Humantalents InternationalInternational Human ResourcesManagement(IHRM) IssuesA learning ResourceJayadeva de Silva.M.

Sc ,FIPM ,FITDObjectivesAfter following t

his lesson, you should be able to:? Identify the types of organizational forms u
sed for competing internationally.? Explain the economic, political-legal, and c
ultural factors in different countries that HR managers need to consider.? Expla
in how domestic and international HRM differ.? Discuss the staffing process for
individuals working internationally.? Identify the unique training needs for int
ernational assignees and their employees. 1
2. Humantalents International? Identify the characteristics of a good internatio
nal compensation plan.? Reconcile the difficulties of home- and host-country per
formance appraisals.? Explain how labor relations differ around the world.Increa
sing Importance of Global Human ResourceUnderstanding for Managing Across Border
sTypes of Corporations
International corporation ? Domestic firm that uses its e
xisting capabilities to move into overseas markets.
Multinational corporation (M
NC) ? Firm with independent business units operating in multiple countries.
Glob
al corporation ? Firm that has integrated worldwide operations through a central
ized home office. Transnational corporation ? Firm that attempts to balance loca
l responsiveness and global scale via a network of specialized operating units.
2
3. Humantalents International ?How International Companies Affect the World Econ
omyo Their production and distribution extend beyond national boundaries, making
it easier to transfer technology.o They have direct investments in many countri
es, affecting the balance of payments.o They have a political impact that leads
to cooperation among countries and to the breaking down of barriers of nationali
sm.How Does the Global Environment Influence Management?Unified Economies?Closel
y partnered nations such as the European Union (EU) havedeveloped into strong co
mpetitors.?Promotes job growth in trading nations. 3
4. Humantalents InternationalCultural environment?The communication patterns, re
ligion, values and ideologies,education, and social structure of a host country
influence how HR isconducted in that country.Cultural Environment of Internation
al BusinessDomestic versus International HRMIssues in international HRM in helpi
ng employees adapt to a new anddifferent environment outside their own country:?
Relocation?Orientation 4
5. Humantalents International?Objective?Translation servicesInternational Staffi
ngExpatriates, or Home-country Nationals?Employees from the home country who are
on internationalassignment.Host-country Nationals?Employees who are natives of
the host country.Third-country Nationals?Employees who are natives of a country
other than the homecountry or the host country.Changes in International Staffing
over Time 5
6. Humantalents InternationalHiring Host-Country NationalsThree main advantages:
?Hiring local citizens is generally less costly than relocatingexpatriates.?Sinc
e local governments usually want good jobs for their citizens,foreign employers
may be required to hire locally.?Most customers want to do business with compani
es they perceiveto be local versus foreign.Recruiting InternationallyWork Permit
, or Visa?Government document granting a foreign individual the right toseek emp
loyment.Guest Workers?Foreign workers invited to perform needed labor.Apprentice
ships?Vocational training programs in skilled trades.Transnational Teams?Teams c
omposed of members of multiple nationalities working onprojects that span multip
le countries.Selecting Global ManagersGlobal manager?A manager equipped to run a
n international businessSkills Categories?Ability to seize strategic opportuniti
es?Ability to manage highly decentralized organizations?Awareness of global issu
es?Sensitivity to issues of diversity?Competence in interpersonal relations?Skil
l in building community 6
7. Humantalents InternationalSelecting Global Managers Create a candidate pool. Asse
ss core skills. Assess augmented skills and attributes.Measured Expatriate Charact
eristicsCore Skills?Skills that are considered critical to an employee s success a
broad.Augmented Skills?Skills that are helpful in facilitating the efforts ofexp
atriate managers.Failure rate?Percentage of expatriates who do not perform satis
factorily.Comparison of Advantages in Sources of Overseas ManagersHost Country H
ome country Third countryLess costly Talent available within company Broad exper

iencePreferred byhost-country Greater control International outlookIntimate know

ledge of Company experience Multilingualismenvironment and cultureLanguage facil
ity Mobility Experience provided to Corporate executivesExpatriate Selection Cri
teria 7
8. Humantalents InternationalCauses of Expatriate Assignment Failure
Family adju
stment Lifestyle issues
Work adjustment
Bad selection
Poor performance Other opp
ortunities arise Business reasons
Repatriation issuesTraining and DevelopmentEss
ential training program content to prepare employees for workinginternationally:
?Language training?Cultural training?Assessing and tracking career development?M
anaging personal and family life?Repatriation 8
9. Humantalents InternationalCulture shock?Perpetual stress experienced by peopl
e who settle overseas.Preparing for an International AssignmentTo prepare for an
international assignment, one should becomeacquainted with the following aspect
s of the host country: 1. Social and business etiquette 2. History and folklore
3. Current affairs, including relations between the host country and the United
States 4. Cultural values and priorities 5. Geography, especially its major citi
es 6. Sources of pride and great achievements of the culture 7. Religion and the
role of religion in daily life 8. Political structure and current players 9. Pr
actical matters such as currency, transportation, time zones, hours of business
10 The LanguageTraining Methodso Reviewing available information about the host
company: books, magazines, video tapes.o Conversations with host country natives
.o Sensitivity training to become familiar with the customs and overcome prejudi
ces.o Temporary assignments to encourage shared learning.A Synthesis of Country
Clusters 9
10. Humantalents InternationalReturning from an Overseas AssignmentRepatriation?
The process of an employee transitioning home from aninternational assignment.?T
hrow a welcome home party.?Offer counseling to ease the transition. 10
11. Humantalents International?Arrange conferences and presentations to make cer
tain thatknowledge and skills acquired away from home are identified anddissemin
ated.?Get feedback from the employee and the family about how well theorganizati
on handled the repatriation process.CompensationDifferent countries have differe
nt norms for employeecompensation.?Financial (money) incentives versus nonfinanc
ial incentives(prestige, independence, and influence)?Individual rewards versus
collectivist concerns for internal equityand personal needs?General rule: match
the rewards to the values of the local culture create a pay plan that supports the
overall strategic intent of theorganization but provides enough flexibility to
customize particularpolicies and programs to meet the needs of employees in spec
ificlocations.Forces Driving Global PayCULTURAL PREFERENCESImportance of statusR
ole of individual vs. organization vs. governmentEquality vs. disparityAchieveme
nt vs. relationshipsECONOMIC CONDITIONSSize of economyTypes of industries, natur
al resourcesInflation, unemploymentProtectionism vs. open market 11
12. Humantalents InternationalPERSONAL PREFERENCESAttitudes toward riskQuality o
f life vs. workShort- vs. long-termCompetitiveness vs. solidaritySOCIAL CONSTRAI
NTSIncome tax rates, social costsLaws and regulationsCollective bargaining, work
er participationSkills, education of workforceCompensation of Host-Country Emplo
yeeso Hourly wages vary dramatically from country to country.o Pay periods are d
ifferent.o Seniority may be an important factor.o High pay rates can upset local
compensation practices.o Bonuses, profit-sharing, benefits and paid leave may b
e more extensive and legally required.Hourly Wages in Different Countries* in US
DollarsNorway 31.55Germany (former West) 31.25Switzerland 27.87Belgium 27.73Swe
den 25.18United States 21.97France 21.13Britain 20.37Japan 20.09Australia 20.05C
anada 19.28 12
13. Humantalents InternationalItaly 18.35Spain 14.96Israel 11.73Korea 10.28Portu
gal 6.23Taiwan 5.84Brazil 2.67Mexico 2.48China 0.63Sri Lanka 0.49Compensation of
Expatriate Managerso Provide an incentive to leave the United Stateso Allow for
maintaining a U.S. standard of livingo Provide for security in countries that a
re politically unstable or present personal dangerso Include provisions for good
healthcareo Provide for the education of childreno Consider foreign taxes the e
mployee is likely to have to pay (in addition to domestic taxes) and help with t
ax forms and filingo Allow for maintaining relationships with family, friends, a

nd business associates.o Facilitate reentry homeo Be in writingExpatriate Compen

sation SystemsHome-Based Pay?Pay based on an expatriate s home country s compensatio
npracticesBalance-Sheet Approach?A compensation system designed to match the pur
chasing power ina person s home country 13
14. Humantalents International?Calculate base pay?Figure cost-of-living allowanc
e (COLA)?Add incentive premiums?Add assistance programsExpatriate Compensation S
ystems (cont d)Host-Based Pay?Expatriate pay comparable to that earned by employee
s in a hostcountry to which the expatriate is assigned.Localization?Adapting pay
and other compensation benefits to match that of aparticular countryOther Issue
s?Adequacy of medical care?Personal security?EducationPerformance Appraisal of I
nternational ManagersWho Should Appraise Performance??Home-country evaluations?H
ost-country evaluationsAdjusting Performance Criteria?Augmenting job duties?Indi
vidual learning?Organizational learningProviding Feedback?Debriefing interviewBo
osting ROI of Expatriates 14
15. Humantalents InternationalMajor initiatives planned to improve assignment re
turn oninvestment (ROI):Better candidate selection 32%Career-planning skills 26C
ommunicating objectives 24Assignment preparation 20Monitoring program 17Cross-cu
ltural training 10Developing or expanding intranet 7Communication/recognition 6W
eb-based cultural training 5Mandating destination support 4Other 17International
Organizations and Labor RelationsInternational Differences in Unions?The level
at which bargaining takes place (national, industry, orworkplace)?The degree of
centralization of union-management relations?The scope of bargaining (parties an
d issues)?The degree to which government intervenes?The degree of unionization a
nd union strength.Key Terms? augmented skills? balance-sheet approach? codetermi
nation? core skills? cultural environment? culture shock? expatriates, or home-c
ountry nationals 15
16. Humantalents International? failure rate? global corporation? global manager
? guest workers? home-based pay? host-based pay? host country? host-country nati
onals? international corporation? localization? multinational corporation (MNC)?
repatriation? third-country nationals? transnational corporation? transnational
teams? work permit, or visa 16