Creating an International Workforce: IHRM orientation and staffing strategy. Alhajie Saidy Khan LAIBS

Transcription

1 International and Comparative Human Resource Management Creating an International Workforce: IHRM orientation and staffing strategy Alhajie Saidy Khan LAIBS

2 Lecture outline The context for international HR resourcing Internationalisation strategy/stage and international staffing strategy International orientation and staffing International assignment success factors Selection criteria for international assignment Expatriate selection and strategy Conditions for using expatriates for international assignments Expatriate failure and its consequences

3 Context for international staffing Globally integrated and co-ordinated systems and need local sensitivity and responsiveness. Global approach to talent source and thus, diverse workforce. Blurring of traditional lines HR functions and need for resourcing specialists to also focus on range of related (not necessarily traditional) HR functions Increase Merger and acquisition requires staffing in a changing environment as well as harmonisation of HR practices. Global networks of integrated systems greater opportunities for learning from diverse practices, but also fast and continuously Rapidly changing and volatile business situations and global markets and thus speed to recruit, deploy, develop and shed people CIPD, 2013

4 Internationalisation strategy and IHRM orientation Early stages of internationalisation = ethnocentric orientation Multi-local strategies = ethno, poly and regiocentric orientation Regional strategies = regiocentric with element of geocentric IHRM orientation International strategy = ethno and plycentric orientation Global strategy = geocentric orientation Edwards and Rees, 2006/11; Harzing and Pinnington, 2011; Perlmutter,

5 Ethnocentric staffing orientation Key management positions filled by parent-country nationals Advantages: Overcomes lack of qualified managers in host nation Unified and coordinated policy that help maintain head quarter control over subsidiaries Could help transfer core competencies from and to HQ Disadvantages: Could produces resentment in host country Can lead to cultural myopia

6 Polycentric staffing orientation Host-country nationals manage subsidiaries and PCNs hold key headquarter positions Best suited to multi-domestic businesses Advantages: Could help alleviates cultural myopia. Relatively inexpensive approach to international staffing Helpful for transfer core competencies Disadvantages: Limits opportunity for experience of host-country nationals outside their own country. Can create gap between home-and host-country operations Limit HQ ability to coordinate and control subsidiaries

7 Regiocentric staffing orientation Nationals of regions manage subsidiaries within their respective regions Parent company nationals hold key HQ positions Advantages Allows for greater regional interaction and sharing of across regional experiences Shows greater sensitivity to local conditions and demands Relatively lower wage bills Eases transition to a global, geocentric orientation Disadvantages Could potentially inhibit ability to see the necessity for global HRM orientation Potential to improve regional career opportunities at the expense of wider international career opportunities Animosities between neighbouring countries could hinder success and undermine wider strategic vision

8 Geocentric staffing orientation Seek best people, regardless of nationality Advantages: Enables the firm to make best use of all its human resources Equips executives to work in different international context Helps build strong unifying and informal management network Disadvantages: National immigration policies may limit implementation Expensive to implement due to training and relocation costs Compensation structure can be problematic

9 Conditions for successful Geocentric staffing Availability of highly competent or potentially competent employees Some international experience within top management Competent or potentially competent cadre of managers willing and ready for international deployment Willingness to learn and an openness to new and different experiences and ideas

10 Key international assignment success factors Professional/technical competence Relational ability Motivation Family situation Language skills Acceptance of assignment Torrington et al, 2007

11 Criteria for selection for international assignment Specific organisation requirements (technical) Family requirement Selection decision Cross-national and cross-regional requirements Host country requirements Norms and traditions Language Knowledge of institutions and legal system etc. Mendenhall and Oddou, 1985; See Sparrow, 2007

12 Corporate and technical criteria Easily evaluated technical and managerial competencies of assignee are most important Organisational situational factors including: Requirements to send expatriates to carryout assignments in certain regions than otherwise Involvement of partners as in joint ventures and crossborder alliances Using specific skills and function and training as selection criteria

13 Cross-national criteria Individual traits and characteristics that impact success or failure of international assignment (e.g. cultural empathy, adaptability, language ability etc.). Ability to implement technical and managerial tasks and be reasonably comfortable in a foreign environment These criteria are, however, sometimes very difficult to determine and measure

14 Host country requirements Copping with alternative social norms and forms of organisation Ability to manage hardship postings (remote locations, high security risks, poor standard of living conditions) Capacity to work and live under what might be perceived as repressive political and social contexts Legal requirements (e.g. need and difficulty of acquiring work permit)

15 Language and other social criteria Core situational factor: knowledge and ability to directly communicate in the language of the host is critical for both assignee and spouse/family Family: could make potential international assignee refuse international assignment Gender: despite steady increase in dual expatriate careers couples, some country may be less suitable for female international assignees

16 Mendenhall, M. and Oddou s four dimensional criteria Self-Orientation Possessing high self-esteem and self-confidence Others-Orientation Ability to develop relationships with host-country nationals Willingness to communicate Perceptual Ability The ability to understand why people of other countries behave the way they do Being non-judgmental and flexible in management style Cultural Toughness Ability to adjust to the ways of country of assignment Source: Academy of Management Review, Vol. 10:1 (pp ) See also, Reich and Harzing (2011) in Harzing and Pinnington (eds.); Tahvanainen and Suutari (2005) in Scullion and Linehan (eds.)

17 Changing context and changing nature of international staffing From expatriate management to, e.g.: International commuters & assignees on short term or medium term business trips Contract expatriates Employees used on long-term business trips Cadres of global managers International transferees (from one subsidiary to another) self-initiated movers (SIMS) - live and work away from their home country Virtual international employees active in cross-border project teams Domestically based employees dealing with international suppliers and/or clients Overseas workers attracted to a domestic labour market. (CIPD)

18 Expatriate management remain Core aspect of international staffing function According to CIPD, various types of international employees indicate that the claim changing business context and requirements have reduced the reliance on longer term expatriation in more mature markets and grown in developing ones and, in the global community. Nevertheless, expatriates management remains a major aspect of work of HR practitioners responsible for international assignments

19 Definitions Expatriate: citizens of one country working in another Inpatriates : expatriates who are citizens of a foreign country working in the home country of their multinational employer

20 Conditions for using expatriates When there is desire for international expansion, but lack of prior international experience Need or desire to transfer of firm-specific knowledge An ethnocentric orientation underpinned by strong singlestatus Corporate outlook and strategy Having new subsidiaries that require guidance Significant differences between parent country and host country culture and institutional frameworks When host country regulations cast doubts on fulfilment of contracts

21 Why MNCs use expatriates Management development - acquiring international management skills and competencies Coordination and control of/over diverse and dispersed operations and activities Effective communication of local needs and strategic information to and from headquarters

22 Expatriate failure Expatriate failure refers to the premature return of an expatriate manager before the completion of his or her international assignment due to the person s failure to attain the expected performance levels and due to the persons continuing inability to adjust to the new work and cultural environment in the host country

23 The Cost of Expatriate Failure Expatriate failure has two cost components: Direct Costs: Can be easily measured in monetary terms (e.g.: air fare, relocation expenses, salary and training). Varies according to position, country of assignment, exchange rates and nature of replacement Indirect Costs: Cannot be measured easily in monetary terms, but may be significantly higher than the direct costs. Examples include: loss of reputation and market share, morale and productivity in the local work force, complications with the host government, lost of credibility and career advancement