Professional Documents
Culture Documents
Lecture 1
Dr Subhash Gupta
What is IHRM?
The second approach to IHRM is the study of industrial relations and labour
management practices and policies in different countries. Study of industrial
relations in a country is reflective of its state of society, historical evolution, power
relationships between groups, class struggle, political framework, prevailing labour
laws and national approach to labour management. This is a very wide field and
encompasses different approaches.
Managerial responses
• Developing a global ‘mindset’
• More weighting on informal control mechanisms
• Fostering horizontal communication
• Using cross-border and virtual teams
• Using international assignments
Thank you
IHRM: Sustaining International Business Operations
Objectives
Approaches to Staffing
Factors affecting approaches to staffing
General staffing policy on key positions at headquarters and subsidiaries
Constraints placed by host government
Staff availability
Ethnocentric
Polycentric
Geocentric
Regiocentric
Types of Staffing Policy
Ethnocentric
Strategic decisions are made at headquarters;
Limited subsidiary autonomy;
Key positions in domestic and foreign operations are held by headquarters’
personnel;
PCNs manage subsidiaries.
Polycentric
Each subsidiary is a distinct national entity with some decision-making autonomy;
HCNs manage subsidiaries who are seldom promoted to HQ positions;
PCNs rarely transferred to subsidiary positions.
Geocentric
A global approach - worldwide integration;
View that each part of the organization makes a unique contribution;
Nationality is ignored in favor of ability:
Best person for the job;
Color of passport does not matter when it comes to rewards, promotion and
development.
Regiocentric
Reflects a regional strategy and structure;
Regional autonomy in decision making;
Staff move within the designated region, rather than globally;
Staff transfers between regions are rare.
Ethnocentric Approach
Advantages:
To ensure new subsidiary complies with overall corporate objectives and policies
Has the required level of competence
Assignments as control
Disadvantages:
Limits the promotion opportunities of HCNs, leading to reduced productivity and
increased turnover among the HCNs
Longer time for PCNs to adapt to host countries, leading to errors and poor
decisions being made
High cost
Considerable income gap, high authority, and increased standard of living may
relate to lack of sensitivity
Polycentric Approach
Advantages:
Employment of HCNs eliminates language barriers, avoids adaptation of PCNs,
reduces the need for cultural awareness training programs
Employment of HCNs allows a multinational company to take a lower profile in
sensitive political situations
Employment of HCNs is less expensive
Employment of HCNs gives continuity to the management of foreign subsidiaries
(lower turnover of key managers)
Polycentric Approach
Disadvantages:
Difficult to bridge the gap between HCN subsidiary managers and PCN managers
at headquarters ( language barriers, conflicting national loyalties, cultural differences)
HCN managers have limited opportunities to gain experience outside their own
country
PCN managers have limited opportunities to gain international experience
Resource allocation and strategic decision making will be constrained when
headquarter is filled only by PCNs who have limited exposure to international assignment
Geocentric Approach
Advantages:
Ability of the firm to develop an international executive team
Overcomes the federation drawback of the polycentric approach
Support cooperation and resource sharing across units
Disadvantage:
Host government may use immigration controls in order to increase HCNs
employment
Expensive to implement due to increased training and relocation costs
Large numbers of PCNs, HCNs, and TCNs need to be sent across borders
Reduced independence of subsidiary management
Regiocentric Approach
Advantages:
Allow interaction between executives transferred to regional headquarters from
subsidiaries in the region and PCNs posted to the regional headquarters
Provide some sensitivity to local conditions
Help the firm to move from a purely ethnocentric or polycentric approach to a
geocentric approach
Disadvantages:
Produce federalism at a regional rather than a country basis and constrain the firm
from taking a global stance
Staff’s career advancement still limited to regional headquarters, not the parent
country headquarters
Parent-Country Nationals
Advantages
Organizational control and coordination is maintained.
Rising stars are given international experience.
PCNs may be the best people for the specific job due to special skills and
experience.
An assurance that the subsidiary will comply with company objectives & policies.
Disadvantages
Promotional opportunities of HCNs are limited.
Time and performance costs associated with adaptation to the host country.
PCNs may impose an inappropriate HQ style.
Compensation for PCNs and HCNs may differ.
Host-Country Nationals
Advantages
Language and other barrier eliminated
Reduced hiring costs
Continuity of management
Government policy may require hiring HCNs
Possible increased morale because of increased career potential
Disadvantages
Hiring of HCNs may encourage a federation of national rather than global units
HCNs have limited career opportunity outside the subsidiary
Control and coordination of HQ may be impeded
Hiring HCNs limits opportunities for PCNs to gain foreign experience
Third-Country Nationals
Advantages
Salary and benefit requirements may be lower than for PCNs.
TCNs may be better informed than PCNs about host-country environment.
Disadvantages
Transfers must consider national animosities.
Host government may resent hiring TCNs.
TCNs may not want to return to their own countries after assignment.
Roles of an Expatriate
Agent of direct control
Agent of socialization
Network builder
Boundary spanner
Language node
Transfer of competence and knowledge
Expatriate Selection
Self-orientation:
Strengthen self-esteem, self-confidence and mental well-being.
Others-orientation:
Enhance ability to interact with host-country nationals.
Perceptual ability:
The ability to empathize - understand why people in host-country behave the way
they do.
Cultural toughness:
How well an expatriate adjusts to a particular posting tends to be related to the
country of assignment.
The Role of Non-expatriates
People who travel internationally yet are not considered expatriates as they do not
relocate to another country
Road warriors, globetrotters, frequent fliers
Much of international business involves visits to foreign locations, e.g.
Sales staff attending trade fairs
Periodic visits to foreign operations
A Glamorous Life
International business travelers cite the positives as:
Excitement and thrills of conducting business deals in foreign locations
Life style (top hotels, duty-free shopping, business class travel)
General exotic nature
But a High Level of Stress!
Home and family issues
Frequent absences
Work arrangements
Domestic side of position still has to be attended to
Travel logistics
waiting in airports, etc.
Health concerns
Poor diet, lack of sleep, etc.
Host culture issues
Limited cultural training
The Expatriate Problem
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.
Expatriate failure:
Premature return of the expatriate manager to his/her home country.
Cost of failure is high:
Estimate = 3X the expatriate’s annual salary plus the cost of relocation (impacted
by currency exchange rates and assignment location).
Individual motives
To gain new job experience.
Better compensation.
Sense of obligation to company.
Possibility of advancement upon return.
Improved life style abroad.
Exposure to new culture.
To shoulder greater professional responsibility.
Desire to escape from personal problems at home.
Restricted career possibilities within parent company
International recruitment: Some issues
Stereotypes, ignorance, assumptions and general lack of cross-cultural
competencies can mean that the right people may not always be given the
opportunities they deserve. Equipping staff with the skills to be able to identify and
manage cross- cultural differences in interviews is vital. Cross cultural differences in
areas such as body language, communication, self-presentation, gender, eye contact,
questioning and privacy can influence an intercultural interview
More socialist countries (France, Norway, Spain, Slovenia etc.) – when looking
for jobs, people prefer to use methods such as: registering with public agencies, asking
friends or relatives
More capitalist/individualist societies (US, Australia, Japan) – people prefer open
advertisements and applying directly for jobs
Apart from the above-mentioned criteria, certain other criteria also need to be
considered in selection of expatriates:
Country- specific requirements
Company-specific requirement
Language
Organizational Commitment
Affective component
Employee’s attachment to, identification with and involvement in, the
organization
Continuance component
Based on assessed costs associated with exiting the organization
Normative component
Employee’s feelings of obligation to remain
Expatriate failure:
Expatriates’ families and spouses face isolation, loneliness and boredom in the
new country and suffer from emotional and physical problems.
Reward package is not sufficient to survive and maintain life style.
In host countries, expatriates have to face uncertainties, relate with people with
different culture, values and beliefs.
Conflicting goals between the parent company, subsidiary or the joint venture
company result in to role conflict.
Culture shock
Inadequate career support and repatriation plan.
Lack of support from headquarters.
Transfer archetypes
Free agents:
41% expatriates fall in this type
Allegiance to host country firm is low
Allegiance to parent firm is low
Flexible, innovative and adventurous
Heart at home
12% expatriates fall in this type
Allegiance to host country firm is low
Allegiance to parent firm is high
Committed towards the company
Determined to achieve the target
Going native
15% expatriates fall in this type
Allegiance to host country firm is high
Allegiance to parent firm is low
Empathetic towards host country culture
Willing to communicate and mix with local people
Dual citizens
32% expatriates fall in this type
Allegiance to host country firm is high
Allegiance to parent firm is high
Open-minded and goal-oriented
Dual citizens are most effective and committed. They are most effective in
balancing the job demands with role clarity.
An expatriate, over-committed to home organization (heart at home), will have
difficulty to adopt the host country practices and will not be able to manage host country
managers, effectively.
If an expatriate is over-committed to the host country organization (going native),
overall integration, coordination and control becomes difficult within the MNC.
The largest group of expatriates falls into the category of free agents, who have
low commitment for both the host and home country organizations.
Solutions to the Dual-career Challenge
Alternative assignment arrangements
Short-term
Commuter
Other (e.g. unaccompanied, business travel, virtual assignments)
Family-friendly policies
Inter-company networking
Job-hunting assistance
Intra-company employment
On-assignment career support
Summary
Summary (cont.)
Summary (cont.)
Summary
It is also apparent that staff selection remains critical. Finding the right people to
fill positions, particularly key managers – whether PCN, TCN or HCN – can determine
international expansion.
However, effective recruitment and selection are only the first step.
We will explore in the next chapter that maintaining and retaining productive staff
are equally important.
Summary (cont.)
Dr Subhash Gupta
Objectives
Training aims to improve employees’ current work skills and behavior, whereas
development aims to increase abilities in relation to some future position or job.
In this lecture, we examine how the international assignment is a vehicle for both
training and development, as reflected in the reasons why international assignments
continue to play a strategic role in international business operations.
The role of training in preparing and supporting personnel on international
assignments is also considered. We examine the following issues:
(cont.)
Objectives (cont.)
The role of training in supporting expatriate adjustment and on-assignment
performance.
Components of effective pre-departure training programs such as cultural
awareness, preliminary visits and language skills. Relocation assistance and training for
trainers are also addressed.
The effectiveness of pre-departure training.
The developmental aspect of international assignments and its relation to
international career paths.
Training and developing international management teams.
(cont.)
BACKDROP OF INTERNATIONAL TRAINING
The key people who need to be trained are:
Expatriates
Spouses
Children
Requirements and goals of expatriate training:
To maximize the cultural sensitivity of relocating employees, in preparing them to
conduct business with colleagues from other cultures.
To learn how to avoid misunderstandings based on cultural differences.
To learn how to communicate verbally and non-verbally with colleagues in other
cultures.
To understand the role of learning and communication styles in work, everyday
living, and telling situations, and how to work effectively with people with differing
styles.
To understand the historical, political, educational, and economic background of
the host country well enough to interpret current news events and economic policies and
social problems.
To learn to anticipate the factors leading to culture shock and how to manage it,
for oneself and one's family.
Role-based training inputs for ensuring due performance of the jobs and
achievement of business goals in line with the company’s expectations.
Some problem which may arise due to lack of effective preparation before taking up of a
foreign assignment are:
The manager may be incompetent to shoulder the responsibilities of the
assignment.
The unwillingness to work abroad.
The personality and the emotional maturity of the manager may
prove inadequate.
The manager may find it very difficult to adapt to the new environment
(as the cultural differences can be very high)
There can be family-related issues (as the spouse would find it very
inconvenient to adapt to the new culture)
International Assignments as a Training and Development Tool
Expatriates are trainers
Expatriates show how systems and procedures work, ensure adoption, and
monitor performance of HCNs
International assignments are a form of job rotation to gain a broader perspective
– management development, and to assist in developing a pool of capable global
operators.
Components of Effective Pre-departure Training
Cultural awareness programs
Preliminary visits
Language training
Practical assistance
Training for the training role
TCN and HCN expatriate training
Non-traditional assignments and training
TRAINING RIGOR
The extent of effort by trainees and trainers required to prepare the trainees for
expatriate positions
LOW RIGOR TRAINING
Short time period
Lectures
Videos on local culture
Briefings on company operations company operations
HIGH RIGOR TRAINING
Lasts over a month
Experiential learning
Extensive language training
Often includes interactions with host country nationals
Levels of training:
First Level: Learning about the host country – Their culture, language, politics,
business, geography, religious values and history. (Through seminars, videos, meeting
with citizens of the country before assignment begins.)
Second Level: Understanding the requirements of the assignment – technical
skills, managerial knowledge.
Third Level: Preparation for the new job: preparing for the new job at the new
location.
Fourth Level: Providing assistance –to adjust and adapt to the new environment.
Fifth Level: Re-entry – contact with family, visit to home during vacations.
Language Training
The role of English as the language of world business
Host country-language skills and adjustment
Knowledge of the corporate language
Practical Assistance
Information that assists relocation
Assistance in finding suitable accommodation and schooling
Further language training
Makes an important contribution to adaptation of expatriate and accompanying
family members to the host location
Effectiveness of Pre-departure Training
Limited data on how effective such training is and what components are
considered most essential:
Use of mixture of methods makes evaluation of which method is most effective
difficult to isolate
Large diversity of cultures involved
What works for one may not work for another
Complex jobs in multiple cultural contexts
Integrated cross-cultural training exhibited cultural proficiency earlier and
appeared to have greater job satisfaction than those with lesser training.
Developing Staff through International Assignments
Management Development
Individuals gain international experience which assists career progression
Multinational gains through having a pool of experienced operators on which to
draw for future international assignments
Developing Staff through International Assignments
Organizational Development
Accumulating a stock of knowledge, skills and abilities
Developing a global mindset
Expatriates as agents of direct control and socialization in the transfer of
knowledge and competence.
Summary
Summary (cont.)
Summary (cont.)
GLOBAL EXPATRIATE WEBSITES
Expat Communities, www.expatcommunities.com, is a worldwide directory
with listings of useful resources, online forums, organizations, etc. for the expatriate.
Expat Exchange, www.expatexchange.com, is one of the most extensive
expatriate sites online, providing a wealth of resources and articles for expatriates
worldwide.
Expat Expert, www.expatexpert.com, provides useful articles and information
for the expatriate, resources about going and living abroad, as well as information for
returning home.
Expat Focus, www.expatfocus.com, provides news, information, and advice for
the expatriate; also maintains an online community through forums and blogs. Maintains
the Yahoo discussion group “Expat Focus,” groups.yahoo.com/group/ExpatFocus.