INTERNATIONAL HR

PRACTICES

By: Bhawna

• International human resource management (IHRM) is the process of procuring, allocating, and effectively utilising human resources in a multinational corporation.

• Even when dealing with one particular HR function area such as compensation, the international HR manager is faced with a great variety of national and international pay issues.

• For example, while dealing with pay issues, the HQ-based HR manager must coordinate pay systems in different countries with different currencies that may change in relative value to one another over time. An American expatriate in Tokyo who receives a salary of $100,000 may suddenly find the buying power of that salary dramatically diminished if the Japanese yen strengthens in value relative to the US dollar. A US dollar purchased 248 yen in 1985, but less than 110 yen in 2000.

EMPLOYEES IN AN INTERNATIONAL WORKFORCE

• Parent-country national – employee who was born and works in the country in which an organization’s headquarters is located.

• Host-country national – employee who is a citizen of the country (other than parent country) in which an organization operates a facility.

• Third-country national – employee who is a citizen of a country that is neither the parent country nor the host country of the employer.

• When organizations operate overseas, they hire a combination of parent-country nationals, host-country nationals, or third-country nationals.

• Expatriates – employees assigned to work in another country.

EMPLOYERS IN THE GLOBAL MARKETPLACE

• International organization – an organization that sets up one or a few facilities in one or a few foreign countries.

• Multinational company – an organization that builds facilities in a number of different countries in an effort to minimize production and distribution costs.

• Global organization – an organization that chooses to locate a facility based on the ability to effectively, efficiently, and flexibly produce a product or service using cultural differences as an advantage.

Levels of Global Participation

MULTINATIONAL STRATEGY AND IHRM

Three Approaches to staffing decision:

• Ethnocentric: All key positions are filled by parent-country nationals.

• Polycentric: HCNs are recruited to manage subsidiaries in their own country and PCNs occupy positions at corporate headquarters.

• Geocentric: utilizing the best people for the key jobs throughout the organization, regardless of nationality.

HR Practices in India

Staffing practicesTraining practicesPerformance AppraisalCompensation and benefits

Staffing Practices• Resumes seek strong educational background• E-recruitment: Naukri.com was the first e-

portal established in 1998• Elaborate employment tests related to the

job, especially at entry level.• Newspaper advertisements are used to brand

the company to potential applicants.• Personal questions are asked in interviews

Training Practices• Education is extremely valued, and training is an

extension of it.• Entry point training programs (3 to12 months of

orientation).• Ongoing training programs. • Development programs (promotions involve training).• In-house training centers are a common feature in

Indian organizations.• Deductive learning style in training: Known as “top-

down approach” where learning principles start with general concepts and move toward specific application.

Performance Appraisal• Cultural dimensions of collectivism and power distance make objective

appraisals a challenge.

Supervisors and subordinates develop close relationships. Organizational loyalty is as important as work performance. Employee promotions are frequently based on seniority.

• Annual performance appraisals.• Supervisors provide performance ratings that are frequently inflated due

to personal relationships. • Employment at will does not exist in India. Employment termination

carries a social stigma.

Compensation and Benefits

• In addition to a base salary, compensation includes:– House rent allowance (HRA*).– Medical allowance.– Dearness allowance (DA*).– Leave travel allowance (LTA*).– Commuter allowance.– * These allowances are frequently referred by their acronyms

• Several categories of leave (vacation) exist:– Sick leave: 7 days (medical certificate required).– Casual leave: 7 days (for personal and family emergencies,

requires prior permission of boss). Employees can take maximum 2 days at a time

– Annual leave: 3 weeks (after one year of employment).– Federal holidays: About 20 days.

Retirement age:

55-60 years (private sector);.

60 years (public sector).

Retirement Benefits: Employees receive two lump-sum payments when they retire:

Provident Fund (similar to 401(k))• Typical contributions: 10-12 percent of base salary

(employer and employee).• Payable on retirement, voluntary separation, death.

Gratuity• Only employer contributes (15 days salary per year of

service).• Tax-exempt for employees.• Payable on retirement, voluntary separation, death.

JAPANESE HR

PRACTICES

Understanding the Japanese way of people management

There are 4 pillars to japanese HR management :

1. Long term employment:55% of Japanese companies are still

observing long term employment14%actively use it as a tool ofrecruiting

and retentionCohort recruiting from colg and stay with

the company until retirementBasic idea:Age/tenure=experience=contribution

2.Seniority based promotion and composition

Pay for age conceptautomatic pay increasemore work less pay when young;less work

more pay with age 3.Company driven employee training programme

4.Trade/labor unionism Unionization rate=18.2% with 10.04million

membersas of 2006Types of labor union: -enterprise level(905

majority)-indutrial trade union-Enterprise or inhouse unionso 10 or more employeeso Employees at companies with no inhouse

unions can join trade unionso Strikes are rarely done due to cooperative

relationships of unions and mgt.

 

HR Practices in CHINA

Major HR practices in ChinaMajor HR practices in China

• Recruitment techniques• Selection techniques• Training • Work culture• Expatriate management

Recruitment

• Companies in china recruit candidates

mainly on basis of:

• Skills

• Employment history

• Total work experience

• Language abilities

• Career goals

Recruitment techniquesAdvertisements

• Advertisements are not permitted in the news media without “the prior approval of the local labour and social security department”.

• Advertisements are usually placed in local papers or specialised industry publications.

Job fairs

• The common recruitment avenues are the labour market, personnel exchange seminars

• The job fairs are sponsored by the Labour Bureau.

Campus Placements

• To recruit potential applicants, many companies regularly go to college or university campuses to interview students

• They can negotiate the job terms directly with the students

Global Image

• The development of technology parks and technology development zones in China, there has been a concomitant growth in the use of Western HR strategies among multinational companies.

Corporate Co-ordination

• International Communications and PR companies are developing offices throughout China to assist local and overseas businesses work together effectively to meet the demands of Eastern and Western markets.

Selection Techniques

Interview

• The interview is a common selection tool

for many companies and is the dominant

method used. Punctuality is very

important in China and in greeting the

applicant the employer will not look at

them directly because lowering of eyes

shows respect.

Tests

• Technology tests, technical tests, problem solving tests and English proficiency tests.

• Traditional companies rarely use psychological or aptitude testing, psychometric testing of abilities and attitudes, interests and motivations, needs and aspirations and/or personal management style has been adopted from Western HR practices, especially in the Healthcare industry.

Behavioural Event• Interactive role play, simulation exercises

and leaderless group discussion (LGD).

TRAINING

• Some of the major training methods are:

• Technical training(both expatriates &

Local employees)

• Language training( expatriates)

• Pre – departure training(expatriates)

• Training on work culture( expatriates)

WORK CULTURE

Respect for age & hierarchy

Face & harmony

Group orientation

Personal relations or guianxi

Features of Chinese work

culture

• the % of expatriate from western, expatriate from Hong Kong and expatriate from Taiwan is decreasing, but % of expatriate from Asia Pacific and locally hired foreigner is increasing.

EXPATRIATE MANAGEMENT

Expat allowan

ce

Locally Hired Foreigner

• Medical Benefit

• Insurance• Housing

Benefit• Car Benefit• 5. Home Visit

Assistance

Locally Hired Returnee

•Medical Benefit• Insurance• Housing Benefit• Car Benefit• Retirement Benefit

Expat fromWestern Countries

•Housing Benefit• Insurance• Medical Benefit•Home Visit Assistance• Car Benefit

Expat fromAsia Pacific

•Medical Benefit• Insurance• Housing Benefit•Home Visit Assistance• Children Education•Benefit

Expat fromHong Kong

•Medical Benefit• Home Visit Assistance•Moving/Relocation•Assistance• Insurance•Housing Benefit

Expat fromTaiwan

•Home Visit Assistance• Moving/Relocation•Assistance• Medical Benefit•Insurance•Housing Benefit

A Comparison between

HR practices

of different countries

Country

Average Hours Worked Per Week

USA 38 Korea 47 Sri Lanka 43 Denmark 32 Germany 33 Greece 36 Japan 36

Vacationing Around the World

Italy

France

Germany

Brazil

Britain

Canada

South Korea

Japan

U.S.

Average annual vacation daysDays

0 5 10 15 20 25 30 35 40 45

Training systems used in different countries

Type Example Countries Features and Sources of Institutional Pressures Cooperative Austria, Germany,

Switzerland, and some Latin American Countries

Legal and historical precedents for cooperation among companies, unions, and the government.

Company-Based Voluntarism/high labor mobility

USA and the UK Lack of institutional pressures to provide training. Companies provide training based on own cost-benefits.

Voluntarism/low labor mobility

Japan Low labor turnover encourages investment in training without institutional pressure

State-Driven Incentive Provider Hong Kong, Korea,

Singapore, Taiwan, China Government identifies needs for skills and uses incentives to encourage companies to train in chosen areas.

Supplier Developing countries in Asia and Africa, transition economies

No institutional pressures for companies to train. Government provides formal training organizations.

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Japanese vs. U.S. Leadership Styles

Dimension Japan US

Employment Often for life Often short-term

Evaluation Slow, takes many years Fast: those not promoted often leave

Career Paths Very general; based on rotations

v. specialised; people stay in one area

Dec. Making Group based By individual managers

Control Mech. Implicit & informal; reliance on trust and goodwill

Explicit; based on knowing the control mechanisms

Responsibility Shared collectively Assigned individually

Concern for employees

Broad and covers the whole life

limited to work-life

Reason for Expatriate Failure

US FirmsInability of spouse to adjustManager’s inability to adjustOther family problemsManager’s personal or emotional immaturityInability to cope with larger overseas responsibilities

US FirmsInability of spouse to adjustManager’s inability to adjustOther family problemsManager’s personal or emotional immaturityInability to cope with larger overseas responsibilities

Japanese Firms Inability to cope with

larger overseas responsibilities

Difficulties with the new environment

Personal or emotional problems

Lack of technical competence

Inability of spouse to adjust

Japanese Firms Inability to cope with

larger overseas responsibilities

Difficulties with the new environment

Personal or emotional problems

Lack of technical competence

Inability of spouse to adjust

European Multinationals: Inability of spouse to adjust.European Multinationals: Inability of spouse to adjust.

Most challenging International HR task

Managing The Global Virtual Teams

THANK YOU