Global Human Resource Management CH 16

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Global Human Resource Management CH 16

• Strategic Role of HR
• 4 Basic Tasks
• Staffing policy
• Management training development
• Performance appraisal
• Compensation policy
• Labor Relations Strategy

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Human Resources

• Activities a firm carries out to use human
  resource effectively strategy, staffing,
  performance evaluation, management development,
  compensation labor relations
• Through influence on character development,
  quality productivity a firms HR can help
  achieve the primary strategic goal of reducing
  the cost of value creation adding value by
  better serving customer needs.
• International HR complicated by profound
  differences in labor markets, culture, legal
  systems economic systems
• How to staff key management posts
• How to develop managers to have cultural literacy
• How to compensate people in different nations
• How to deal with issues of expatriate managers

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Opening Case - Molex
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Opening Case - Molex

• 70 year old Chicago manufacturer of electronic
  components
• 1967 International Division to coordinate
  exporting 1970 Japanese plant 1971 Irish
  plant
• 2003 61 of business from international sales of
  1.84 b 50 plants in 21 countries 16,000
  people worldwide (1/3 in US)
• Strategy
• Low cost excellent customer service
• Plants are located where conditions are favorable
  major customers are close
• Truly global company - at home wherever in world
  they operate that proactively shares valuable
  knowledge across operations in different
  countries
• Committed to globally minded managers,
  multilingual competency creation of common
  company culture
• HR most localized of functions
• Regular expatriates 3 to 5 years in another
  country (50)
• Inpats come to US to work at HQ
• 3rd country nationals who move from one Molex
  entity to another (Singapore to Taiwan)
• Short term project transfers 6 to 9 months
• Medium term project transfers 12 to 24 months

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Strategic Role of International HR

• Strong fit between HR practices strategy is
  required for high profitability
• Sustained source of high productivity
  competitive advantage in the global economy
• HR policies need to be congruent with strategy -
  4 Strategies pursued by international business
• Multi-domestic create value by emphasizing
  local responsiveness
• International transferring core competencies
  overseas
• Global realizing experience curve location
  economies
• Transnational doing all these thing
  simultaneously
• Molex transnational strategy building a
  strong corporate culture informal management
  network for transmitting information within the
  organization.

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Staffing Policy

• Selection of employees for particular jobs
• Tool for developing and promoting corporate
  culture (norms value system) to attain higher
  performance
• Types
• Ethnocentric
• Polycentric
• Geocentric

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Types of Staffing PolicyEthnocentric

• Ethnocentric - all key management positions are
  filled by parent company nationals
• May believe the host country lacks qualified
  individuals
• May see this as the best way to maintain a
  unified corporate culture
• May believe it is the best way to transfer core
  competencies to a foreign operation
• Disadvantages
• Limits advancement opportunities for host-country
  nationals -gt resentment, lower productivity
  increased turnover
• Can lead to cultural myopia failure to
  understand host country cultural differences that
  require different approaches to management
  marketing
• Compatible with an international strategy

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Types of Staffing PolicyPolycentric

• Polycentric Requires host country nationals to
  be recruited to manage subsidiaries, while parent
  country nationals occupy key positions at
  corporate HQ
• Firm less likely to suffer from cultural myopia
• Less expensive to implement -gt reducing the cost
  of value creation (expats are )
• Disadvantages
• Host country nationals have limited opportunities
  to gain experience outside their own country
  cant progress to senior positions -gt resentment
• Gap can form between host country managers
  parent country isolating HQ staff from various
  foreign subsidiaries (Unilevers little kingdoms
  transnational)
• Lack of management transfers can lead to lack of
  integration -gt a federation of largely
  independent national units with only nominal
  links to H
• Difficult to transfer core competencies or
  realize experience curve location economies
• Compatible with a multi-domestic strategy

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Types of Staffing PolicyGeocentric

• Geocentric seeks the best people for the job
  throughout the company, regardless of nationality
• Enables firm to make the best use of its human
  resources
• Enables the firm to build a cadre of
  international executives who are at home working
  in a number of cultures
• Build a strong unifying corporate culture
  informal management network required for global
  transnational strategies
• Better able to create value from the pursuit of
  experience curve location economies and from
  the multidirectional transfer of core
  competencies
• Reduce cultural myopia enhance local
  responsiveness
• Disadvantages
• Immigration laws can require the employment of
  host-country nationals
• Expensive to implement training relocation
  costs
• Need a compensation structure with a standardized
  international base pay level higher than national
  levels in most countries
• Compatible with both global transnational
  strategies

10
Expatriate Managers

• Ethnocentric geocentric staffing policies rely
  on extensive use of expatriate managers
• Prominent feature is expatriate failure
  pre-mature return of an expatriate manager to his
  or her home country
• Failure of firms selection policies to identify
  individuals who will not thrive abroad ( 40
  return early from developed 70 return early
  from developing)
• Cost of failure can be 3X the expats annual
  domestic salary cost of relocation 250,000 -
  1M
• Reasons (US) inability of spouse to adjust
  managers inability to adjust other family
  problems managers personal or emotional
  maturity inability to cope with larger overseas
  responsibilities

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Selecting Expatriate Managers

• 90 of time employees are selected on the basis
  of their technical expertise, not their cross
  cultural fluency.
• Only 10 of 50 Fortune 500 firms tested for
  important traits such as cultural sensitivity,
  interpersonal skills, adaptability flexibility
• 4 dimensions predict success in a foreign posting
  (Mendenhall Oddou)
• Self-orientation self-esteem, self-confidence,
  mental well being
• Others-orientation ability to interact
  effectively with host country nationals
  (relationship development willingness to
  communicate)
• Perceptual ability ability to understand why
  people in other countries behave the way they do
• Cultural toughness relationship between country
  of assignment how well an expatriate adjusts to
  a particular posting

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Training Development

• Training the manager to do the specific job
  management development which can happen over the
  course of a career
• Job transfers are opportunities for broad
  international experience that will enhance the
  management leadership skills of executives
• Training expatriate manager spouse cultural,
  language practical training to reduce failure
• Repatriation of Expats prepare them for reentry
  into the home country (15 of returning expats
  leave w/i 1 year, 40 w/i 3 years)
• Management development as a strategic tool
  especially transnational
• Strong unifying corporate culture information
  management network to assist in coordination
  control
• Need to be able to detect pressures for local
  responsiveness that requires cultural
  understanding

13
Performance Appraisal

• Two groups usually evaluate the performance of
  expats host nation home office managers.
  Both are subject to bias
• More weight should be given to on-site manager
  appraisal than off-site (soft variables)
• Former expat who served in country could be
  involved in the appraisal
• When on-site prepares, off-site should be
  consulted before it is complete to balance

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Compensation

• How should compensation be adjusted to reflect
  national differences according to prevailing
  country standards or equalize pay on a global
  basis
• How should expatriate managers be paid
• Ethnocentric how much home country expats
  should be paid
• Polycentric lack of managers mobility among
  national operations -gt pay can be kept country
  specific
• Geocentric pay the international executives the
  same basic salary regardless of country of origin
  or assignment
• Balance sheet approach to expat pay equalizes
  purchasing power across countries (figure 16.1
  page 549)

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International Labor Relations

• Concern of domestic unions about MNEs
• company can counter its bargaining power with the
  power to move the plant to another country
• International business will keep highly skilled
  tasks in the home country farm out low-skilled
  tasks to the foreign plants
• International business will attempt to import
  employment practices contractual agreements
  from its home country
• Organized labor has responded by
• Trying to establish international labor
  organizations
• Lobbying for national legislation to restrict
  MNEs
• Achieve international regulations on MNEs through
  UN
• Not very successful because
• Unions want to cooperate but compete with each
  other for jobs
• Wide variation in union structure
• Divergent ideologies about role of union in
  society class conflict