GLOBAL HUMAN RESOURCE MANAGEMENT

Presented by: Jatin Vaid

GLOBAL H.R.M IN INTERNATIONAL BUSINESS

Human Resource Management

It refers to the activities an organization carries out to use its human resources effectively. These activities include: i. Determine firms HR strategy ii. Staffing iii. Performance Evaluation iv. Management Development v. Compensation vi. Labour relations

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Importance of HRM
i. Related to the strategy of the firm. ii. Influence on the character, development, quality and productivity of firms HR iii. Helps firms to achieve strategic goal of reducing cost of value creation iv. Helps firms add value by serving customer needs better.
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How different is Global HRM?

Several key factors make Global HRM different from domestic management: i. Different labour markets ii. Mobility problems: legal, economic, cultural barriers iii. Different management styles iv. Varied compensation practices v. Labour laws. Ch 1 5

Key Issues
i. ii. How to staff key management posts in the Co.? How to develop managers, who can do business in different countries? How to compensate people in different nations? How to evaluate the performance of managers in different countries? Expatriate managers
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iii.
iv. v.
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Strategic role of Global HRM

STRUCTURE

INCENTIVES & CTRL

PEOPLE

PROCESSES

CULTURE

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Strategic Role of Global HRM

Strategy is implemented through organizational architecture. Right people at right postings. Effective training to acquire right skill set to help perform jobs effectively. Behaviour, congruent with the desired organizational culture. Compensation must create incentives for actions inline with the strategy. Performance appraisal to measure the behaviour, firm wants to encourage.
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I.

Staffing Policy

Staffing policy is concerned with the selection of employees for particular jobs. i. Selecting individuals who have the skill to do a particular job. ii. Tool for developing and promoting the desired corporate culture (norms & value system) of the firm.
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Types of staffing policies

There are three types of staffing policies in IB: i. Ethnocentric approach ii. Polycentric approach iii. Geocentric approach

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i.

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Ethnocentric approach

All key management positions are filled by parent country nationals. Ones own culture is superior Overlooks important cultural factors Host country lacks qualified professionals Maintain a unified corporate culture Create value by transferring core competencies Limits advancement opportunities for host country nationals Leads to resentment, lower productivity, and high turnover in employees. E.g.: Procter & Gamble, Toyota and Matushita
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ii. Polycentric approach

Decentralized control Business Units in different countries have autonomy from home office, like a local Co. No standard forms or procedures Recruits host country nationals to manage subsidiaries, while parent country nationals occupy key positions at corporate HQ. Firm is less likely to suffer from cultural myopia. Less expensive to implement Host country nationals have limited opportunities to gain experience outside their own countries Gap due to language barriers, cultural differences may isolate corporate HQ from foreign subsidieries.
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iii. Geocentric approach

It seeks the best people for key jobs, throughout the organization, regardless of nationality. Hybrid of Ethno and Poly Based on informed knowledge of home and host countries. Enables firms to make best use of its HR Helps the firm to build a cadre of international executives, who feel at home working in No. of countries. Helps building a strong unifying corporate culture and informal management network. Reduces cultural myopia Enhance local responsiveness
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Expatriate Managers
Expatriates are citizens of one country, who are working in another country. Inpatriates is a subset of expatriates who are citizens of a foreign country, working in the home country of their multinational employer. (e.g., citizen of India, who moves to U.S to work for Microsoft)
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Expatriate selection
Four dimensions that predict success in a foreign posting: Self orientation self esteem, self confidence, mental well being, adapt their interest in food, sports, music and hobbies. Others orientation ability to interact with host countrys nationals, relationship development and willingness to communicate by learning local language. Perceptual ability to understand the particular behaviour of people in host countries, empathise. Cultural toughness relationship between country of assignment and how well an expatriate adjusts

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II.

Training and Management Development

After selection, the next step is training the manager to do the specific job. MDP is a broader concept, it is intended to develop a managers skills over her career in the firm, e.g., sending managers on various foreign postings over years to build her cross cultural sensitivity and experience. To enhance management and leadership skills of executives. MDP have a strategic purpose, and helps reinforce desired culture of the firm by creating an informal network.
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Types of training
Cultural training understanding the culture of host country, enhance effectiveness, familiarization trip before formal transfer. ii. Language training managers ability to interact, help build rapport and improve managers effectiveness. iii. Practical training adjust to day to day life in host country, establish a routine, successful adaptation, support network of friends Ch 1 17 i.

III. Performance Appraisal

These are the systems used to evaluate the performance of managers against some criteria, that the firm judges to be important for the implementation of strategy and attainment of competitive advantage. Important elements of control system. 2 groups evaluate the performance of Expatriates, - Host country managers and home country managers. Biasness by cultural frame of reference and expectations Unfair evaluation Due to proximity, onsite manager should evaluate soft variables of expatriates performance. Consultation of home country manager to balance out.

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IV. Compensation
National differences in compensation Payments according to global standards or country specific standards. Issues in compensation practices: i. How compensation should be adjusted to reflect national differences in economic circumstances and practices? ii. How should the expatriate managers be paid?

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Expatriate Pay
Acc. To Balance Sheet Approach, it equalizes purchasing power across countries so employees can enjoy the same living standard in their foreign posting, as the enjoyed at home. It also provides financial incentives to offset qualitative differences between assignment locations.

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Components of a typical compensation package

i.

ii.

iii. a) b) c) d) iv. v.
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Base Salary in same range as base salary for similar position in home country. Foreign Services Premium extra pay to work outside country of origin. Offered as inducements to accept foreign postings. Compensates for living in an unfamiliar country. Allowances Hardship allowance difficult location, where basic amenities like health care schools, etc are deficient. Housing allowance to afford same quality of housing Cost of living allowance maintain std. of living Education Allowance expatriates children receive same std. of education as in home country Taxation Benefits Medical, pension, etc.
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Thank You

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