalism – the stage at which the manager and family
members grow to accept and appreciate local people and practices
and are able to function effectively in two cultures
 27

Chapter 9 Prentice Hall

2003

Subculture Shock
• Subculture shock occurs when a manager is
transferred to another part of the country where
there are cultural differences – essentially from
what she or he perceives to be a “majority”
culture to a “minority” one.
 28

Chapter 9 Prentice Hall

2003

Training Techniques
(as classified by Tung)

• Area studies, that is, documentary programs about the

country’s geography, economics, sociopolitical history,
and so forth
• Culture assimilators, which expose trainees to the
kinds of situations they are likely to encounter that are
critical to successful interactions
• Language training
• Sensitivity training
• Field experiences – exposure to people from other
cultures within the trainee’s own country.
 29

Chapter 9 Prentice Hall

2003

Stage of Globalization and Training Design Issues

(Exhibit 9-6)

Export Stage
• Degree of rigor: Low to moderate
• Content: Emphasis should be on interpersonal skills, local culture,
customer values, and business behavior
• Host-Country Nationals: Low to moderate training of host
nationals to understand parent country products and policies.
 30

Chapter 9 Prentice Hall

2003

Stage of Globalization and Training Design Issues

(contd.)

MNC Stage
• Degree of Rigor: High moderate to high
• Content: Emphasis should be on interpersonal skills, two-way
technology transfer, corporate value transfer, international strategy,
stress management, local culture, and business practices.
• Host-Country Nationals: Moderate to high training of host
nationals in technical areas, product and service systems, and
corporate culture.
 31

Chapter 9 Prentice Hall

2003

Stage of Globalization and Training Design Issues

(contd.)

MDC Stage
• Degree of Rigor: Moderate to high
• Content: emphasis should be on interpersonal skills, local culture,
technology transfer, stress management, and business practices and
laws
• Host-Country Nationals: Low to moderate training of host
nationals; primarily focusing on production and service procedures.
 32

Chapter 9 Prentice Hall

2003

Stage of Globalization and Training Design Issues

(contd.)

Global Stage
• Degree of Rigor: High
• Content: Emphasis should be on global corporate operations and
systems, corporate culture transfer, customers, global competitors,
and international strategy
• Host-Country Nationals: High training of host nationals in
global organization production and efficiency systems, corporate
culture, business systems, and global conduct policies.
 33

Chapter 9 Prentice Hall

2003

Components of an Expatriate Compensation Package

(Exhibit 9-8)

Salary
• Home rate/home currency
• Local rate/local currency
• Salary adjustments or promotions – home or local standard
• Bonus – home or local currency, home or local standard
• Stock options
• Inducement payment/hardship premium – percentage of salary or
lump sum payment, home/local currency
• Currency protection – discretion or split basis
• Global salary and performance structures
 34

Chapter 9 Prentice Hall

2003

Components of an Expatriate Compensation Package

(contd.)

Taxation
• Tax protection
• Tax equalization
• Other services
Benefits
• Home-country program
• Local program
• Social Security program
 35

Chapter 9 Prentice Hall

2003

Components of an Expatriate Compensation Package

(contd.)

Allowances
• Cost-of-living allowances
• Housing standard
• Education
• Relocation
• Perquisites
• Home leave
• Shipping and storage