14 Managing Global Human Resources

Transcription

1 Managing Global Human Resources Introduction HR and the Internalization of Business How Inter-Country Differences Affect HRM Global Differences and Similarities in HR Practices HR Selection Procedures The Purpose of Performance Appraisal Training and Development Practices The Use of Pay Incentives How to Implement a Global HR System Making the Global HR System More Acceptable Developing a More Effective Global HR System Staffing the Global Organization International Staffing: Home or Local Offshoring Values and International Staffing Policy Why International Assignments Fail Selecting International Managers Objectives At the end of this chapter, students should be able to: List the HR challenges of International Business Illustrate how inter country differences affect HRM Discuss the global differences and similarities in HR practice Explain five ways to improve international assignments through selection Discuss how to train and maintain international employees Training and Maintaining Expatriate Employees Training Employees on International Assignment Compensating Expatriates Appraising Expatriate Managers International Employment Relations Terrorism, Safety and Global HR Repatriation: Problems and Solutions Auditing the HR Function Chapter Summary Case Study Exercises

2 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT.1 INTRODUCTION LG Machinery Limited has assigned Marianne White to head the Operations team in its subsidiary in Africa. Marianne has been waiting for 10 years to get this opportunity. As she was driving home, she was thinking about the way to tell her husband, Keith and their three teenage children. She decided to tell them during dinner and this is an excerpt of the conversation. Marianne: Mummy has exciting news to tell the family. Keith: Honey, what is it? Marianne: I have been promoted to head the Operations Team. Anne: Congratulations! We are so proud of you. Lily: Good, we can have extra pocket money now. Mum, can I have twenty? Keith: Why do you have that sad look? Marianne: Ummmm! Mmmmmmm. The job is in Kenya and we will be there for three years. Lily: What! No way, mum! Not during my senior year. You don t care for us!! Everything is for you. I hate you!!! Keith: What do you expect me to do there?????????????? Figure.1 The White family arguing during dinner Based on the conversation above, do you think that Marianne will be able to handle the international assignment successfully? Let s read the chapter below to determine the answer..2 HR AND THE INTERNALIZATION OF BUSINESS As organizations expand their business abroad, they face new management challenges. The company s organization structure must balance centralized home-office control with adequate local autonomy. Its HR policies and systems have to be introduced abroad with more complex issues such as special candidate selection, overseas assignment, immigration, cultural training, expatriate compensation and foreign taxation to consider. There are also country specific problems such as inadequate medical care and telecommunication facilities. Steps should be taken by the HR Department to rectify these problems. The challenges of conducting HR activities abroad come from the vast distances and cultural, political, legal and economic differences among countries and people. 388

3 Managing Global Human Resources Immigrat ion Cultural training Special candidate selection Domestic Foreign taxation Overseas assignment HR Country specific problems Expatriate compensation Domestic HR Foreign HR Figure.2 Difference between domestic HR and foreign HR.2.1 How Inter-Country Differences Affect HRM An organization operating multiple units abroad does not have the luxury of dealing with a relatively limited set of economic, cultural and legal variables. a. Cultural Factors Countries differ widely in their cultures and values. Therefore, each country has its own management practices due to cultural differences. For example, U.S. managers are concerned about completing the job whereas Chinese managers prefer to maintain a harmonious environment. I need to complete the job as soon as possible How to maintain a harmonious relationship? Figure.3 Cultural differences 389

4 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT As per Hofstede, societies differ in power distance i.e. the extent to which less powerful members of institutions accept and expect an unequal distribution of power. For example, people in the U.S. call each other by their first names regardless of position but it is different in the Asian countries such as Indonesia, Malaysia, India and Bangladesh. In such countries, people get offended if you don t call them by their titles. Table 15.1 Hofstede s 5 cultural dimension b. Economic Systems Differences in economic systems translate into differences in HR practices. China has a social political system with market characteristics. However, under the one country two systems arrangement, Hong Kong Special Administrative Region has a free market system. Differences in labor costs are substantial. That is why many organizations like Dell Computers and Hong Kong and Shanghai Banking Berhad had transferred their call centers to Malaysia. c. Legal and Employment Relations It varies dramatically from country to country. In many European countries, work councils replace the informal or union based worker-management mediations typical in U.S. organizations. In Germany and several other countries, codetermination is the rule where employees have the legal right to a voice in setting company policies. 390

5 Managing Global Human Resources.3 GLOBAL DIFFERENCES AND SIMILARITIES IN HR PRACTICES The HR practices tend to differ from country to country due to difference in culture, legal, political and economic systems. The practices below highlight some of the similarities and differences in HR practices all round the world..3.1 HR Selection Procedures Organizations around the world uses similar criteria such as a person s ability to do the job and proven track record in similar jobs in selecting employees. Most of them also use personal interview as a selection tool. However, there are some differences in criteria due to cultural differences. For example, having the right connections is important in some Asian countries such as China. China, Indonesia and Korea use employment tests as one of their three selection methods but not US..3.2 The Purpose of Performance Appraisal The purpose of performance appraisal varies by country as shown in the table below. Purpose of Performance Appraisal Country Determining Pay Taiwan, US and Canada Documentation on Employees Taiwan, US and Australia Performance Employee Recognition Japan and Mexico Table.2 Purpose of Performance Appraisal by Country Source: Adapted from Dessler & Tan 2006, p Training and Development Practices There were more similarities in training and development programs across countries. Most employers provided training to improve the employees technical abilities and use classroom training as the main training method. However, the amount spent on training and the number of training hours per employee varies by country..3.4 The Use of Pay Incentives The importance of financial incentives varies by country. A survey revealed that incentives were relative important in China, Japan and Taiwan as compared to US..4 HOW TO IMPLEMENT A GLOBAL HR SYSTEM Organizations who implement global HR systems apply various international HR best practices. This enables them to create global HR systems that are globally acceptable and effective, which makes it easier for HR staff to implement..4.1 Making the Global HR System More Acceptable The three best practices that employers must engage in so that the global HR systems that they eventually develop will be acceptable to their local managers around the world are: 391

6 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT a. Remember that Global Systems are more Accepted in Truly Global Organizations A truly global organization means that all business units work as a global team. For instance, you can recruit a candidate in China who is going to work in Kenya. This makes it easier for all managers to accept a more standardized HR system. Figure.4 Global HR team b. Investigate Pressures to Differentiate and Determine their Legitimacy HR managers wanting to standardize all HR activities will definitely meet resistance from local managers. The local managers will insist that the activities are not possible due to cultural differences. In such cases, it would be good to conduct an investigation to assess whether the local culture will negatively affect the new system. While investigating, it is important to know the local legal issues and be willing to differentiate when necessary. I don t think that this process is suitable for my country. We need to modify the policy according to our need due to some government policy Figure.5 Discussion on global HR policy c. Try to Work within the Context of a Strong Corporate Culture A strong corporate culture unifies employees worldwide to a set of shared values. As such, it makes it easier to develop and implement standardized HR practices worldwide. Figure.6 Examples of shared values 392

7 Managing Global Human Resources.4.2 Developing a More Effective Global HR System How can organizations develop effective global HR systems? They can consider some of these best practices: Develop a More Effective Global System Form global HR networks Standardize Ends and Competencies Figure.7 Best practices in developing effective global HR system a. Form Global Networks The organization s HR managers around the world should feel that they are part of the organization s global HR network. This can be achieved by involving the HR managers in developing the new global HR system via global HR development teams. In doing that, one can understand the local HR systems and the challenges faced by the local HR managers. Once the HR managers perceive themselves as equal partners, it is easy to gain their support and buy-in. Figure.8 Forming global network b. It is More Important to Standardize Ends and Competencies than Specific Methods It is important to standardize tool globally but we must be flexible in how it is assessed. For example, IBM uses a standardized recruitment and selection process world-wide but the details differ by country..4.3 Implementing the Global HR System When implementing the global HR system, one must remember the following: Communication is the most important thing. There is a constant need to be in close contact with the decision makers in each country and the people implementing and using the systems Head Office needs to ensure that they provide enough resources for any additional global HR activities 393

8 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT Do. Work within existing local systems integrate global tools into local systems Create a strong corporate culture Create a global network for system Treat local people as equal partners in system development Assess common elements across geographies Focus on what to measure and allow flexibility in how to measure Allow for local additions beyond core elements Differentiate when necessary Train local people to make good decisions about which tools to use and how to do so Communicate, communicate, communicate! Dedicate resources for global HR efforts Know or have access to someone who knows the legal requirements in each country Table.3 Summary of the Best Global HR Practices Source: Marie et al, p.92 cited in Dessler 2005, p.450 Don t.. Try to everything the same way everywhere Yield to every claim that we re different make them prove it Force a global system on local people development global input is critical Use local people just for implementation Use the same tools globally, unless you can show that they really work and are culturally appropriate Ignore cultural differences Let technology drive your system design you can t assume every location has the same level of technology investment and access Assume that if we build it they will come you need to market your tools or system and put change management strategies in place.5 STAFFING THE GLOBAL ORGANIZATION The heart of international HR is staffing the employer s global organization. This includes the recruitment and selection processes..5.1 International Staffing: Home or Local Multinational organizations employ several types of international managers. An expatriate is a non-citizen of the country in which they are working 394

9 Managing Global Human Resources Figure.9 Amy is an expatriate because she is an American working in India A home country national is a citizen of the country in which the MNC has its headquarters Figure.10 Melissa is a home country national because she is an American working in San Francisco and her company s headquarters is in the U.S. A third country national is a citizen of a country other than the parent or the host country. For example, a Malaysian working in the Lagos office of a Canadian bank Figure.11 Theresa is a third national because he is a Malaysian working in Cambodia A local is a citizen of the country where they are working Figure.12 George is a local because he is a Nigerian working in Nigeria Reasons for employing local managers are: Cheaper as compared to expatriates 395

10 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT The government in some countries such as Malaysia may insist that local people be employed unless the organization is unable to find qualified locals for the positions Reasons for employing expatriates are: Lack of technical competence among the locals International assignments are part of the organization s global career development system Home office managers have a better understanding of the organization s policies and practices and are more likely to implement instructions from the head office..5.2 Offshoring Offshoring refers to transferring in-house jobs to foreign countries due to the lower cost of labour. Organizations who support offshoring argues that the money saved could boost research and development and create more domestic jobs in the home country. How does HR become involve in offshoring? They need to identify high-quality, low-cost foreign talent and also research for background data such as wage rates, working conditions and productivity. After locating a suitable city, they must develop an effective supervisory and management system to manage and train these employees. Finally, the compensation and working conditions must also be satisfactory. Identify foreign talent Research for background data HR s Involvement in Offshoring Develop supervisory and management system Provide good compensation package and training Figure.13 HR s involvement in offshoring.5.3 Values and International Staffing Policy The top management s values, apart from cost and competency will determine whether the organization will use locals or expatriates. The table below shows the relationship between top management s values and international staffing policies. 396

11 Managing Global Human Resources Top Management s Values Home country s attitudes, management style, knowledge, evaluation criteria and managers are more superior than the host country Only host country managers can really understand the culture and behavior of the host country market The best manager maybe in any of the countries in which the organization operates International Staffing Policy Ethnocentric staffing policy where parentcountry nationals hold key management jobs in the foreign subsidiaries. The reasons for implementing this policy are lack of qualified host-country senior management, a desire to maintain a unified corporate culture, tighter control and to expedite the transfer of the home office s core competencies. Example: Royal Dutch Shell Polycentric staffing policy where the organization would recruit host-country nationals for its foreign subsidiaries and parent-country nationals for its home office. A geocentric staffing policy recruits the best people for key jobs throughout the organization regardless of nationality. This assists in building a stronger and more consistent set of values among the entire global management team. Example: Standard Chartered Bank Table.4 The Relationship between top management s values and international staffing policy Sources: Adapted by Dessler 2005, pp Why International Assignments Fail Statistics have shown that there were 3.2% of international assignment failures in The reasons for these failures are in descending orders are: The inability of the manager s spouse to adjust to a different physical or cultural environment due to the lack of cultural and language skills Mac, I can t take it anymore. I want to return to America. I have no friends here and you are always working. Figure. Wife complaining to her husband 397

12 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT The manager s inability to adapt to a different physical or cultural environment Why don t these people work faster? They work so slowly. Other family-related problems Figure.15 Inability to adapt to cultural differences I need to go home. Mum needs me badly to help her get around. Figure.16 An expatriate feeling upset as his mother is not well Manager s personal or emotional immaturity and inability to cope with larger overseas responsibility Organizations can implement the following strategies to ensure the success of international assignments by providing language training to the spouse or assisting the spouse to find a job there. Figure.17 Language training Organizations could also provide realistic previews of what to expect, careful screening of candidates and provide better orientation training and compensation packages. Finally, organizations can shorten the duration of the assignments. 398

13 Managing Global Human Resources.5.5 Selecting International Managers The process of selecting international managers is vital as failures in foreign assignments are costly. It is estimated that the financial costs of failed assignments ranged between USD55,000 to USD1.2 million. These estimates do not include damage to relationships with employees, customers, suppliers and host governments and the emotional costs paid by the expatriate and their family (Mendenhall, Dunbar & Oddou, 1987). The selection process tests the candidates for traits that predict success in adapting to new environments. A survey conducted on 338 expatriates from various countries revealed that there are five important factors that contribute to the success of the foreign assignment. The most important factor is the family situation. Other factors are job knowledge and motivation, relation skills, flexibility/adaptability, extra-cultural openness and family situation. The table below shows the components in the factors that ensure international assignee success. Factors Job knowledge and motivation Relational Skills Flexibility/Adaptability Extracultural Openness Components Managerial ability Organizational ability Imagination Creativity Administrative Skills Industriousness Initiative and energy High motivation Frankness Belief in mission and job Perseverance Respect Courtesy and fact Display of respect Kindness Empathy Non-judgmentalness Integrity Confidence Resourcefulness Ability to deal with stress Flexibility Emotional stability Willingness to change Tolerance for ambiguity Adaptability Independence Dependability Political sensitivity Positive self-image Variety of outside interests Interest in foreign cultures Openness Knowledge of local language(s) 399

14 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT Outgoingness and extroversion Overseas experience Family Situation Adaptability of spouse and family Spouse s positive opinion Willingness of spouse to live abroad Stable marriage Table.5 Five Factors Important in International Assignee Success and Their Components Source: Dessler & Tan 2006, p.453 Adaptability screening is part of the expatriate screening process. It is a process that evaluates the assignee s and his spouse s probable success in handling a foreign assignment. Candidates with foreign work and non-experience, education and language skills stand a higher chance to adapt to living and working with different cultures, thus, increasing the probability of success in foreign assignments. Have you lived in a foreign country before? Perhaps as a foreign student for a short period of time. Figure.18 Conducting adaptability screening.6 TRAINING AND MAINTAINING EXPATRIATE EMPLOYEES Employees who go on foreign assignments require special training in order to ensure the success of the assignments. Apart from that, the organization should also develop international HR polices for compensating these employees and maintaining healthy employment relations..6.1 Training Employees on International Assignment Figure.19 Expatriate training 400

15 Managing Global Human Resources Organizations are beginning to recognize the pressure and stress faced by expatriates and their families when they move to a foreign country. Pre-move orientation and training for these people are essential before the global assignment begins. The training program comprises four levels i.e.: Types of Level One Two Three Four Table.6 Training levels Areas of Training Cross cultural training to create the trainees awareness of cultural differences and their impact on business outcomes Understand how attitudes are formed and their impact on behavior (For example, stereotyping may subconsciously influence how new managers treat their new subordinates) Factual knowledge about the target country Language and adjustment skills Figure.20 Employee Assistance Program The organizations must ensure that these expatriates undergo a continuous development program whereby they are exposed to new skills, home-country development and career planning. This can be achieved via Internet service in the areas of career services and 24 hours employee assistance program. Online career services provide the opportunity for expatriates and their spouses to upgrade their skills while on assignment. Figure.20 Repatriation training as Australians expatriates return to Australia Repatriation orientation and training is also essential during the near completion of the foreign assignment to ease the transition in adapting to the home-country culture. It also prepares the expatriate s new subordinates and supervisor for the return. 401

16 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT Expatriate Preparation and Development Prior to Departure: Orientation and Training Language Culture History Local Customs Living Conditions During Assignment: Continual Development Expanding Skills Career Planning Home-Country Development Near Completion: Repatriation Orientation Training Home Country Lifestyle Home Country Workplace Home Country Employees Figure.21 Expatriate preparation and development program Source: Mondy & Noe 2005, p Compensating Expatriates The main thing to consider in compensating expatriates is determining a fair and equitable compensation package. If the organization decides to maintain a company-wide pay scale throughout the world, it minimizes the risk of perceived inequity and makes it easier to monitor the wages rates in all countries. Compensation for expatriate working in Japan Base salary + Cost of living allowances + Compensation for expatriate working in Indonesia Base salary + Cost of living allowances + Figure.22 Equitable compensation package for expatriates However, this may create internal problems as the cost of living differs by country. For example, it is cheaper to live in Malaysia as compared to Hong Kong. As such, managers will reject high-cost assignments if the organization maintains a company wide pay scale. Therefore, the way to overcome this issue is to pay a similar base salary company-wide and to add on various allowances according to individual market conditions. 402

17 Managing Global Human Resources Information on wage rates in many countries maybe obtained via surveys conducted by consultant firms such as Hay Associates and Wyatt. Multinational companies may also choose to conduct their own annual compensation surveys..6.3 Appraising Expatriate Managers The main issue in appraising expatriate managers is who should appraise them? Local management definitely needs to provide some inputs but cultural differences may distort the appraisals. As for home-office managers, they are unable to provide valid appraisals as they are not aware of situation the managers face locally. Therefore, the factors used to evaluate the expatriates should be objective criteria such as profits and market share. However, local events such as political instability may affect the expatriates performance. Recommendations for improving the expatriate appraisal process include: Adapt the performance criteria based on the difficulty of the assignment Give more weigthage on the appraisal done by the host-country managers rather than the home-office managers If the home-office manager is required to do the actual written appraisal, ask them to get advice from a former expatriate from the same overseas location..6.4 International Employment Relations Organizations with subsidiaries abroad cannot use the same employment relations practices as they vary by countries. Employment issues include terms and conditions of work, collective bargaining, union recognition, grievance handling, dispute settlement and strikes..6.5 Terrorism, Safety and Global HR Many countries HR activities have been affected by the threat of terrorism. For example, since the September 11 attack, foreign workers have to wait for months to get their employment documents. This is because prospective employees need to be interviewed at their local US Embassy and scheduling these interviews is time-consuming. Figure.23 Personnel in the US Embassy interviewing prospective employees 403

18 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT Employers may also face resistance from prospective expatriates, as they fear for the safety of their lives and their families lives. In order for them to take the extra risk, they usually demand for more compensation. Employers also have taken steps to protect their expatriate employees by implementing safety plans such as evacuation plans, purchasing kidnapping and ransom insurance and engaging crisis teams due to the increasing number of overseas kidnapping. Figure.24 Examples of steps taken to protect expatriate employees.6.6 Repatriation: Problems and Solutions Repatriation refers to expatriates returning into their home countries and organization. The returning expatriates and their families face lots of repatriation problems such as: It is good to be home!!!!! Figure.25 An expatriate family returning to their home country a. Organizational/Career Issues The returning expatriates are anxious whether there is a position for them as well as their career path. This is because many organizations find it hard to determine the position to be filled by the expatriate, thus, diminishing the expatriate s self-image. They may also feel discouraged to discover that their former colleagues have been promoted while they have been away. They also take a longer time to reestablish themselves in the organization and productivity is affected by changes in their personal and professional lifestyles. I wonder what position will be offered to me. I hope that they will give me a promotion. The whole gang has been promoted and I don t want to work under them. Figure.26 A repatriate thinking about his career 404

19 Managing Global Human Resources b. Financial Pressures The returning expatriate receives a lower monthly income due to the difference in foreign compensation levels and loss of overseas allowance. Expenses will increase as the returning expatriate and his family will need to restart their households. The standard of living also declines, as they need to forgo traveling, servants and country club memberships. Bills, bills, bills!!!!!!! How am I going to settle all these bills? Figure.27 Financial problems c. Family Problems The returning expatriates families may face reverse culture shock as they face the task of renewing friendships, starting new schools and giving up overseas perks such as the company car and servants. These create additional stress to the repatriated executives. Mummy, Daddy, the kids at school make fun of me. I hate this place. I want to go back to Japan. That is our home, Daddy. Everyone likes me there. Figure.28 A young girl facing reverse culture shock when her family returned from an international assignment in Japan d. Executive Psychological Stress Pressures created by the three factors above and the reentry process may also increase the psychological tension in the executive. Lack of support from peers in the organization may result in the repatriated executive developing a feeling of betrayal by the organization. The organization needs to provide a repatriation program for its returning expatriates and their families. The principles below could ensure the success of a repatriation program: Make sure that the expatriates and their families do not feel that the company has left them on their own Make sure that the expatriates are informed of the events happening in the home office Provide repatriation services to assist the expatriates and their families prepare for their return. 405

20 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT Figure.29 Repatriation services Prepare the expatriates for their next career move within the organization. Career path counseling focused on problems associated with reentry and stress experienced by family disorientation. Figure.30 Career path counseling Provide programs that assist returning spouses and their children adjust to the local environment. These programs include extensive personal interviewing by professional training to identify personnel and family stress, assigning experienced expatriate spouses to help in the physical transition back to the local environment i.e. assistance in house hunting, selection of schools and introduction to social clubs, formation of formal returning expatriates club and extended release time and reduced travel for executives in the first several months upon returning to assist them in making decisions and dealing with conflicts between spouses and children..6.7 Auditing the HR Function Managers need to periodically evaluate the effectiveness of their HR policies and procedures. There are a few ways to audit the HR functions. a. HR Scorecard It is able to translate specific HR activities into measurable organizational outcomes b. Tap the opinion of HR and Line Managers The organization can obtain opinion and feedback from HR and line managers regarding the effectiveness of HR functions by following the five step process HR and line managers answer the question: What should HR s functions be? 406

21 Managing Global Human Resources They rate the importance of each of the HR functions identified in step 1 Then, they reply to the question: How well are each of these functions performed? A comparison is made between step 2 and 3 to identify the areas that need improvements Then, top management answers the question: How effective does the HR function allocates its resources? Example: Can the organization utilize its resources more effectively if they create a centralized HR call centre, given the results of questions 1 to 4. This method highlights concerns and suggestions from the managers about things they like to see HR change but do not audit each step in the organization s HR process. We need to obtain feedback from our line managers on the effectives of our HR activities. Dave, please prepare the form for them to fill. Figure.31 HR Department meeting on measuring the effectiveness of all HR activities c. Engage an Expert Opinion The organization can engage a HR consultant to audit its HR functions. The HR consultant will use a detailed checklist approach to evaluate all HR related activities in the organization such as job descriptions, performance appraisal systems, and recruitment and compensation programs. They can also identify legal compliance issues that the organization needs to deal with. After the audit, they will present a written and oral report with sound recommendations. Figure.32 HR consultant presenting his findings and recommendations to their client 407

22 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT.7 SUMMARY 1. International business is important to almost every business today. Many companies are going global and must understand international HR needs with respect to selecting, training, paying and repatriating global employees. 2. Inter-country differences affect a company s HR practices. These differences stem out from cultural, economics, legal and industrial relations factors. 3. Research shows that employers engage in 3 best practices to assist them in making their global HR systems acceptable to their local managers around the world. These are: a. remembering that global systems are more accepted in truly global companies, b. investigating pressures to differentiate and determine their legitimacy and c. trying to work within the context of a strong corporate culture. To develop effective world-wide HR systems : form a global HR networks; remember that it is more important to standardize ends and competencies than specific methods; remember you cannot communicate enough, and provide adequate resources for the global HR effort. 5. The failure rate of expatriate assignments can be reduced through careful selection. There are various sources HR can use to staff domestic and foreign subsidiaries. Often, managerial positions are filled by locals rather than expatriates. 6. Selecting managers for expatriate assignments mean screening them for traits that predict success in adapting to new environments. Such traits include adaptability and flexibility, cultural toughness, self-orientation, job knowledge and motivation, relational skills, cultural openness and family situation. Adaptability screening focusing on the family s probable success in handling foreign assignment can be an especially important step in the selection process. 7. Training for overseas managers focus on cultural differences, on how attitudes influence behavior and on factual knowledge about the target country. The most common approach to formulating expatriate pay is to equalize purchasing power across countries, a technique known as the balance sheet approach. The employer estimates expenses for income taxes, housing, goods and services and reserves and pays supplements to the expatriate in order for him to maintain the same stand of living he would have had at home. 8. Repatriation problems are common and can be minimized. Suggestions for avoiding the problems include using repatriation agreements, assigning a sponsor, offering career counseling, providing financial support to maintain the expatriate s home-country residence and offering re-orientation programs to the expatriates and their families. 408

23 Managing Global Human Resources.8 CASE STUDY MURRAY CLEANING CENTRE With Emily Ko gradually taking over the management of Murray Cleaning Centre, her father, Murray Ko decided to take his first long vacation in years and go to Phuket for two weeks. What he found surprised him. While he spent much of his time on the beach, he also spent some time in town looking at how the local people do business. He was surprised that there we no laundry shops. On his flight back to his laundry store in Penang, he began to think whether he should expand his chain of laundry to Phuket or even Bangkok. On his was home to have dinner with Jen, he began to think of some questions to ask her on whether or not to expand in Thailand. Questions 1. Assuming they began by opening just one or two stores in Thailand, what do you see as the main HR related challenges he and Emily would have to deal with? 2. How would you choose a manager for a new store if you were Murray? For instance, would you hire someone locally or send someone from one of your existing stores. Why? 3. The cost of living in Phuket is below that of Penang where one of Murray laundry stores is now located. How would you develop a pay plan for the new manager if you decided to send a Malaysian to Thailand? 4. Present a detailed explanation of the factors you would look for in your candidate for expatriate manager to run the store in Thailand. 409

24 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT.9 EXERCISES Answer the following questions 1. Geert Hofstede called the extent to which less powerful members of institutions accept and expect an unequal power distribution. a. masculinity b. time framework c. individualism d. power distance e. tolerance for ambiguity 2. How do performance appraisals in China differ from those in the United States? a. performance appraisals in China focus on the process b. employees in China are less likely to receive incentives c. appraisals in China focus on developing the employee d. appraisals in China focus on quantifiable, objective results e. appraisals in China are softer than those in the US 3. Marie is an Italian executive working in a manufacturing plant in Siena, Italy that is owned by a parent company based in Singapore. Marie is a. a. local b. expatriate c. third-country national d. home-country national e. host-country national 4. Jason is a British executive working in the Tokyo branch of a multinational bank based in the United Kingdom. Jason is classified as a. a. local b. expatriate c. third-country national d. home-country national e. host-country national 5. Peter is a German citizen working as a manager for Siemens in Freiberg, Germany. Siemens has facilities all over the world but its headquarters is in Germany. Peter is a(n). a. local b. expatriate c. third-country national d. home-country national e. host-country national 410

25 Managing Global Human Resources 6. Which group tends to earn the highest total compensation from the parent company? a. parent country nationals b. host country nationals c. third country nationals d. a and b e. all of the above 7. Mercedes sent a team of executives from Germany to oversee the start-up of its US operations. Mercedes chose to manage this operation. a. parent country nationals b. host country nationals c. third country nationals d. all of the above e. none of the above 8. A disadvantage of using expatriates to fill foreign subsidiary management positions is that expatriates. a. are more expensive than using local managers b. spend too much time sightseeing in the foreign country c. focus unnecessarily on long-term projects d. bring a sense of diversity to the foreign facility e. all of the above 9. Microsoft tends to follow a geocentric staffing model. From which group will it tend to hire? a. parent country nationals b. host country nationals c. third country nationals d. a and b e. all of the above 10. Call centers that service customers for firms like software and computer hardware companies are increasingly using employees in India to staff the telephones. This is an example of. a. outsourcing b. offshoring c. deportment d. downsizing e. international staffing 11. What classification refers to a conscious belief that only host country managers can ever really understand the culture and behavior of the host country market? a. polycentric b. ethnocentric c. geocentric d. monocentric e. francocentric 411

26 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 12. If a firm chooses to fill key management jobs in foreign subsidiaries with employees who are parent-country nationals, the firm is following a(n) staffing policy. a. polycentric b. ethnocentric c. geocentric d. monocentric e. francocentric 13. The most common reason that an expatriate fails at an international assignment is. a. incompetence b. technical demands of the job c. expense d. family pressure e. all of the above. When Colgate uses adaptability screening to assess an employee s probable success in handling a foreign transfer, the best predictor of future success is. a. job competence b. past international travel c. language skills d. youthfulness e. extraversion 15. The basis of the approach to formulating expatriate pay is to estimate the employee s expenses in the home country and what that standard of living will cost in the host country. a. income sheet b. balance sheet c. equitable wage rate d. performance e. cash flow 16. Which of the following is not one of the main home-country groups of expenses featured in the balance sheet approach to formulating expatriate pay? a. income taxes b. housing c. goods and services d. disposable income e. discretionary expenses 17. JP Enterprises seeks to entice one of its star managers to move to Iraq to oversee its negotiations for Iraqi oil. The firm will likely need to offer a(n) to a manager s base salary. a. cost-of-living allowance b. bonus c. hardship allowance d. tax equalization adjustment e. all of the above 412

27 Managing Global Human Resources 18. In the movie, Proof of Life, Russell Crowe heads up a crisis team sent in to negotiate the release of a kidnapped employee. In real life, who would pay the costs for a crisis team in a situation like this? a. the costs would be covered by the host country b. the costs would be covered by the home country c. the costs would be covered by insurance if the firm holds a kidnapping and ransom insurance policy d. the costs would be covered by the employer e. the costs would be covered by the employee or employees family 19. Frank Williams is being sent to Saudi Arabia for two years to work for his company s Saudi affiliate. Which of the following suggestions should Frank follow to minimize his chances of being the victim of a kidnapping? a. emphasize that he is an American b. take the same route to and from work everyday c. equip car and home with adequate security systems d. wait at the airport in main traffic areas e. all of the above 20. A formal repatriation program should seek to. a. reassure the employee and his or her family of the company s concern for their welfare b. match the employee and his or her family with a specialist in repatriation issues c. maintain communication with the employee regarding activities and progress at the home office d. make the employee comfortable with his or her career development in the company following the international assignment e. all of the above 21. Identify best practices used by successful global firms in developing and implementing a global HR system. 22. What are the advantages and disadvantages of using home country nationals in international assignments? 23. Explain what things seem to make it easier for spouses to adjust to living in a foreign country. 24. What are the five factors associated with success in international assignments. Is one more important than the others? Explain. 25. Explain the balance sheet approach to formulating expatriate pay. 413