International HRM/ Personnel

Management :


Sapna suri
Developments leading to IHRM
ECONOMIC DEVELOPMENTS

I. International division of labour
II. Emergence of service sctor
III. Demand has moved from protected economy to market
economy

Contd














Second source of change is associated in the
area of technology after 1980s

I. Technical revolution
II. Computerization paradox







Third area of change is relationship
between strategy and organization


I. First generation model had organization structures on basis of
strategic concern such as productivity, centralization,
decentralization, etc
II. Second generation models while accepting the link between
strategy and structure
Focus in Development process
Economic
Development
Technology
Strategy
Structure of the
organization
Forms of International Business
Parent
country
Goods and
services
services
Host
country
Parent
country
Primarily technical
know-how
Host country
Parent
country
Managerial and
technical know-
how
Parent country
Host country
Materials
services and
personnel
Parent
country
Host country
Parent country
Capital and know how
Capital and know how
Host country
Host country
Host country
Types of organizations :
GLOBAL
Views the world as a single
market operations are
controlled centrally from the
corporate office

TRANSACTIONAL
Specialized facilities
permit local
responsiveness; complex
coordination mechanisms
provide global
integration

INTERNATIONAL
Domestic firm that uses
existing capabilities to expand
into foreign market






MULTINATIONAL
Several subsidiaries
operating as stand-alone
business units in multiple
countries




International Corporation

International corporation is essentially a domestic firm that builds
on its existing capabilities to penetrate overseas markets.
Companies Honda, General Electric, & Procter & Gamble
A Multinational Corporation :

MNC is a more complex form that usually has fully
autonomous units operating in multiple countries.
Companies Shell, Philips, ITT
The Global Corporation :

The Global Corporation on the other hand can be
viewed as a multinational firm that maintains control
of operations back in the home office.
Companies Matsushita and NEC
A Transactional Corporation

A Transactional Corporation attempts to achieve the
local responsiveness of an MNC while also achieving
the effectiveness of a global world.
Companies such as Ford, Unilever, & British Petroleum.
Define International HRM :
HRM refers to those activities undertaken by an
organization to utilize its human resources
effectively
The following are the activities would include at
least the following :
I. Human resource planning
II. Staffing (recruitment, selection, placement)
III. Performance management
IV. Training & development
V. Compensation (remuneration) & benefits
VI. Industrial relations
Model developed by MORGAN
:
There are 3 dimensions on IHRM :
I. The broad human resource activities of
procurement, allocation & utilization
II. The national or country categories involved in
HRM activities:
A. The host country where a subsidiary may be located
B. The home country where the firm is headquartered
&
C. Other countries that may be the source of labour,
finance & other inputs
A Model of IHRM :
HUMAN RESOURCE ACTIVITIES
HOST-COUNTRY
NATIONALS
(HCNS)
PARENT
COUNTRY NATIONALS
(PCNS)
THIRD-
COUNTRY NATIONALS
(TCNS)
CONTD >>>>>>>>>>>>>


The three categories of employees of an international
firm :
I. Host-country nationals (HCNS)
II. Parent-country nationals (PCNS)
III. Third-country nationals (TCNS)
Thus an example : The US multinational IBM employs
Australian citizens in its Australian operations
(HCNS) often sends US citizens (PCNS) to Asia-
Pacific countries on assignment & may send some of
its Singaporean employees on an assignment to on its
Japanese operations (as TCNS). The nationality of
the employee is a major factor in determining the
persons category
Define an Expatriate:
One obvious difference between domestic &
international HRM is that staff are moved across
national boundaries into various roles within the
international firms foreign operations these
employees have traditionally been called expatriates

An expatriate is an employee who is working &
temporarily residing in a foreign country.
Difference between domestic
& international HRM :

There are 6 factors on which International can be divided
such as :
More HR activities
The need for a broader perspective
More involvement in employees personal lives
Changes in emphasis as the workforce mix of
expatriates & locals varies
Risk exposure
Broader external influences


Variables that moderate differences
between domestic & international
HRM :

There are 4 moderators :
The cultural environment
The industry (or industries) with which the
multinational is primarily involved
The extent of reliance of the multinational on its home-
country domestic market
The attitudes of senior management
Diagram
The cultural environment
Extent of reliance of the
Multinational on its home-country
Or domestic market
Attitudes of
Senior management
Complexity involved in
Operating in different countries
& employing different rational categories of employees
The Industry (or industries within
Which the multinational is
Primarily involved
Domestic & International activities
Of the HRM function
The Cultural environment :


Define : Culture >>>>>>> the term is usually used to
describe a shaping process. That is, members of a
group or society share a distinct way of life with
common values, attitudes & behaviors that are
transmitted over time in a gradual, yet dynamic,
process.
Contd


A person is not born with a given culture:
rather, she or he acquires it through the
socialization process that begins at birth : an
American is born with a liking for hot dogs, or
a German with a natural preference for beer:
these behavioral attributes are culturally
transmitted.:
Define Culture :


A distinct way of life, shared by members of a
group or society, with common values, attitudes
and behaviors that are transmitted over time in
a gradual, yet dynamic, process
Define Culture Shock :

A phenomenon experienced by people who move across
cultures. They experience a shock reaction (or
psychological disorientation) when exposed to new
cultural experiences, because they misunderstand or do
not recognize important cues.

The cultural environment:
the convergence hypothesis
The hypothesis that management practices around the
world would converge, based on two assumptions:

That the principles of sound management
would hold, regardless of national environment.

That the universality of sound management
practices would lead to societies becoming
more and more alike in the future.



The cultural environment:
the divergence hypothesis


In opposition to the convergence hypothesis,
the notion that societies and management
practices around the world will remain, or
become more, dissimilar.


Industry type
Multidomestic industry:

An industry in which competition in each
country is essentially independent of
competition in other countries.
Global industry:

An industry in which a firms competitive
position in one country is significantly
influenced by its position in other countries.


Reliance of the MNE on its
home-country domestic market
The top ten MNEs on the UNCTAD index of
transnationality
Rio Tinto (United Kingdom/Australia)
Thomson Corporation (Canada)
ABB (Switzerland)
Nestl (Switzerland)
British American Tobacco (United Kingdom)
Electrolux (Sweden)
Interbrew (Belgium)
Anglo American (United Kingdom)
Astrazeneca (United Kingdom)
Philips Electronics (Netherlands)

Attitudes of senior management to
international operations
Ethnocentrism

The assumption that ones own cultural approach is
superior to any other.

An ethnocentric approach to international staffing
typically results in all key management positions
being held by PCNs.

Also, international HRM activities are typically
developed and administered by PCNs.


A model of strategic HRM in
multinational enterprises
Aspects of culture you can see
Dress

Food

Climate

Housing

Aspects of culture you cant see:

Communication style
What motivates people
Role expectations
Negotiation styles
Non-verbal communication
Tempo of work
How tasks are assigned
Attitude toward authority

Cross-cultural differences
in Workplace :


How interviews should be conducted
How managers should act with their subordinates
How negotiations should be conducted
How training should be delivered
How people should be paid for work

Cross Cultural Differences in
Communications :

Cross-cultural communication is becoming
increasingly important as organizations expand
their business operations beyond their national
boundaries

4problems relating to language:


There are barriers caused by word connotations
There are barriers caused by semantics
There are barriers caused by tone differences
There are barriers caused by differences among
perceptions

Communication: Business
Introduction :
Criterion America
Japan Russia Middle-east
Cultural
Objective
Find out who
you are; Add
to network of
contacts;
Gain Control
Discover
position
within the
company &
mission;
Maintain
Harmony
Know the
where-abouts
of the person
as to
maintain
courtesy of
address
Establish
personal
rapport
Business
cards
A formality A
record of
contact
Important to
show
company
affiliation &
level
Exchanging
business-
cards very
important
Formality:
No Intrinsic
Value
Opening What do you
do? Job
Identity
crucial
Put yourself
in group
context:
company,
department,
Individual
Know your
name,
company,
designation
Establish
personal
status/family
context;
General
Conversation
Self-image Independence Member of
the group
Employee of
a company
with little
authority
Part of rich
culture
Use of
language
First name;
Informal;
Friendly
Less talking Talks on
weather,
holidays,
trips, etc. are
common
Expression of
admiration;
Flattery;
Formal
greeting
Non-verbal
messages
Direct eye
contact; Firm
Handshake
Bowing level;
Minimal
facial
expression
Direct eye-
contact;
Handshake
Facial
expression;
Body
language
Time
orientation
Short period
of
introduction
Give lead to
others
Short
introduction
followed by
small talk &
other
courtesies
like cookies
etc
Long range;
Take
initiative
Influencing
cultural
variable
Informality;
openess;
directness;
Harmony;
respect;
listening;
non-
emotional
Social;
Individualism
; courteous
Religious
harmony;
hospitality;
emotional
support;
status/ritual
Communication: Telephonic
Conversations
Criterion America Japan Russia
Middle-east
Objective Action-
orientation
information
Information Information Personal
relationships;
Commitment
Opening Full name;
Purpose of
call
Company
name
Full
introduction;
Purpose of
the call
Personal
Greeting
Process Task-
oriented;
Direct
questions
Information
gathering by
listening
Indirect;
Small general
talk
Indirect
approach;
Inquire first
about
self/family,
then get on to
business
Use of
language
Direct
objective
Generally
conservative
Courteous Flattery
Non-verbal
communicati
on
Urgency Silence/harm
ony
Patience Conveys
emotion with
the tone of
voice
International Recruitment &
Selection :
In the recruitment process, three points require to be
decided:
From what countries to recruit ? Whether home, host
or any other
Techniques to be used when recruitment is planned
outside home country
Whether to centralize recruitment activities in home
country or decentralize in foreign subsidiaries.
Four approaches used for
recruitment by the MNCS are :
Ethno-centric :
Here primary positions are held by citizens of home
country. Three factors are to be considered in the staff:
Should be able to adjust in family, culture &
personality problems to avoid failure
To succeed, should enjoy local entertainment, develop
local relationships & communicate with locals
To achieve success, expatriates to have open attitude &
take training toward host country

Poly-centric :
Here primary positions are filled by nationals from host
country. Advantages of this are :

Better local knowledge
Reduces personal problems
Host country manager can protect a MNC from hostile
treatment by host government
Top people are limited to subsidiary & not for
corporate positions


Regio-centric


Here primary positions are by people from countries with
similar cultures, experiences & management practices.
For example, posting in srilanka, Indians can be
considered.
Geo-centric :
Under this the best qualified individuals are hired at
home & abroad regardless of nationality. Whole world
is treated as market to implement global approach
In designing staffing policies
First determine its needs
Then identify approach to hiring ------- who, how &
from where
Finally recruits are trained for living in a foreign land.
Selection criteria are based on wide range of skills,
family factors, business knowledge & experience
Recruitment for Overseas
Assignments:

1. Recruit from home office or country. These are called
expatriates or home country nationals. Some
advantages are:
Familiar with goals, policies & practices of home
office.
More technically & managerially competent as they
are tried persons
Can keep effective liaison with home office personnel
It is easier to exercise control over operations of
subsidiary

Contd >>>>>>>>>>.
o Recruit native of host country or local nationals for
foreign subsidiary
o Third country national is another approach. It is to
employ manager from England to manage United States
operations in France.
o An another recruiting approach is having an international
grade at a higher salary, by his agreeing to accept a
transfer anywhere in the world
o Last recruiting approach in transferring a manager for
specific duties/assignment for fixed period.
o For example : , when opening a new manufacturing units
there is an increased demand for specialists, so a manager
from existing cadre is transferred

Incentives or Attractions for
Managers To Go Abroad :

To gain 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

Expatriate selection criteria :
Should have technical & managerial skills & to able to
do his job as he is at distance from headquarters &
cannot consult readily
Motive & desire of manager interested to go overseas
assignment such as interest in host country, financial
incentives, gain self-confidence
Has social skills to interact & understand people
norms. Mixing in social activities such as sports, eating
language. Ability to deal effectively with superiors,
peers & clients, etc.
Contd >>>>>>>>

Diplomatic skills is ability to interact with business
associates, govt officials, leaders abroad.
Maturity & Stability to deal with situations, logically,
adaptability, resourcefulness & initiative
Ability to cope up with environmental variables such as
political, legal, & socio-economic structures in host
country.
Attitude towards company & performance
Expatriate Performance
Appraisal :
Performance management aims at creating alignment
of individual goals with those of company & enables an
individual to effectively manage performance for
himself & his team
Performance management embraces both planning &
executing
It is the process of managing your strategy
Strategy is of paramount importance & is senior
managements primary responsibility.


Performance management has
3 key goals :


Creating a workplace where top performers want to
stay
Transforming people who are not stars into top
performers
Aligning behavior & actions toward the goals of the
business enterprise

Benefits of Performance
Management :

Help people reach their potential
Encourage people to take risk to accept change
Build confidence
Align behavior with company goals, principles, &
values
Even the playing field
Stimulate action
Create new habits

Criteria for Performance Appraisal of
Expatriates :

Influencing factors for expatriates performance :
I. Compensation package on Foreign Assignment
II. The task & responsibilities of Expatriate
III. Support from the head office
IV. Work environment in Host Country
V. Cultural Adjustment of Expatriate & his family

Criteria to be used for Appraisal of
Expatriates Or International Staff :

Person to evaluate
Performance appraisal forms
Frequency of the appraisal should be such that it is
possible to provide feedback for mid-course correction,
regular feedback is important for meeting targets &
revising goals & consequent involvement & motivation.
Who Should Appraise the
Expatriate:
2 Experts make five suggestions for improving the
expatriate appraisal process:
Stipulate the assignments difficulty level. For example,
being an expatriate manager in china is generally
considered more difficult than working in England, &
the appraisal should take such difficulty level
differences into account
Weight the evaluation more toward the one-side
managers appraisal than toward the home-site
managers distant perceptions of the employees
performance
Contd >>>>>>>>>

If, however the home-site manager does the actual
written appraisal, have him or her use a former
expatriate from the same overseas location to provide
background advice during the appraisal process
Modify the normal performance criteria used for that
particular position to fit the overseas position &
characteristics of that Particular locale.
Characteristics to be evaluated :


Cross-cultural interpersonal skills, sensitivity foreign
norms, values & case of adjustment to unfamiliar
environments are some common characteristics
considered for evaluation of international managers

Criteria for Appraisal of
Performance :


Strategic thinking
Initiating change
Relationship Management

Criteria for successful
performance for managers :

Flexibility ------ capacity to change structures to
implement changed strategies
Inter-personal understanding & respect
Empowerment to share information, delegate
responsibilities & motivate employees to feel more
capable
Team support cause employees to cooperate &
Versatility capacity to adjust in new environment

International Training &
Development :
Training of Expatriates for
Assignments Abroad:

As companies go global, there arises the need for
training employees for international assignments
As is well-known, habits & practices relating to work
motivation, profit motivation, negotiating skills, gift
giving customs, eating & dressing, body gestures, he
delaying, interpretation of co lour & numbers vary
across countries.
Some countries such as Japan, are more committed to
the importance of training for international
assignments
Diagram :
Analysis of
Training needs
Determination of
Training goals
Content training
Material
Method Media Sequence
Implementation
Contd >>>>>>>>>>>
Profiles in terms of competencies needed for success on
international assignments may form an important basis
for development of effective training for international
staff, continuous research required.

An ideal people which summarizes the competencies
needed for international success can be drawn.


Contd>>>>>>>>>>
Six competencies that were perceived, in one study are as
follows:
Leadership skills
Initiative
Emotional stability
Motivation
Ability to handle responsibility
Cultural sensitivity
To handle stress
Flexibility

Contd>>>>>>>
Training & Development of international staff should
be approached as process & not as a one-time event
just prior to departure.
The goals of cross-cultural training : goals is statement
of intent. Whereas objectives are very specific
statements what candidate should be able to do at the
end of learning session.
Personally adjusted ie: he feels happy & satisfied with
situation abroad.
Professionally effective if he performs his tasks, duties,
& responsibilities on-the-job competently.

Contd>>>>>>>

Inter-personally adjusted & effective if
he takes interest in interacting with
locals capably.

Methods of cross-cultural
training:
Instructional strategies Specific methods
Simulations Role playing
Case studies
Instructional games
Programmed instruction Cultural assimilator on
negotiation skills, etc.
Sensitivity training Training group for self-
awareness communication styles,
empathy, listening skills
Behaviour modification methods
Field experience
Drill and practice
Modelling
Field trips
Assignments to micro-cultures
Meetings with experienced
international staff understanding
social skills code of conduct,
regard systems in the host
country, language. Etc.
On-the-job training Coaching by mangers on
company operation & institutions
Job rotation in different positions
& business areas.
Contd>>>>>>>>>.
Cross-cultural training is seen as short duration one-
short remedy
First phase of training & development soon after
selection & joining company with international
prospects
Second phase: after selection for international career.
Focus on fulfillment, of an international assignment.
Third phase: training is for specific skills needed for his
assignment & knowledge of specific cultural issues in
host country, logistical information & business
practices & procedures is imparted.

Contd>>>>>
Inclusion of the partner of host country in cross-
cultural training is vital as inability of the partner to
adapt to different environment is cause for failure of
international assignment.
Inclusion of HCNS in cross-cultural training as
ultimate success of an expatriate assignment depends
not only on the expatriate himself but also upon the
local people with whom he has to work.
Designs of Training:
First level training> focuses on learning about host
countrys--- culture, language, politics, business,
geography, religious values & history.
Second level training> deals about assignment itself.
Requirements of the position---- technical, managerial
knowledge needed company officials can do that before
leaving.
Third level training > deals with preparing him for new
job at new location to be done by whom he is replacing.
Fourth level training> how he adjusts & adapts to new
environments, by providing assistance.
Contd>>>>>>>

Fifth level>training addresses re-entry back home &
contact with people at home & visit home during
vacation.
Training & Development of
international Staff:
3 aspects to be considered for training & development of
international staff:

The Deployment cycle for international assignments.
Preparatory training for foreign assignments &
Design of training overseas assignment, i.e. during the
assignment itself & training during the re-entry phase.
The Deployment Cycle for
International Assignments:
The employee is accepted into a position in the home organization
that offers him international prospects.
Once he has shown that he possesses the basic abilities &
motivation needed for international career he is selected &
receives further training.
After selection for a specific assignment, country specific
preparation follows both for the future expatriate & his partner.
On the assignment he receive onsite orientation & briefing, as well
as support & monitoring from home organization.
Upon completion of the assignment, he is given support during the
re-entry process.
Finally, he resumes a position in the home organization.


Diagram :
Position in Home Country
selection/training for International Career
Selection/training for specific assignment
Assignment :
Arrival orientation
Overseas support
& Monitoring
Re-try Training & Support
Return
Preparatory Training for Foreign
Assignment:
Training is not to be thought as effective
The period of time selection & expatriates departure is
short leaving little time for in-depth training prior to
departure
Temporary nature of most assignments does not
warrant expenditure for training.
There is a belief that technical skills are main success
factors on assignment abroad. Relational skills &
international cultural competencies are not seen as
being of importance for success

Design of training for overseas
assignment:

First level training to focus on learning about host countries-----
culture, language, politics, business, geography, religious values &
history through seminars, meetings with citizens of the country
Second level training deals about assignment itself. Requirements
of the position & technical, managerial knowledge needed.
Third level deals with preparing him for new job at new location
to be done by whom he is replacing.
Fourth level training--- how we adjust & adapts to new
environments , by providing assistance.
Fifth level training addresses re-entry back home & contact with
people at home. A visit home during vacation can be beneficial

Performance
Management in MNCS
Meaning of Performance
Management:

Performance management aims at creating alignment of
individual goals with those of the company & enables
an individual to effectively manage performance for
himself & his team.
3 goals of performance
management:

Creating a workplace where top performers want to
stay
Transforming people who are not stars into top
performers.
Aligning behaviour & actions toward the goals of the
business enterprise
Benefits of Performance
Management :

Help reach people reach their potential
Encourage people to take risks to accept change.
Build confidence
Align behaviour with company goals, principles, &
values
Even then playing field
Stimulate action
Create new habits
Performance Management
Cycle
Corporate Budget
Unit/business sector draft budget end
February
Offline performance
Planning
On-line performance
Planning
Mid- year
review
Final review
And feedback
Normalization
And score
Criteria for Performance
Appraisal of expatriates :
Factors influencing Expatriates Performance :

Compensation package on foreign assignment
The task & responsibilities of Expatriate
Support from the head office
Work environment in Host Office
Cultural Adjustment of Expatriate & his family
Criteria for Appraisal of
Performance :

Flexibility
Inter-personal understanding & respect
Empowerment---- to share information, delegate
responsibilities & motivate employees to more capable.
Team support cause employees to cooperate
Versatility------ capacity to adjust in new environment.
Comparative summary of
performance review & compensation
practices of some countries :
Criteria America Japan Russia Middle-East
Objective Periodic review based on
present goals;
Identify personal strengths
& weakness
Find out why the
performance is not
in harmony with the
group
Periodic
review based
on present
goals;
Identify
personal
strengths &
weakness
Set employee on
the track;
reprimand for bad
performance
Structure Formal procedure; every
6/12 months; in managers
office
Informal ;
Ad hoc with
employee; frequent
reporting to
administration;
In office, coffee
shop, bar
Formal
Annual;
In mangers
office
Informal, ad-hoc;
recorded in
managers office
Interaction Two-way; both sides openly
present own point of view;
manager as a leader, advisor;
employee independent, self
motivated
Employee answers
managers
concerns; manager
gives advice as
parent, mentor,
senior employee;
Part of group/
family; continuous
feed back
Tow-way;
open
One-way door
one-way; manager
guides
subordinate;
authority figure;
mentor; random
feedback;
Child is family
Evaluation Success measured by
performance to stated goal
Success measured
by contribution to
group harmony &
output
Success
measured by
performance
to stated goal
Success measured
by personal
contribution
Outcome Promotion;
Salary increase;
Bonus;
Commission;
Salary freeze
Loss of title;
Loss of power
Mainly affects the
amount of semi-
annual bonus;
Less important
Job;
Job rotation;
Doc bonus/ salary
Bonus;
Training
Bonus of day
salary;
Promotion;
Salary decrease
Closing Stress agreement on
expectation;
Documented review
Performance
continually forward
to personnel open
door
Training
planned
rewards in
terms of
bonus
Admiration or
threat of
punishment one-
way door
Influencing
cultural
variable
Openness;
Equality
Fairness

Group achievement;
relationship
Individual
achievement
Information
seekers
Privacy;
Authority;
Parenthood


Compensation in International
Perspective & Practices in
Countries :
Purposes or objectives of International
Compensation :
Compensation serves several purposes:

Should enable organization to attract potential
candidates, should match local & regional standards.
Internally equitable, externally competitive in order to
retain, & system should have ease of administration.
Stimulate performance/ behavior for organization
success


Contd >>>>>>>>>>

Programme should be in line with existing status
hierarchy in the organization.
Enable the organization to optimize its total wage level,
Compensate for inconveniences, &
Facilitate the transfer of international employees


Miscellaneous
Non- work Award
(vacations, pension)
Sacrifice Reward
(overtime, shift allowance)
Seniority Increase (Increments)
Adjustment cost of living ---DA
Basic Pay
Four systems contribute something
to economic reward :

Basic pay, motivates for higher responsibility,
Performance incentive to improve performance,
Profit sharing bonus motivates toward team work in
the organization
Reward for extended service & encourages him to
remain with organization.
Factors for compensation- differences
between countries :
First these differences are result of differences in
prosperity & spending power of the company.
Secondly, the institutional frameworks within which
wage bargaining takes place are quite different in
countries. In Germany & Switzerland bargaining takes
place at the national or industry level.
Thirdly, cultural differences between countries have an
important impact. These differences do not so much
influence the rates of pay as the total apportioning of
the total sum between wages, incentives & benefits &
due to appraisal methods
Contd >>>>>>>>>

Fourthly, there may be considerable differences
between organizations & industries. This may result of
a deliberate policy, or differences in productivity,
labour- capital ratios & situations on the relevant
labour market.