International HRM

Why care about international HRM?

The success of many organizations depends upon their ability to internationalize their operations.

Canada is no stranger to this need. Examples include Alcan, BCE, Cognos, Nortel, Bombardier, the Royal Bank, KPMG, Ernst & Young, and Abitibi-Consolidated.
2

Stages of Internationalization
Stage 1: Domestic Operations
Firms offer products or services that are designed to primarily serve consumers in the domestic market (e.g., law firms)

Stage 2: Export Operations

Products and services are opened up to markets in other countries, but production facilities remain in Canada (e.g., McCain Foods). HRM: Provides sales force with skills and motivation to succeed in these foreign markets.
3

Stages of Internationalization
Stage 3: Subsidiaries or Joint Ventures Some operational facilities (e.g., parts assembly) are physically moved to other countries. Corporate headquarters in home country has high control over foreign operations. HRM: Provides expatriates and local employees with knowledge and skills to succeed in the foreign country.
4

Stages of Internationalization
Stage 4: Multinational Operations Much more prevalent international dispersion of production and service provision facilities.

Decentralization of decision-making more prevalent, but major personnel decisions still made within home country. Expatriates still primarily manage foreign facilities.
5

Stages of Internationalization
Stage 5: Transnational Operations Little allegiance to the firms country of origin. Large-scale decentralization of decision-making.

Dominant role of expatriates is removed.

Each business unit across the globe has the freedom to make and implement its own HRM policies and practices.
6

Use of Expatriates
At Stage 3, the firm must decide what presence expatriates will have in managing the foreign facilities. Three approaches can be taken:
Ethnocentric (all expatriates) Polycentric (all local country citizens) Geocentric (citizenship is ignored in favour of best person for the job); typical of transnational firms.
7

Use of Expatriates
Use of expatriates increases when: Poor or insufficient local talent There is a need to ensure a strong corporate-wide vision (and culture). When domestic and foreign operations are highly interdependent. The political situation in the foreign country is unstable There are significant culture differences. Bottom line: When the home country does not TRUST the abilities and/or intentions of local labour force.
8

Use of Expatriates
Why do International Assignments Fail? Career blockage (the home office has forgotten about me)

Culture Shock, resulting in frustration and poor cooperation abroad. Family problems, due to poor adjustment and/or lack of contact if family is left behind.
9

Use of Expatriates
Why do International Assignments Fail? (cont)

Over-emphasis on technical qualifications. Getting rid of a problem employee.

10

Use of Expatriates
Difficulties upon Return Home 20-40% of repatriates quit after returning home. Why?
Lack of respect for acquired skills/knowledge (especially firms at Stage 3) Loss of status Poor planning for return position Reverse culture shock
11

Use of Expatriates
The Role of HRM
Selection Provide realistic country preview. Measure ability to be sensitive to different cultures and/or comfort with specific foreign countrys culture. Have successful expatriates make the selection decisions. Require previous international experience (pay attention to specific country worked in). Assess familys willingness to live or work abroad.
12

Use of Expatriates
The Role of HRM Training
Cross-cultural training, which can address: Major cultural differences Foreign expectations regarding polite behaviour Foreign expectations regarding business behaviour How to avoid feeling insulted when no insult is made Video and role-play approaches to training delivery are critical for cross-cultural training.
13

Use of Expatriates
The Role of HRM
Career Development Ensure expatriates know that an international assignment helps in terms of advancement within the firm

Compensation Disposable income abroad should be the same (if not more) than what is given at home. Provide incentive to work abroad (bonus, pay increase). Ensure pay equity within foreign facilities.
14