Global Human Resource Management

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Global Human Resource Management

• Dr. Carol Reade
• Bus 187

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Introduction

• Human resource management (HRM) refers to the
  activities an organization carries out to utilize
  its human resources effectively, that is, to
  reduce the costs of value creation and to add
  value by better serving customer needs
• HRM is key to the competitiveness of global
  firms.

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Learning Objectives

• To gain a better understanding of
• the strategic role of HRM in the multinational
  enterprise
• the various tasks of HRM
• the expatriate-repatriate cycle

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The Strategic Role of Global HRM

• Figure 18.1 The Role of Human Resources in
  Shaping Organizational Architecture

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Four Major Tasks of HRM

• Staffing policy
• Management training and development
• Compensation policy
• Performance appraisal

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Staffing Policy

• Approaches to Staffing
• Ethnocentric
• Polycentric
• Geocentric
• Selection of Staff (Expatriates)
• Selecting individuals with skills to do a
  particular job
• Tool for developing and promoting corporate
  culture

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Comparison of Staffing Approaches
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Expatriate Selection

• Expatriate citizen of one country working in
  another
• Employees are typically selected for overseas
  assignments based on their
• Performance in the home country
• Technical expertise
• However, an employees domestic performance does
  not (necessarily) equate to overseas performance
  potential
• Employees need to be selected not solely on
  technical expertise, but also on cross-cultural
  fluency

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The Expatriate-Repatriate Cycle

• HRM function must determine
• when to use expatriates
• who should be sent on foreign assignments
• how they should be trained
• how they should be compensated
• how they should be reoriented when they return
  home

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Expatriate Failure

• Expatriate failure is the premature return of an
  expatriate manager to his or her home country
• Between 16 and 40 of all US expatriates in
  developed countries fail to complete their
  assignments
• Almost 70 of Americans assigned to developing
  countries return home early
• Cost of failure is high estimate 3X the
  expatriates annual salary plus the cost of
  relocation (impacted by currency exchange rates
  and assignment location)
• Each expatriate failure can cost between 250,000
  and 1 million

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Expatriate Failure

• Why do you think the expatriate failure rate is
  so high?

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Reasons for Expatriate Failure

• Japanese multinationals
• Inability to cope with larger overseas
  responsibilities
• Difficulties with the new environment
• Personal or emotional problems
• Lack of technical competence
• Inability of spouse to adjust

• US multinationals
• Inability of spouse to adjust
• Managers inability to adjust
• Other family problems
• Managers personal or emotional immaturity
• Inability to cope with larger overseas
  responsibilities
• European multinationals
• Inability of spouse to adjust

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Expatriate Selection

• Firms can reduce expatriate failure through
  improved selection procedures
• Four dimensions that predict expatriate success
  are
• 1. self-orientation - the expatriate's
  self-esteem, self-confidence, and mental
  well-being
• 2. others-orientation - the ability to interact
  effectively with host-country nationals
• 3. perceptual ability - the ability to understand
  why people of other countries behave the way they
  do
• 4. cultural toughness the ability to adjust to
  the posting

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Expatriate Selection The Global Mindset

• A global mindset may be the fundamental attribute
  of a global manager
• A global mindset is often acquired early in life
  from a family that
• is bicultural or multicultural
• lives in foreign countries, or
• learns foreign languages as a regular part of
  family life

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Training and Management Development

• Training focuses upon preparing the manager for a
  specific job
• Management development is concerned with
  developing the skills of the manager over his or
  her career with the firm
• Historically, most firms focus more on training
  than on management development

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Training and Management Development

• Training for expatriate managers involves
  obtaining skills for a particular foreign posting
• Language training Can improve expatriates
  effectiveness, aid expatriate in adjusting to
  foreign culture, and fosters a better firm image
• Cultural training Can foster an appreciation of
  the host countrys culture and help in expatriate
  adjustment
• Practical training Can help expatriate and
  family to ease into day-to-day life of the host
  country

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Management Development and Strategy

• Management development programs for expatriate
  managers increase overall skill levels by
• ongoing management education
• rotations of managers through jobs within the
  global firm to give them varied experiences
• Management development is often used as a
  strategic tool to build a strong unifying culture
  and informal management network, both of which
  are supportive of a transnational and global
  strategy

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Compensation Expatriate Pay

• Most firms use the balance sheet approach
• Equalizes purchasing power to maintain same
  standard of living across countries
• Provides financial incentives to offset
  qualitative differences between assignment
  locations
• Components of compensation package
• 1. base salary
• 2. a foreign service premium
• 3. various allowances
• 4. tax differentials
• 5. benefits

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Performance Appraisal

• Challenge of Unintentional Bias
• Host nation biased by cultural frame of reference
• Home country biased by distance and lack of
  experience working abroad
• Expatriate managers believe that headquarters
  unfairly evaluate and under-appreciate them
• In a survey of personnel managers in U.S.
  multinationals, 56 stated foreign assignment
  either detrimental or immaterial to ones career

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Repatriation of Expatriates

• A critical issue in the training and development
  of expatriate managers is preparing them for
  reentry into their home country
• Repatriation should be seen as the final link in
  an integrated, circular process that selects,
  trains, sends, and brings home expatriate
  managers

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Coming Home

• Consider
• Is it harder to go to a foreign country on
  assignment, or is it harder to come back home
  after completion of the assignment?

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Repatriation of Expatriates
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Welcome Home Stranger

• The past is a foreign country they do things
  differently there.
• L.P. Hartley, The Go-Between, 1953

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Repatriation of ExpatriatesThe Final Link in
Global HRM Strategy

• HRM needs to develop good programs for
  re-integrating expatriates back into work life
  within their home country organization once their
  foreign assignment is over
• It is in the strategic interest of the company to
  have successful managers, both on foreign
  assignment and back at home, and to leverage the
  knowledge they acquired abroad to enhance the
  effectiveness of the global organization