Global Human

Resource
Management
Global HRM
The Global HRM is about understanding ,
researching, applying and revising all human
resource activities in their internal and external
contexts as they impact the process of managing
human resources in enterprises throughout the
global environment to enhance the experience of
multiple stakeholders, including investors,
customers, employees, partners, suppliers,
environment and society.
Types of Organizations
GLOBAL
GLOBAL TRANSNATIONAL
TRANSNATIONAL
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GLOBAL EFFICIENCY

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INTERNATIONAL
INTERNATIONAL MULTINATIONAL
MULTINATIONAL
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subsidiariesoperating
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LOCAL RESPONSIVENESS
Objectives of Global HRM
Ensure an international look with respect
to local sensitivities

Spread cross cultural sensitiveness and

awareness amongst managers and
employees across the globe

Bring in a local perspective in the region

of operation
Increasing Importance of
Global Human Resource
International
International
Mergers
Mergersand
and
Acquisitions
Acquisitions

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Foreign
ForeignHuman
Human
Global
GlobalHuman
Human
Resources Global
GlobalCompetition
Competition
Resources
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Management
Management

Market
MarketAccess
Access
Opportunities
Opportunities
The decision had to be made in Global HRM:

• From a labour force perspective, which countries make the most sense for
locating international operations

• The numbers and proportions of international assignees versus host-country

employees needed to staff plants and offices around the world

• Where and how to recruit the individuals and how to compensate them for
the performance

• Whether HRM practices and policies will be uniform across all locations or
will be tailored to each location

• 4 Basic Tasks
– Staffing policy
– Management training & development
– Performance appraisal
– Compensation policy
Summary of Best Practices
Summary of Best Practices
 The HR Challenges of
International Business

 Deployment
◦ Easily getting the right skills to where we need them, regardless of
geographic location.
 Knowledge and innovation dissemination
◦ Spreading state-of-the-art knowledge and practices throughout the
organization regardless of where they originate.
 Identifying and developing talent on a global basis
◦ Identifying can function effectively in a global organization and
developing his or her abilities.
Staffing the Global Organization

International staffing: Home or local?

◦ Expatriates (expats): Noncitizens of the countries in which
they are working.
◦ Home-country nationals: Citizens of the country in which
the multinational company has its headquarters.
◦ Third-country nationals: Citizens of a country other than
the parent or the host country.
Off shoring
◦ Having local employees abroad do jobs that the firm’s
domestic employees previously did in-house.
Staffing the Global Organization (cont’d)

Off shoring
◦ Having local employees abroad do jobs that the firm’s domestic
employees previously did in-house.
Issues in off shoring
◦ Having an effective supervisory and management structure in place to
manage the workers.
◦ Screening and required training for the employees receive that they
require.
◦ Ensuring that compensation policies and working conditions are
satisfactory.
Recruiting for Key Positions
 Evaluating the management team of proposed merger or acquisition
partner in terms of experience, skills, potential and cultural fit. HR
managers can provide objective input as to which key managers to
retain and how to retain them

 Identifyingpotential obstacles to organization change such as union

agreements or work council regulations

 Identifying any unacceptable employment practices

 Assessing and comparing pay and benefit philosophies and practices

and evaluating the impact of integrating those programs.
Staffing Policy
Selection of employees for particular jobs

 Tool for developing and promoting corporate

culture (norms & value system) to attain higher
performance

Types
◦ Ethnocentric
◦ Polycentric
◦ Geocentric
 Types of Staffing Policy
Ethnocentric
 Ethnocentric - all key management positions are filled by parent company
nationals
◦ May believe the host country lacks qualified individuals
◦ May see this as the best way to maintain a unified corporate culture
◦ May believe it is the best way to transfer core competencies to a foreign
operation
 Disadvantages
◦ Limits advancement opportunities for host-country nationals -> resentment,
lower productivity & increased turnover
◦ Can lead to “cultural myopia” – failure to understand host country cultural
differences that require different approaches to management & marketing

 Compatible with an international strategy

 Types of Staffing Policy
Polycentric
 Polycentric – Requires host country nationals to be recruited to manage subsidiaries,
while parent country nationals occupy key positions at corporate HQ
◦ Firm less likely to suffer from cultural myopia
◦ Less expensive to implement -> reducing the cost of value creation (expats are $$$)

 Disadvantages
◦ Host country nationals have limited opportunities to gain experience outside their
own country & can’t progress to senior positions -> resentment
◦ Gap can form between host country managers & parent country – isolating HQ staff
from various foreign subsidiaries (Unilever’s little kingdoms & transnational)
◦ Lack of management transfers can lead to lack of integration -> a federation of
largely independent national units with only nominal links to H
◦ Difficult to transfer core competencies or realize experience curve & location
economies

 Compatible with a multi-domestic strategy.

Types of Staffing Policy
Geocentric
 Geocentric – seeks the best people for the job throughout the company,
regardless of nationality
◦ Enables firm to make the best use of its human resources
◦ Enables the firm to build a cadre of international executives who are at home
working in a number of cultures
◦ Build a strong unifying corporate culture & informal management network –
required for global & transnational strategies
◦ Better able to create value from the pursuit of experience curve & location
economies and from the multidirectional transfer of core competencies
◦ Reduce cultural myopia & enhance local responsiveness

 Disadvantages
◦ Immigration laws can require the employment of host-country nationals
◦ Expensive to implement – training & relocation costs
◦ Need a compensation structure with a standardized international base pay
level higher than national levels in most countries

 Compatible with both global & transnational strategies

Global Staffing Issues
 Selecting candidates for overseas assignment
 Assignment terms and documentation
 Relocation processing and vendor management
 Immigration processing
 Cultural and language orientation and training
 Compensation administration and payroll processing
 Tax administration
 career planning and development
 Handling of spouse and dependent matters
International Labor Relations
International Organizations and Labor Relations

International Differences in Unions

◦ The level at which bargaining takes place (national,
industry, or workplace)
◦ The degree of centralization of union-management
relations
◦ The scope of bargaining
◦ The degree to which government intervenes
◦ The degree of unionization.
International Labor Relations
 Concern of domestic unions about MNCs
◦ Company can counter its bargaining power with the power to move the plant
to another country
◦ International business will keep highly skilled tasks in the home country &
farm out low-skilled tasks to the foreign plants
◦ International business will attempt to import employment practices &
contractual agreements from its home country

 Organized labor has responded by

◦ Trying to establish international labor organizations
◦ Lobbying for national legislation to restrict MNCs
◦ Achieve international regulations on MNCs through UN

 Not very successful because

◦ Unions want to cooperate but compete with each other for jobs
◦ Wide variation in union structure
◦ Divergent ideologies about role of union in society & class conflict
Differences in International Labor Relations

 Centralization  Content and scope of

 Union structure bargaining
 Grievance handling
 Employer organization
 Strikes
 Union recognition
 Union  Worker participation
security
Establishing and Maintaining Global Ethical
Standards
Issues that need to be addressed:
 The need for employees to comply all applicable laws and
regulations, specifying who to contact internally in the event of any
question.
 Prohibition on payment to public officials
 Prohibition on political contributions
 Guidelines regarding “facilitating payments”
 Authorization procedures for transactions and disposition of assets
 Approval procedures for payments
 Maintenance and retention of records
EXPATRIATES
 Who is an expatriate?
 An employee who is working and temporarily
residing in a foreign country
• Some firms prefer to use the term “international assignees”
• Expatriates are PCNs from the parent country operations,
TCNs transferred to either HQ or another subsidiary, and
HCNs transferred into the parent country
 Global flow of HR: more complexity in activities
and more involvement in employees' lives
Food for Thought…..
“ An international assignment is not only a
physical adventure in a more or less remote
land, but also a psychological adventure that
requires the willingness to revise deeply held
beliefs concerning one’s own identity”

“Perhaps the most challenging of all the

transformations is the ability to develop a
dual identification”
Selecting Expatriate Managers
 90% of time employees are selected on the basis of their technical
expertise, not their cross cultural fluency.

 Only 10% of 50 Fortune 500 firms tested for important traits such as
cultural sensitivity, interpersonal skills, adaptability & flexibility

 4 dimensions predict success in a foreign posting (Mendenhall & Oddou)

◦ Self-orientation – self-esteem, self-confidence, & mental well being

◦ Others-orientation – ability to interact effectively with host country
nationals (relationship development & willingness to communicate)
◦ Perceptual ability – ability to understand why people in other countries
behave the way they do
◦ Cultural toughness – relationship between country of assignment &
how well an expatriate adjusts to a particular posting
Expatriate
Selection
Criteria
Training & Development
 Training the manager to do the specific job & management development
which can happen over the course of a career

 Job transfers are opportunities for broad international experience that will
enhance the management & leadership skills of executives

 Training expatriate manager & spouse – cultural, language & practical

training to reduce failure

 Repatriation of Expats – prepare them for reentry into the home country

 Management development as a strategic tool – especially transnational

◦ Strong unifying corporate culture & information management network to assist in
coordination & control
◦ Need to be able to detect pressures for local responsiveness & that requires
cultural understanding
Preparing for an International Assignment
To prepare for an international assignment, one should
become acquainted with the following aspects of the host
country:
7. Sources of pride and great
achievements of the culture
1. Social and business etiquette
8. Religion and the role of religion
2. History and folklore in daily life
3. Current affairs, including 9. Political structure and current
relations between the host
country and the players
4. United States 10. Practical matters such as
currency, transportation, time
5. Cultural values and priorities zones, hours of business
6. Geography, especially its major
cities 11. The language
Performance Appraisal
Two groups usually evaluate the performance of
expats – host nation & home office managers.
Both are subject to bias
◦ More weight should be given to on-site manager
appraisal than off-site (soft variables)
◦ Former expats who served in country could be
involved in the appraisal
◦ When on-site prepares, off-site should be consulted
before it is complete to balance.
Forces Driving Global Pay
 Cultural Preferences
◦ Importance of status
◦ Role of individual vs.
organization vs. government
◦ Equality vs. disparity
◦ Achievement vs. relationships
 Economic Conditions
◦ Size of economy
◦ Types of industries, natural
resources
◦ Inflation, unemployment
◦ Protectionism vs. open market
 Personal Preferences
◦ Attitudes toward risk
◦ Quality of life vs. work
◦ Short- vs. long-term
◦ Competitiveness vs. solidarity
 Social Constraints
◦ Income tax rates, social costs
◦ Laws and regulations
◦ Collective bargaining, worker
participation
◦ Skills, education of work force
Compensation
 How should compensation be adjusted to reflect national
differences – according to prevailing country standards
or equalize pay on a global basis

 How should expatriate managers be paid

◦ Ethnocentric – how much home country expats should be paid
◦ Polycentric – lack of managers’ mobility among national
operations -> pay can be kept country specific
◦ Geocentric – pay the international executives the same basic
salary regardless of country of origin or assignment
 Repatriation of Expatriates
A criticalissue in the training and development of the
expatriate managers is preparing the for reentry into
their home countries
Reasons for problems with repatriation process:

- Unaware of the position they will hold upon return

- Role and career Progression
- Unable to adjust in the prevailing business environment
Your Questions are
welcome..!!!!
THANK YOU