International

Business,
8th Edition
Griffin & Pustay

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-1

Learning Objectives
 Describe the nature of human resource management in
international business
 Detail how firms recruit and select managers for
international assignments
 Explain how international businesses train and develop
expatriate managers
 Discuss how international firms conduct performance
appraisals and determine compensation for their
expatriate managers
 Analyze retention and turnover issues in international
business
 Explain basic human resource issues involving
nonmanagerial employees
 Describe labor relations in international business
COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-2
The Nature of International Human
Resource Management

 Human Resource Management

 Recruiting and Selecting Non-managers
and Managers
 Providing Training and Development
 Appraising Performance
 Providing Compensation and Benefits

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-3

The Nature of International Human
Resource Management (Cont.)

 Challenges of International Human

Resource Management
Differences in Cultures
Levels of Economic Development
Legal Systems
Optimal Mix of Employees
Complex Training and Development
Challenges
Compensation Systems

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Strategic Significance of HRM

HRM strategy

Overall Corporate &

Business Strategies
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Strategic
Significance
of HRM

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-6

International Managerial Staffing
Needs

Staffing Issues:
Recruiting, Training and
Retaining

Managerial
Nonmanagerial
and Executive
Employees
Employees
COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-7
Scope of Internationalization

International Involvement

Export Department

International Division

Global Organization

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-8

Scope of Internationalization (Cont.)

 Collective Expertise and Knowledge

Product Line
Functional Skills
Individual Country Markets
Global Strategy

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-9

Centralization versus Decentralization
of Control

Decision Making

Decentralized
Centralized
(Delegated)
at Corporate
to Operating
Headquarters
Subsidiaries

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-10

Staffing Philosophy

 Hiring International Managers

Parent country nationals (PCNs)
Host country nationals (HCNs)
Third-country nationals (TCNs)

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-11

Staffing Philosophy (Cont.)

 Staffing Models
Ethnocentric
Polycentric
Geocentric

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-12

Recruitment and Selection

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Recruitment of Managers

 Recruitment of Experienced Managers

Among Current Employees
Retired Executives
Prospective Managers
Headhunters
Globalized Market for Executive Talent
 Recruitment of Younger Managers

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-14

Selection of Managers

 Promising Candidates
Managerial Competence
Appropriate Training
Adaptability to New Situations
 Expatriate Failure
Cultural Adaptability
Motivation and Interest

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-15

Expatriation and Repatriation
Issues

ISSUES PHASES IN
ACCULTURATION

Expatriation Issues Honeymoon

Acculturation Disillusionment
Challenges
Culture Shock Adaptation
Biculturalism
Repatriation Issues

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-16

Expatriation and Repatriation Issues
(Cont.)

 Freedom of Choice
 Realistic Previews
 Realistic Expectations
 Home-Based Mentorship
 Clear Link to Career Prospects

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Training and Development

• Enhancing specific job-

Training related skills and
abilities

• Preparing managers
Development for new assignments or
higher-level positions

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-18

Assessing Training Needs

Start-Up Established
Businesses Businesses

Training and
Development
Needs

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Basic Training Methods and
Procedures

 Standardized Programs
 Customized Programs
 Instructional Vehicles
Lectures
Assigned Readings
Videotaped and Web-based Instruction
Multimedia Technologies

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-20

Developing Younger International
Managers

Internationalizing
managers earlier in their
careers

Globalization
Systematic integration of
international assignments
into career development
plans for younger
managers

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-21

Performance Appraisal and
Compensation: Assessing Performance
in International Business
 Purposes of Performance Appraisal
 Provide feedback to individuals on how
well they are doing
 Provide a basis for rewarding top
performers
 Identify areas in which additional training
and development may be needed
 Identify problem areas that may call for a
change in assignment

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-22

Assessing Performance in
International Business

 Assessing Managers
Goals
Measures
Frequency

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Determining Compensation in
International Business

 Labor Market Forces

 Occupational Status
 Licensing Requirements
 Standards of Living
 Government Regulations
 Tax Codes

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Compensating Expatriate Managers

 Differential Compensation
Cost-of-Living Allowance
Hardship/Foreign-Service Premium
Tax Equalization System

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Compensating Expatriate Managers
(Cont.)

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Benefits Packages for Expatriate
Managers

 Special benefits
Housing
Education
Medical Benefits
Travel Allowances
Club Memberships

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Equity in Compensation
Equity in Compensation

Expatriate Manager

Host-Country National (HCN)

Third-Country Nationals (TCN)

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Retention and Turnover

• Extent to which a
Retention firm is able to retain
valued employees

• Rate at which
Turnover people leave a firm

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-29

Retention and Turnover (Cont.)

 What Causes Turnover?

Dissatisfaction with the Job
Better Offers of Employment
Job-Related Transitions
High-Demand Job Skills

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Retention and Turnover (Cont.)

 Turnover Management
Career Development
Counseling or Cross-Culture Training
Inducements and Incentives
Time Frame
Exit Interviews

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Human Resource Issues for Non-
managerial Employees

 Local Laws
 Culture
 Economic Conditions

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Recruitment and Selection

PCNs TCNs HCNs

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Training & Development

 Training and Development Needs

Location
Highly Industrialized Markets
Relatively Underdeveloped Area
Productivity
Training Costs

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Compensation and Performance
Appraisal

Customs
Local
Laws Cultures

Compensation and
Performance Appraisal
Practices for Non-
Managerial Employees
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Labor Relations: Comparative Labor
Relations

Social
Culture
Structure

Economic
Laws
Host Conditions
Country
Labor
Relations

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Labor Relations: Collective
Bargaining

Labo
Man Collective
r
age bargaining Unio
ment
ns

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Union Influence and Codetermination

 Industrial Democracy
 Codetermination
 Social Charter/Policy

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-38

Review Questions

 Along what dimensions does domestic HRM

differ from international HRM?
 How does the degree of centralization or
decentralization affect international
staffing?
 What are the basic issues involved in
recruiting and selecting managers for
foreign assignments?
 What issues are at the core of expatriation
and repatriation problems?

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-39

Review Questions (Cont.)

 Why is performance appraisal important

for international firms?
 What special compensation and benefits
issues arise in international HRM?
 How does international HRM for
nonmanagerial employees differ from that
for managerial employees?

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-40

COPYRIGHT © 2015 PEARSON EDUCATION, INC. Chapter 19-41