intern

ation

al bu

siness, 5

th edition

chapter 20international human resource management and labor relations

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Chapter Objectives 1

• Describe the nature of human resource management in international business

• Detail how firms recruit and select managers for international assignments

• Explain how international businesses train and develop expatriate managers

• Describe labor relations in international business

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Chapter Objectives 2

• Discuss how international firms conduct performance appraisals and determine compensation for their expatriate managers

• Analyze retention and turnover issues in international business

• Explain basic human resource issues involving nonmanagerial employees

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Human Resource Management

Human resource management is the set of activities directed at

attracting, developing, and maintaining the effective workforce

necessary to achieve a firm’s objectives.

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Figure 20.1 The International Human Resource Management Process

HRM’s Strategic Content

Recruitment and Selection

Training and Development

Performance Appraisal

Compensation and Benefits

Labor Relations

Contribution to Organizational Effectiveness

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International Staffing Needs

Managerial/Executiveemployees

Nonmanagerial employees

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Scope of Internationalization

Export department

Global organization

International division

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Expertise Needs in Global Organizations

Product line

Functional skills

Individual country markets

Global strategy

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Centralization versus Decentralization of Control

• Centralized firms

– Favor home country managers

– Most common amongst international division form

• Decentralized firms

– Favor host country managers

– Most common amongst multidomestic firms

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Staffing Philosophy

Parent country nationals

Third countrynationals

Host countrynationals

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Strategies for Staffing

• Ethnocentric staffing model

• Polycentric staffing model

• Geocentric staffing model

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Figure 20.2 Necessary Skills and Abilities for International Managers

Skills and AbilitiesNecessary to Do

the Job

•Technical•Functional•Managerial

Skills and AbilitiesNecessary to Work

in a Foreign Location

•Adaptability•Location-specific skills

•Personal characteristics

Improved Chances of Succeeding inan International Job Assignment

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Recruitment of Managers

Experiencedmanagers

Younger managers

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Selecting expatriates is an important element in international HRM.

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Selection of Managers

Managerial competence

Appropriate training

Adaptability to new situations

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Table 20.1 Questions from AT&T’s Questionnaire for Screening Overseas Transferees 1

• Would your spouse be interrupting a career to accompany you on an international assignment? If so, how do you think this will affect your spouse and your relationship with each other?

• Do you enjoy the challenge of making your own way in new situations?

• Securing a job upon reentry will be primarily your responsibility. How do you feel about networking and being your own advocate?

• How able are you in initiating new social contacts?

• Can you imagine living without a television?

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Table 20.1 Questions from AT&T’s Questionnaire for Screening Overseas Transferees 2

• How important is it for you to spend significant amounts of time with people of your own ethnic, racial, religious, and national background?

• As you look at your personal history, can you isolate any episodes that indicate a real interest in learning about other peoples and cultures?

• Has it been your habit to vacation in foreign countries?

• Do you enjoy sampling foreign cuisine?

• What is your tolerance for waiting for repairs?

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Culture Shock

Culture shock is a psychological phenomenon that may lead to feelings of

fear, helplessness, irritability, and disorientation, which is commonly

experienced by new expatriates who may experience a sense of loss regarding their

old cultural environment as well as confusion, rejection, self-doubt, and

decreased self-esteem from working in a new and unfamiliar cultural setting.

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Figure 20.3 Phases in Acculturation

Honeymoon

Disillusionment

Adaptation

Biculturalism

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Honeymoon Phase

• New culture seems exotic and stimulating

• Excitement of working in new environment makes employee overestimate ease of adjusting

• Lasts for first few days or months

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Disillusionment Phase

• Differences between new and old environments are blown out of proportion

• Challenges of everyday living

• Many stay stuck in this phase

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Adaptation Phase

• Employee begins to understand patterns of new culture

• Gains language competence

• Adjusts to everyday living

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Biculturalism

• Anxiety has ended

• Employee gains confidence in ability to function productively in new culture

• Repatriation may be difficult

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Overseas Success

• Likelihood of managers being successful at overseas assignment increases if the managers– Can freely choose whether to accept or reject the

assignment

– Have been given a realistic preview of the job and assignment

– Have been given a realistic expectation of what their repatriation assignment will be

– Have a mentor back home who will guard their interests and provide support

– See a clear link between the expatriate assignment and their long-term career path

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Training and Development

• Assessing training needs

• Basic training methods

– Standardized

– Customized

• Developing younger managers

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Performance Appraisal

Performance appraisal is the process of assessing

how effectively people are performing their jobs.

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Functions of Performance Appraisals

To provide feedback to individuals about how well they are doing

To provide a basis for rewarding top performers

To identify areas in which additional training and development may be needed

To identify problem areas that may call for a change in assignment

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Compensation Packages

Cost-of-living allowance

Hardship premium

Tax equalization system

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Figure 20.5 Global Cost of Living Survey

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Components of Compensation Packages

Occupationalstatus

Professionallicensing

requirements

Standards ofliving

Labor market forces

Governmentregulations

Tax codes

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Figure 20.6 An Expatriate Balance Sheet

U.S. Domestic Base Salary

Taxes Consumption Savings

Foreign andExcess U.S. TaxesPaid by Company

Excess Foreign CostsPaid by Company

Foreign ServicePremium/ HardshipAdded by Company

U.S. Levels

U.S. Spendable Income

U.S. Hypothetical Housing and UtilitiesU.S. Auto Purchase

U.S. Hypothetical Tax and

Social Security

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Labor Relations

Comparative Labor Relations

Collective Bargaining

Union Influence and Codetermination