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Title: International%20Human%20Resource%20Management


1
International Human ResourceManagement
  • Chapter 8

IBUS 681, Dr. Yang
2
Learning Objectives
  • Define international human resource management
  • Understand how corporate strategy influences IHRM
  • Explain major IHRM functions
  • Discuss additional concerns of managing
    expatriate employees

3
Major HRM Functions
  • Staffing
  • Recruiting and selection
  • Training and development
  • Compensation and benefits
  • Employee motivation
  • Performance evaluation
  • Labor relations

4
Major Areas of IHRM
  • The management of human resources in global
    corporations
  • The management of expatriate employees
  • The comparison of HRM practices in a variety of
    different countries

5
Approaches to Managing and Staffing Subsidiaries
  • Ethnocentric
  • Polycentric
  • Regiocentric
  • Geocentric

What factors would influence your choice?
6
Choosing an Approach to IHRM
  • Political and legal concerns
  • Level of development in foreign locations
  • Technology and the nature of the product
  • Organizational life cycle
  • Age and history of the subsidiary
  • Organizational and national cultural differences

7
Recruitment and Selection
  • Employee classification
  • Parent country national (PCN)
  • Host country national (HCN)
  • Third country national (TCN)
  • Managing and staffing approaches
  • Selecting the right candidate

8
Selecting the Right Candidate
  • Need a balance between internal corporate
    consistency and sensitivity to local labor
    practices
  • Consider cultural values, e.g.,
  • Achievement-oriented
  • Ascription-oriented
  • Must comply with local labor laws, e.g.,
  • EEOA

9
Expatriate Selection
  • Western European and Japanese MNCs emphasize
    technical competence and ability to acclimate
  • North American corporations select mainly on
    technical competence
  • Behaviors successful at home may not work abroad
  • Previous experience abroad may or may not predict
    future success

10
Training and Development
  • Planned individual learning, organization
    development, and career development
  • Delivery of programs worldwide
  • Developing globally minded managers

11
Delivery of Programs Worldwide
  • Centralized approach
  • Ethnocentric training originates at
    headquarters and corporate trainers travel to
    subsidiaries
  • Geocentric training develops through input from
    both headquarters and subsidiary staff and
    trainers could be from any location

12
Delivery of Programs Worldwide
  • Decentralized approach
  • Training on a local or regional basis
  • Local people develop training materials and
    techniques for use in their own area
  • Effective training considers cultural background
    of trainees
  • With a centralized approach, trainers need to
    adapt to local cultures

13
Cultural Impacts on Training and Development
Practices
  • Human resource development roles
  • Analysis and design
  • Development and delivery
  • Administration and environment
  • US and Canada
  • East Asia
  • Middle East and North Africa
  • Latin America

14
Cross-Cultural Training Methods
Explain the major aspects of the host country
culture, including customs, traditions, every
day behaviors. Explain the history, geography,
economy, politics, and other general information
about the host country and region. Portray a
real-life situation in business or personal life
to illustrate some aspect of living or working in
the host culture.
  • Cultural Briefings
  • Area Briefings
  • Cases

15
Cross-Cultural Training Methods (cont.)
Allows the trainee to act out a situation that he
or she might face in living or working in the
host country. Provides a written set of
situations that the trainee might encounter in
living or working in the host country. Trainee
selects one from a set of responses to the
situation and is given feedback as to whether it
is appropriate and why. Provide an opportunity
for the trainee to go to the host country or
another unfamiliar culture to experience living
and working for a short time.
  • Role Playing
  • Culture Assimilator
  • Field Experiences

16
How Situational Factors Influence the Selection
of a CCT Method
High
Degree of Culture Novelty
Degree of Training Rigor
EXPERIENTIAL
Simulations
Low
Field Trips
Role Plays
Interactive Language Training
High
ANALYTICAL
Training Methods
Sensitivity Training
Culture Assimilators
Case Studies
Degree of Job Novelty
Classroom Language Training
Films
FACTUAL
Books
Lectures
Area Briefings
Low
High
Low
Degree of Interaction with Host Country Nationals
IBUS 681, Dr. Yang
17
Developing Globally Minded Managers
  • Companies whose CEO's have international
    assignment experience are better performers
  • Even stronger if the top management team also has
    international experience and the company has an
    extensive global strategy
  • Companies must identify managers with global
    potential and provide them various training and
    development opportunities.

18
Performance Evaluation
  • Systematic appraisal of employees performance
    within the organization
  • Depends on overall HRM strategy
  • Should consider cultural influences

19
Performance Evaluation
  • Purpose
  • Timeframe
  • Standards
  • Feedback
  • Market conditions
  • Economic factors

20
Expatriate Performance
Multinationals Failure Rates Top Reasons
U.S. 10-40 Family Adaptability
Western Europe 5-15 Family Adaptability
Japan Less than 5 Larger Responsibility
  • Based on HR administrative reports
  • Failure as premature return from international
    assignments

21
Expatriates Selection Criteria
  • Technical competence
  • Adaptability
  • Communication skills
  • Family stability
  • Gender
  • Age
  • Ethnicity

22
Compensation and Benefits
  • Salary-related and non-salary related factors
  • Organizational philosophy and strategy
  • Cost to the organization
  • Employee motivation
  • Company image

23
Typical Expatriate Benefits
  • Overseas premium
  • Housing allowances
  • Cost of living allowances (COLA)
  • Moving expenses
  • Tuition assistance for dependent education
  • Home leave
  • Tax reimbursement plans

24
How HR and IHR differ in compensation?
  • Company strategy and philosophy
  • Salary and non-salary related, e.g.
  • Key elements in compensation package
  • Home-based, host based or region-based
  • Performance and motivation
  • Gender
  • Nationality

25
Employee Compensation
Extrinsic
Intrinsic
Participate in
Non-Financial
Financial
decision making
Greater job
Implied Membership-based
Explicit Membership-based
Performance-based
freedom and
Preferred office
discretion
furnishings
More
Cost
-
of
-
living
Protection
Preferred
responsibility
Piecework
programs
increases
lunch hours
Commission
Labor
Assigned
Pay for time
More interesting work
parking spaces
market
not worked
Incentive
adjustment
plans
Opportunities
Preferred
Time-in-rank
Services and
for personal
work
Performance
increase
perquisites
assignments
growth
bonuses
Business Cards
Profit sharing
Diversity of
Merit pay
activities
Own secretary
plans
Impressive titles
26
Per Capita Incomes by Metropolitan Area (U.S.
Average 29,469)
TOP 10 TOP 10 TOP 10 TOP 10 TOP 10 TOP 10
1 San Francisco, Ca 57,414 6 West Palm Beach, Boca Raton, Fla 41,007
2 San Jose, Ca 55,157 7 Trenton, NJ 40,954
3 New Heaven, Bridgeport, Stamfort, Danbury, Waterbury, Conn. 46,542 8 Seattle, Bellevue, Everett, Wash 40,686
4 Bergen, Passaic, NJ 42,726 9 Nassau, Suffolk, NY 40,353
5 Middelsex, Sommerset, Hunterdon, NJ 42,392 10 Naples, Fla 40,121
Source U.S. Department of Commerce Bureau of
Economic Analysis, The Mercury News, August 4,
2002
27
Per Capita Incomes by Metropolitan Area (U.S.
Average 29,469)
BOTTOM 10 BOTTOM 10 BOTTOM 10 BOTTOM 10 BOTTOM 10 BOTTOM 10
1 McAllen, Edinburg, Mission, Texas 13,344 6 Auburn, Opelika, Ala. 18,484
2 Brownsville, Harlingen, San Benito, Texas 14,906 7 El Paso, Texas 18,535
3 Laredo, Texas 15,114 8 Merced, CA 18,536
4 Yuma, Ariz. 16,002 9 Provo, Orem, Utah 19,128
5 Las Cruces, N.M. 17,321 10 Pine Bluff, Ark. 19,826
Source U.S. Department of Commerce Bureau of
Economic Analysis, The Mercury News, August 4,
2002
28
Typical U.S. Expatriate Remuneration Package
Remuneration Package London Brussels Tokyo Riyadh
Cash premium Allowances 12,540 (28.5) 37,625 (30.1) 45,080 (19.6) 62,700 (33)
Relocation assistance 8,888 (20.2) 24,875 (19.9) 53,750 (28.8) 25,650 (18.5)
Itemized reimbursement 8,184 (18.6) 18,750 (15) 41,880 (18.2) 39,330 (20.7)
Taxation 14,888 (32.7) 43,750 (35) 91,310 (39.7) 62,320 (32.8)
Total annual incremental cost 44,000 125,000 230,000 190,000
Total three-year incremental cost 132,000 375,000 690,000 570,000
Total three-year cost Incremental plus base 432,000 675,000 990,000 870,000
Based on a 3-year term with an annual base pay of
100,000
29
Gender Pay Gap Differentials in EU and the US
.Country Time Period Women's Average Pay as Percentage of Men's Trends
Austria 1990-99 68 ? 67 (monthly gross earnings) Increasing
Belgium 1991-96 75.3 ? 79.4 for blue-collar workers 64.2 ? 70.1 for white-collar workers (gross annual earnings). Narrowing
Denmark 1995-1999 83.61 ? 82 in private sector Stable
Finland 1990-99 80 ? 82 (monthly earnings). Stable
France 1991-98 84.2 ? 88.2 for full-time employees (monthly pay) 75.1 ? 75.8 for all employees including part-time No information
Germany 1997-2000 75.3 ? 75.8 for blue-collar workers (West Germany) 69.4 ? 70.4 for white-collar workers (West Germany). Narrowing
Greece 1996-1998 80 (average gross hourly earnings) Narrowing
Ireland 1987-97 80 ? 84.5 (hourly earnings) Narrowing
Italy 1991-98 82.3 ? 81.7 (annual income). No information
Luxembourg 1995-2000 85 (1999 average, no overtime figures given) Narrowing
Netherlands 1990-98 73 ? 77 (hourly pay) Narrowing
Portugal 1997-98 77 ? 76.5 (monthly pay) Increasing
Spain 1996-2000 74.9 ? 76.9 (monthly pay) Narrowing
Sweden 1995-2000 84 ? 82 (monthly pay) Increasing
UK 1990-2000 76.6 ? 80.6 (hourly pay) Narrowing
U.S. 1983-2000 66.6 ? 76.0 (weekly full-time wage and salary) Narrowing
Source Adapted from National data - EIRO
Eurostat data, May 2001, Theme 3 US DOL Bureau
of Labor Statistics, August 2001
30
Womens Average Earnings as Percentage of Mens
31
Gender-based Occupation
Who Does What of Positions Held by Women
Management, professional and related occupations 50.3
Physicians and surgeons 29.4
Dentists 22.0
Dental assistants 96.5
Registered nurses 92.2
Personal care and service occupations 77.6
Lawyers 29.4
Paralegals and legal assistants 86.4
Postsecondary teachers 46.0
Elementary and middle school Teachers 81.3
Preschool and kindergarten teachers 98.1
Librarians 83.2
Architects and engineers 13.8
Clergy 15.0
Source USDOL BLS, 2005
32
Wal-Marts Gender-based Pay Differentials
Job Categories Average Annual Earnings 2001 Average Annual Earnings 2001 Average Annual Earnings 2001 Average Annual Earnings 2001 Average Annual Earnings 2001
Job Categories No. of Employees of Women Male Salaries Female Salaries Gender Gap
Regional VP 39 10 419,400 279,800 .67
District MGR 508 10 239,500 177,100 .74
Store MGR 3,241 14 105,700 89,300 .84
Assistant MGR 18,731 36 39,800 37,300 .94
MGMT Trainee 1,203 41 23,200 22,400 .97
Dept Head 63,747 78 23,500 21,700 .92
Sales Associate 100,003 68 16,500 15,100 .92
Cashier 50,987 93 14,500 13,800 .95
Based on Business Week March 3, 2003
33
Family Impact on Gender-based Pay Ratios
(Corrected for Hours)
Country All Workers Married Workers Single Workers
Germany (monthly) .6880 .5730 1.027
United Kingdom (annual) .6337 .5966 .9489
United States (annual) .6849 .5944 .9552
Austria (monthly) .7256 .6558 .9703
Switzerland (monthly) .6174 .5768 .9449
Sweden (annual) .7673 .7274 .9350
Norway (annual) .7308 .7160 .9158
Australia (annual) .7489 .6909 .9144
Average .6995 .6417 .9514
Source Adapted from The gender earning gaps
Learning from international comparisons, Blau and
Kahn, American Economic Review, (82) 2, 1992
34
The Dual-career Penalty
Lower Pay Lower Pay
Average income of men with MBA and whose wives were Average income of men with MBA and whose wives were
Working 95,067 Not Working 125,120
Up 48 in six years Up 59 in six years
Fewer Promotions Fewer Promotions
entered top management positions whose wives were entered top management positions whose wives were
Working 28 Not Working 38
Source Effects of alternative family structures
on managerial career paths, Schneer, and Reitman,
Academy of Management Journal 30 (4), 1993
35
Why both are working?
Percentage change 1975-95 Income vs.
Costs
Source Is your family wrecking your career,
Fortune, March 17, 1997 71
36
Labor Relations
  • Labor relations function
  • Identify and define roles of management and
    workers in the workplace
  • Collective bargaining
  • Union organizations
  • Union membership
  • Labor law

37
Union Density Figures for Selected Countries
Country Percentage of Union Membership Country Percentage of Union Membership
Australia 28 India 26
Canada 30 Japan 22
China 90 Norway 71
Colombia 7 Mexico 30
Germany 26 Slovakia 60
Hong Kong 15 South Korea 12
Iceland 50 Turkey 57
France 10 U.S. 14
Source U.S. Department of Labor, Bureau of
International Labor Affairs, Foreign Labor Trends
and Bureau of Labor Statistics,
38
Trade Unions in Industrial Countries
39
Managing Expatriates
  • Training and development
  • Cross-cultural adjustment
  • Expatriate evaluation
  • Expatriate compensation
  • Expatriate reentry assistance
  • Minimize reverse culture shock
  • Integrate the manager back into the home office
  • Adjustments to a new or lower standard of living
  • Allow for reentry time

40
Culture Shock Cycle
High
Mood
Low
1 2 3 4 5 6
Length in a New Culture
41
Retaining the Expatriates
  • 80 believe they would be promoted
  • About 23 get the promotion
  • 20 want to leave the company upon return
  • Averaged 44 turnover 25 leave within one year
    after repatriation, 55 after three years
  • Average turnover cost is 250,000

42
Convergence or Divergence?
  • Large corporations preference for consistent
    worldwide systems
  • Smaller companies desire for more professional
    systems
  • Need to follow local HRM laws and social norms
  • Development of unique techniques and practices to
    suit local cultural and legal requirements

43
Implications for Managers
  • Every international manager has responsibility
    for effectively managing human resources, and
    therefore, must understand IHRM functions.
  • It is helpful to understand IHRM because of
    potential impacts on ones career.
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