Global HRM
Basic Assumptions Major growth opportunities for large organizations are at the international level Going across national borders creates the need to coordinate and manage actions of employees from different cultures, educational levels, etc. Cultural, legal, and other differences affect all levels of HRM functions (e.g., selection, training, etc.) And now for a short quiz: Number
Why Move Beyond National Level? New markets Reduce labor costs Needed knowledge, skills, or resources may not be readily available locally Technology makes operating at a distance feasible Operate on a 24/7 basis Easier to do than in the past
Levels of Global Participation See Noe, Hollenbeck, Gerhart, & Wright (2009), Fig. 15.1, p. 437
Factors Affecting HRM in International Markets Education Economic Systems Culture Global HRM Political- Legal Systems (Wiletzky, 2009)
Example: Culture Culture a community s set of shared assumptions about how the world works and what ideals are worth striving for. Culture can greatly affect a country s laws. Culture influences what people value, so it affects people s economic systems and efforts to invest in education. Culture often determines the effectiveness of various HRM practices. (Wiletzky, 2009)
Culture Cultural characteristics influence the ways members of an organization behave toward one another as well as their attitudes toward various HRM practices. Cultures strongly influence appropriateness of HRM practices. Cultural differences can affect how people communicate and how they coordinate their activities. Basic idea is that culture impacts how managers relate to employees or how leaders are expected to lead. Another example: How training takes place and role of the trainer. (Wiletzky, 2009)
Hofstede s Dimensions of Culture 1. Individualism/Collectivism Describes the strength of the relation between an individual and other individuals in the society. 2. Power Distance Concerns the way the culture deals with unequal distribution of power and defines the amount of inequality that is normal. 3. Uncertainty Avoidance Describes how cultures handle the fact that the future is unpredictable. 4. Masculinity/Femininity The emphasis a culture places on practices or qualities that have traditionally been considered masculine or feminine. 5. Long-term/Short-term Orientation Suggests whether the focus of cultural values is on the future (long term) or the past and present (short term). (Wiletzky, 2009)
(cf. Weiten, 2011, p. 526)
Terms for Employees in an International Workforce Parent-country national employee who was born and works in the country in which an organization s headquarters is located. Host-country national employee who is a citizen of the country (other than parent country) in which an organization operates a facility. Third-country national employee who is a citizen of a country that is neither the parent country nor the host country of the employer. (Wiletzky, 2009)
Terms for Employees (continued) When organizations operate overseas, they hire a combination of parent-country nationals, host-country nationals, or third-country nationals. Expatriates employees assigned to work in another country. A citizen of one country living and working in another country. (Gomez-Mejia, Balkin, & Cardy, 1998, p. 518) (Wiletzky, 2009)
Local vs. Expatriates: Advantages and Disadvantages (1 of 2) Locals Decreases labor costs Shows trust Advantages Increases local acceptance of organization Helps reflect local knowledge and issues in decisions Disadvantages Potential problems balancing global and local priorities May lead to delays in making difficult local decisions Local labor pool may not contain necessary KSAOs and competencies Possible decline in corporate oversight and control (cf. Gomez-Mejia, Balkin, & Cardy, 1998, p. 520)
Local vs. Expatriates: Advantages and Disadvantages (2 of 2) Expatriates Advantages Increased transfer of business practices May increase corporate control and coordination Employee development (e.g., multinational experience) May be used to develop local talent Problems adapting to and returning from international assignments To locals, expatriates (and company) viewed as foreigners Costs for travel, moving, etc. Disadvantages Possible personal and family issues Use of expatriates may be prohibited or time-limited by host nation laws, etc. (cf. Gomez-Mejia, Balkin, & Cardy, 1998, p. 520)
Criteria for Selection of Employees for Foreign Assignments 1. Competency in the employee s area of expertise 2. Ability to communicate verbally and nonverbally in the foreign country 3. Flexibility, tolerance of ambiguity, and sensitivity to cultural differences 4. Motivation to succeed and enjoyment of challenges 5. Willingness to learn about the foreign country s culture, language, and customs 6. Support from family members (Wiletzky, 2009)
Selection of Expatriates: Examples Examples of standardized measures: Overseas Assignment Inventory Culture Shock Inventory Cross-Cultural Adaptability Inventory Also use: Structured behavioral interviews Assessment centers Self-assessment programs (Bennett, 2002, p. 4)
Expatriates: Examples of Problems Career blocked or sidetracked Culture shock Lack of proper recruitment, selection, training, and orientation Overemphasis on technical skills Dumping ground for problem employees Family problems Problems upon return (loss of status, lack of respect for new skills, problems with return position, reverse culture shock) (Gomez-Mejia, Balkin, & Cardy, 1998, pp. 522-525)
Profile of Effective Expatriate Spouse: Examples Good listener; concerned about others Flexible in response to ideas, beliefs, or points of view Effective at building and maintaining relationships with diverse persons Respect for others; nonethnocentric Good relations with immediate family Other issues to consider include impact on: Spouse s career Children s educational and other needs (Bennett, 2002, p. 2-3)
Effects of Culture on Training Design See Noe et al. (2009), Table 15.1. p. 447
International HR: Training Topic Examples Intercultural competency Language training Cultural training & coaching Security briefing Employee s expectations for assignment Company s expectations for assignment Business culture training Management training Informational meetings (Kreicker, 2005)
Performance Management Across National Boundaries Differences may include: Which behaviors are rated How and the extent to which performance is measured Who performs the rating How feedback is required (Wiletzky, 2009)
Compensating Expatriates Balance sheet approach adjusts expatriate s compensation so that it gives her/him the same standard of living as in the home country plus extra pay for the inconvenience of locating overseas. This approach involves an effort by the global organization to ensure that its expatriates are made whole. (Wiletzky, 2009)
The Balance Sheet for Determining Expatriate Compensation See Noe et al. (2009), Fig. 15.6, p. 457
Compensating Expatriates (continued) After setting the total pay, the organization divides this amount into the four components of the total pay package: 1. Base salary 2. Tax equalization allowance 3. Benefits 4. Allowances (Wiletzky, 2009)
International Assignment Allowance Form See Noe et al. (2009), Fig. 15.7, p. 460
Helping Expatriates Return Home Repatriation the process of preparing expatriates to return home from foreign assignment. 1. Communication: the expatriate receives information and recognizes changes at home while abroad. 2. Validation: giving the expatriate recognition for the overseas service when this person returns home. (Wiletzky, 2009)