Ihrm chapter4

1(c) 2009 by Nelson Education Limited.

Chapter 4

Staffing International Operations for Sustained Global Growth


Chapter Learning Objectives

After reading this chapter, you should be able to:• discuss issues relating to the various approaches to

staffing foreign operations• provide reasons for using international assignments:

filling positions, management development and organizational development

• define the various types of international assignments:short term, extended and longer term, along with non-standard arrangements: commuter, rotator, contractual

and virtual


Chapter Learning Objectives

• describe the role of expatriates and non-expatriates in supporting international business activities

• outline the possibilities on a return on investment of international assignments

• define the role of the corporate HR function


Opening Vignette

Help!

• IHRM plays a leading role in the staffing of international operations by supporting and guiding managers involved in assignments in foreign companies.


Opening Vignette

• Discuss some of the areas and aspects that should have been managed by his company’s HRM team.

• How could the HR function help its Dutch employee?

6(c) 2009 by Nelson Education Limited.6IHRM Chapter 4

Expatriate roles:

agent of direct controlagent of socializationlanguage nodenetwork builderboundary spanner

Approaches to staffing:inpatriates

expatriates

flexpatriates

Assignments: short-termextendedtraditionalcommuterrotationalcontractualvirtual

ethnocentric polycentricgeocentric regiocentric

ROI approach

Terms


Approaches to Staffing

• ethnocentric• polycentric• geocentric • regiocentric


Ethnocentric

• few foreign subsidiaries have any autonomy and strategic decisions are made at headquarters

• key positions in domestic and foreign operations are held by headquarters’ personnel

• subsidiaries are managed by staff from the home country (PCNs).


Advantages & Disadvantages of Using PCNs (IHRM Notebook 4-1)


Cost of Employing Expatriates (IHRM Today 4.3)

• the costs of sending this manager on a international assignment are nearly a million dollars, compared to the approximately $300,000 it would cost to employ a U.K. – based manager.


Advantages & Disadvantages of Using TCNs (IHRM Notebook 4-1)


Polycentrism

• subsidiary is treated as a distinct national entity with decision‑making autonomy

• subsidiaries are managed by local nationals (HCNs) • HCNs are seldom promoted to positions at headquarters

• PCNs are rarely transferred to foreign subsidiary operations


Advantages & Disadvantages of Using HCNs (IHRM Notebook 4-1)


Geocentrism

• a global approach to its operations, recognizing that each part (subsidiaries and headquarters) makes a unique contribution

• world wide integrated business; nationality is ignored in favour of ability.


Advantages of Geocentrism

• develops international executive teams and internal pools of labour

• overcomes federation drawback

• supports cooperation and resource sharing across units


Disadvantages of Geocentrism

• host governments may utilize immigration controls in order to force HCN employment

• companies required to provide extensive documentation

• increased training and relocation costs


Disadvantages of Geocentrism

• compensation structure with standardized international base pay

• large numbers of PCNs, TCNs, and HCNs need to be sent abroad

• requires longer lead time and centralized control of the staffing process


Regiocentrism

• reflects the geographic strategy and structure of the MNE

• it utilizes a wider pool of managers but in a limited way

• staff may move outside their countries but only within the particular geographic region

• regional managers may not be promoted to headquarters positions but enjoy a degree of regional autonomy


Advantages of Regiocentrism

• interaction between executives

• sensitivity to local conditions (staffed by HCNs)

• way to gradually move from a purely ethnocentric or polycentric approach to a geocentric approach


Disadvantages of Regiocentrism

• can produce federalism at a regional rather than a country basis

• improves career prospects at the national levels


A Philosophy Towards Staffing

The internal and external contingencies facing an internationalizing MNE influence its staffing practices

• managerial attitude• degree of culture differences• local government requirements• foreign market• maturity of operation• organizational needs


Determinants of Staffing Choices (Figure 4.1)


Transferring Staff for International

Business Activities

HRM implications• reasons for using international assignments• types of international assignments• role of expatriates and non-expatriates• role of inpatriates


Reasons for International Assignments

• position filling

• management development

• organization development


Types of International Assignments

Short term up to 3months

Extended up to 1year

Long term (traditional expatriate assignment) 1 to 5 years


Short-term Assignments

• take up to three months

• usually for troubleshooting, project supervision, or a stopgap measure


Extended Assignments

• up to one year

• may involve similar activities as that for short term assignments


Long-term Assignments

• traditional expatriate assignment varying from one to five years

• involving a clearly defined role in the receiving operation


Differences Between Traditional & Short-term Assignments(IHRM Notebook 4-2)


Non-standard International Assignments

Commuter go home every one to two weeks

Rotational commute for set period followed by in home country

Contractual specific skills employees hired for6 to 12 months on specific projects


Non-standard International Assignments

Virtual

• employee manages international responsibilities from home country base

• relies on communications technologies such as telephone, email or video conferences

• frequent visits to the host country


Virtual Assignments

Advantages• overcoming high costs of international assignments • fills shortage of mobile staff prepared to accept longer

term postings

Disadvantages• stress resulting from intensive travel commitments• role conflict, dual allegiance, and identification issues• interpersonal and work relationships


The Roles of an Expatriate (Figure 4.2)


Agent of Direct Control

• subsidiary compliance through direct supervision

• enables strategic objectives for local operations to be achieved


Agent of Socialization

• the transfer of shared values and beliefs; related to the use of corporate culture as an informal control mechanism

• assist in knowledge sharing and competence transfer, and adoption of common work practices


Network Builders

• develop social capital: fostering interpersonal linkages that can be used for informal control and communication purposes


Boundary Spanners

• collect host country information and act as representatives of their firms in the host country

• can influence agents

• bridge internal and external organizational contexts


Language Nodes

• many MNEs operate through language standardization – or corporate language, usually English.

• employees competent in other languages may be the person in which other country representatives preferred to conduct queries from the MNE.


Transfer of Competence and Knowledge

• elements from all roles


The Role of Non-Expatriates

• travel internationally yet do not relocate to another country

• a large proportion of their role involves constant international visits to foreign markets, subsidiary units, international projects


Stress Factors

• the international component of their work is performed within the context of their ‘normal’ duties

• a high level of stress involved for those whose job

responsibilities contain a large proportion of international business travel


Stress Factors

• home and family • work arrangements • travel logistics• health concerns• host culture issues


The Role of Inpatriates

• international assignments of HCNs or TCNs from a foreign location to the MNE headquarters

• “linking pins” between the different organizational units


Expatriate ROI

• a calculation in which the financial and non-financial benefits to the MNC are compared to the financial and non-financial costs of the international assignment


ROI Indicators for Calculating International Assignment (Figure 4-3)


4-Steps to Calculate Expatriate ROI

• identify financial and non-financial costs and benefits.• link the costs and benefits to the purpose of the long-term

assignment.• identify the appropriate antecedents from a system’s

perspective.• conduct the calculation at an appropriate time within the

context of the assignment’s purpose.

47(c) 2009 by Nelson Education Limited.47IHRM Chapter 4

Various Roles of Corporate HR (Table4-1)


Discussion Questions

48IHRM Chapter 4

1. Outline the main characteristics of the four approaches to international staffing.

2. Which factors determine the choice of a staffing approach? Would a MNE choose the same staffing approach worldwide? Place your arguments in the context of the model outlining determinants of staffing choices.



49IHRM Chapter 4

3. What are the reasons for using international assignments?

4. What is the role of inpatriates? Do inpatriates guarantee a geocentric staffing policy?

5. Why is it important to measure return on investment of international assignments? Which indicators can be used?



50IHRM Chapter 4

6. As a newly appointed Project Manager of a research team, you consider that you will be able to manage the project virtually from your office in London, even though the other six members are located in Munich. This will solve your personal dilemma as your family does not want to be relocated. The project has a six-month deadline. What factors should you need to consider in order to make this virtual assignment effective?


Case: RBC Dexia Investor Services

Questions PART A

1. When two international companies like RBC and Dexia partner up in a joint venture many positions are double occupied. From a HR perspective how would you approach this problem? What are your options to solve this problem?

2. What are some of the other key HR challenges in an international partnership such as Canada’s RBC and Belgium/Luxembourg Dexia?



Questions PART A

3. What are your options to fill the 300 additionally required jobs in Luxembourg?

4. What kind of impression could the sudden and justification lacking announcement of changes at the top management level have on employees?



Questions PART B

1. Based on the message from this note what are the consequences for employees wanting to move between RBC to RBC Dexia?

2. With regard to service history, pensions and benefits,

what are the options for HRM to help employees wanting to move from RBC to RBC Dexia?

Ihrm chapter4

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