International HR

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International HR Labor Relations

• Dr. Carol Reade
• Bus 162

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Introduction

• Global assignments have become increasingly
  important both for corporate competitive
  advantage and for individual career development
• While on an international assignment, the global
  manager may need to manage labor relations in
  host countries have become increasingly important
  as manufacturing continues to be outsourced

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Learning Objectives

• Identify the sources that MNCs use to fill
  vacancies in their global operations
• Assess selection criteria and training
• Consider adjustment issues and reasons for
  returning home
• Discuss the importance of good labor relations in
  global operations

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Sources of Human Resources

• MNCs can use four basic sources for filling
  overseas positions

Home-country Nationals (Expatriates)

• Expatriate managers who are citizens of the
  country where the multinational corporation is
  headquartered
• Sometimes called headquarters nationals
• Most common reason for using home-country
  nationals, or expatriates, is to get the overseas
  operation under way

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Sources of Human Resources

• MNCs can use four basic sources for filling
  overseas positions

Home-country Nationals (Expatriates)

• Local managers hired by the MNC
• They are familiar with the culture
• They know the language
• They are less expensive than home-country
  personnel
• Hiring them is good public relations

Host-country Nationals
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Sources of Human Resources

• MNCs can use four basic sources for filling
  overseas positions

Home-country Nationals (Expatriates)

• Managers who are citizens of countries other than
  the country in which the MNC is headquartered or
  the one in which the managers are assigned to
  work by the MNC
• These people have the necessary expertise for the
  job

Host-country Nationals
Third-country Nationals
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Sources of Human Resources

• MNCs can use four basic sources for filling
  overseas positions

Home-country Nationals (Expatriates)

• Individuals from a host country or a
  third-country national who are assigned to work
  in the home country
• The use of inpatriates recognizes the need for
  diversity at the home office
• Use of inpats helps MNCs better develop their
  global core competencies
• MNCs can subcontract or outsource to take
  advantage of lower human resource costs and
  increase flexibility

Host-country Nationals
Third-country Nationals
Inpatriates
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Selection Criteria for International Assignments
General Criteria

• Many criteria are used in selecting managers for
  overseas assignments including

• Education
• Knowledge of local language
• Motivation
• Support of spouse children
• Leadership

• Adaptability
• Independence
• Self-reliance
• Physical emotional health
• Age
• Experience

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Selection Criteria for International Assignments
Other Considerations

• Applicants can better prepare themselves for
  international assignments by following three
  phases

• Focus on self-evaluation and general awareness
  include the following questions
• Is an international assignment really for me?
• Does my spouse and family support the decision
  to go international?
• Collect general information on available job
  opportunities

Phase I
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Selection Criteria for International Assignments
Other Considerations

• Conduct a technical skills assessment Do I have
  the technical skills required for the job?
• Start learning the language, customs, and
  etiquette of the region you will be posted
• Develop an awareness of the culture and value
  systems of the geographic area
• Inform your superior of your interest in the
  international assignment

Phase I
Phase II
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Selection Criteria for International Assignments
Other Considerations
Phase I

• Attend training sessions provided by the company
• Confer with colleagues who have had experience in
  the assigned region
• Speak with expatriates and foreign nationals
  about the assigned country
• Visit the host country with your spouse before
  the formally scheduled departure (if possible)

Phase II
Phase III
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Common Elements of Compensation Packages

• Compensating expatriates can be difficult because
  there are many variables to consider
• Most compensation packages are designed around
  four common elements

Allowances
Taxes
COMPENSATION PACKAGE
Base Salary
Benefits
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Relative Cost of Living in Selected Cities
Tokyo Oslo Zurich Hong Kong Copenhagen Paris
London New York Singapore Stockholm Seoul
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Relative Cost of Living in Selected Cities
Frankfurt Beijing Moscow Rome Tel Aviv Mexico
City Toronto Prague Jakarta Warsaw Kuala Lumpur
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Relative Cost of Living in Selected Cities
Johannesburg Bangkok Cairo Buenos Aires Sao
Paulo Manila
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Adjustment Issues

• Anticipatory Adjustment
• Training
• Previous experience
• In-country Adjustment
• Individuals ability to adjust effectively
• Ability to maintain a positive outlook, interact
  well with host nationals, and to perceive and
  evaluate the host countrys cultural values and
  norms correctly
• Clarity of expatriates role in the host
  management team
• Expatriates adjustment to the organizational
  culture
• Nonwork matters

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The Relocation Transition Curve
6. Search for Meaning Understanding reasons for
success and failure. New models/personal theories
created
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7. Integration of New Skills and Behavior
Acceptance of the new environment
3. Interest A deeper exploration of the
environment and a realization that it is
fundamentally different from home
1. Unreality The feeling that the relocation is
a dream
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2
5
5. Experimentation and Testing of New
Approaches Practice phase trying to do things
differently Feedback of results success and
failure
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2. Fantasia The feeling of enchantment and
excitement in the new environment
1
4
4. Acceptance of Reality Letting go of past
comfortable attitudes and realizing you are a
stranger in a strange land
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Repatriation of Expatriates

• Reasons for returning to home country
• Assignment is completed
• Want children educated in a home-country school
• Not happy in their overseas assignment
• Failed to do a good job
• Readjustment problems
• Out of sight, out of mind syndrome
• Organizational changes
• Technological advances
• Adjusting to the new job back home

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Repatriation of Expatriates

• Further challenges of repatriation include
• Adjusting to life back home
• Facing a financial package that is not as good as
  that overseas
• Having less autonomy in the stateside job than in
  the overseas position
• Not receiving any career counseling from the
  company
• Repatriation Agreements
• Firm agrees with individual how long she or he
  will be posted overseas and promises to give the
  individual, on return, a job that is mutually
  acceptable

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Labor Relations in the International Arena
Definition of Labor Relations

• The term labor relations can be defined as the
  process through which management and workers
  identify and determine the job relationships that
  will be in effect at the workplace.
• Includes mechanisms for determining
• wages, working hours, working conditions, and
  related areas such as vacations and benefits.

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Labor Relations in the International Arena
Importance of Labor Relations to the MNC

• Labor relations have a direct impact on labor
  costs, productivity, and profits.
• Poor relations can increase cost
• Larger political issues
• job export
• free trade

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Labor Relations in theInternational Arena
The U.S. Approach to Labor Relations
Importance of Positive Labor Relations

• They directly determine labor costs,
  productivity, and eventually, even profits

• Labor costs in the United States are lower in
  recent years than in most other major industrial
  countries.
• Thanks to unionmanagement cooperation, U.S.
  companies have been able to introduce high-tech,
  efficient machinery.
• Much of this outcome is a result of effective
  labor relations strategies.

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Annual Average Days Lost Due to Labor Disputes
1993-2002
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Labor Relations in the International Arena
Labor Relations in Other Countries

• Labor relations vary greatly from country to
  country due to a number of factors
• Economic development of the country
• Changes in the political environment
• Strike activity
• Cultural considerations

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Labor Relations in the International Arena
Labor Relations in Other Countries
Differing Approaches to Industrial Relations

• JAPAN
• Japanese unions are relatively weak (enterprise
  unions)
• Social custom dictates non-confrontational
  unionmanagement behavior
• Cultural value of Wa
• Disputes are settled in an amicable manner though
  sometimes resolved by third-party mediators or
  arbitrators
• Strikes and lockouts in Japan are very rare
• Strikes severe following WWII, but today only to
  make a point

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Labor Relations in the International Arena
Labor Relations in Other Countries
Differing Approaches to Industrial Relations

• EMERGING ECONOMIES (China, India, Southeast
  Asia)
• Labor is less powerful
• Unions are less prevalent
• Workers are often compelled to accept conditions
  of work set by management
• Employees have less power and are less likely to
  initiate actions or organize unions to negotiate
  for improved working conditions

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Labor Relations in the International Arena
Labor Relations in Other Countries
Differing Approaches to Industrial Relations

• Southeast Asia including Brunei, Cambodia, East
  Timor, Indonesia, Laos, Malaysia, Myanmar
  (Burma), Philippines, Singapore, Thailand, and
  Vietnam
• Many states are still focused on keeping labor
  movements in check, whether in the name of
  economic development, national unity, or social
  stability
• Labor movements are fragmented or constrained due
  to the political environment

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Strategic Management of InternationalLabor
Relations
New Labor Force Trends and Pressures
Global Pressures for Improved Labor Practices

• MNCs are under increasing pressure to upgrade
  working conditions and labor practices of
  manufacturing and other facilities
• NGOs and other groups are pressuring MNCs to
  adhere to international standards and adopt new
  codes of responsibility
• The ILO addresses the conditions of workers
  through its standards and conventions
  (international treaties), nonbinding
  recommendations, codes of conduct, resolutions,
  and declarations

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Industrial Democracy

• Involves the rights of employees to participate
  in significant management decisions, including
• Wage rates
• Bonuses
• Profit sharing
• Vacations and holiday leave
• Work rules
• Dismissals
• Plant expansions and closings