International Human Resource Management MGMT414 Assoc. Prof. Dr. Cem Tanova.

International Human Resource Management

MGMT414Assoc. Prof. Dr. Cem Tanova

1. Bic pens are 1. French, Bic;

2. Godiva chocolate is 2. American, Campbell Soup;

3. Algida’s owner is 3. Anglo-Dutch, Unilever

4. Haagen-Dazs ice cream is made by a(n) company

4. British, Grand Metropolitan;

5. Firestone (Bridgestone) tires are

5. Japanese, Bridgestone Corp;

6. RCA televisions are made by a(n) company

6. French, Thompson;

7. Atari Video games are 7. American, Atari Corp;

8. Jaguar cars made by a(n) company

8. American, Ford Motor Co.;

9. Holiday Inns are owned by 9. British, Bass;

10. The parent company of Braun household products is

10. American, Gillette Co.;

Introduction to International Human Resource Management

• How the world is changing, • Importance of globalization, • IHRM as a key factor in the success of

international business. • An overview of domestic HRM and discussion

on what is different in IHRM.

Questions to consider

• What are the key elements of “best practice” in HRM?

• Can the best practices be applied on a global level?

• To what extent are the principles of managing people universal and to what extent culture specific?

• Inter-cultural or International? What is the difference? (Our focus will be international)

Irwin/McGraw-Hill

Motivations and Perspectives Shaped by Administrative Heritage

Inter War Period

- National market differences

- Transport/communication barriers

- Rising protectionism

* Internationalize through rationally differentiated and responsive strategies

- European MNC expansion

Immediate Post-War period

- Post-war reconstruction

- Transfer of new technologies

- Leverage management skills

* Internationalize through transfer of technological and managerial innovations

- American MNC expansion

Mid 1960s to late 1970s

- Falling trade barrier

- Homeogeniziing markets

- Improved transport, communications

* Internationalize by capturing global scale advantages and global competitive games

- Japanese MNC expansion

Irwin/McGraw-Hill

STRATEGIC PERSPECTIVES IN MNCs

AN EVOLVING MANAGEMENT MENTALITY• “ INTERNATIONAL” PERSPECTIVE

- DOMESTIC COMPANIES WITH FOREIGN APPENDAGES

- OPPORTUNISTIC APPROACH TO FDI

- PORTFOLIO APPROACH TO MANAGEMENT OF FOREIGN OPERATIONS

• “ MULTI-NATIONAL” PERSPECTIVE

- INCREASED REALIZATION OF IMPORTANCE OF INTERNATIONAL MARKETS

- MANAGE OVERSEAS OPERATIONS AS A FEDERATION OF INDEPENDENT COMPANIES

• “ GLOBAL” PERSPECTIVE

- GROWING CONCERN ABOUT INTERNATIONAL COMPETITION AND INEFFICIENCIES OF MULTI-NATIONAL RESPONSE

- DRIVE FOR COST COMPETITIVENESS THROUGH PRODUCT STANDARDIZATION AND ORGANIZATIONAL CENTRALIZATION

- MANAGE WORLWIDE OPERATIONS AS SINGLE ENTITY

• “ TRANS-NATIONAL” PERSPECTIVE

- NEED TO RESPOND TO HOST COUNTRY PRESSURES AND GLOBAL COMPETITIVE DEMAND SIMULTANEOUSLY

- MANAGEMENT CHALLENGE TO COORDINATE RESPONSIVE NATIONAL UNIT IN A GLOBALLY EFFICIENT SYSTEM

Copyright 2003-2006, Chris Chan 8

Strategies of international, multinational, global & transnational organizations

• International company – transports its business outside home country; each of its operations is a replication of the company's domestic experience; structured geographically; and involves subsidiary general managers

• Companies offering multiple products often find it challenging to remain organized e.g. need to have a common information systems for accounting, financial and management controls, and marketing. Most evolve to become multinational companies



• Multinational company – grows and defines its business on a worldwide basis, but continues to allocate its resources among national or regional areas to maximize the total.



• Global organizations – treat the entire world as though it were one large country; may be the entire company or one or more of its product lines; may operate with a mixture of two or more organizational structure simultaneously.



• Transnational organization - Use specialized facilities to permit local responsiveness; more complex coordination mechanism to provide global integration


Global efficiency and local responsiveness of different types of firms

GlobalGlobal TransnationalTransnational

InternationalInternational MultinationalMultinational

Global efficiency

HighLow

High

Local responsiveness

Irwin/McGraw-Hill

Evolving Motivations: Changing Perspectives

GlobalHigh

Global CoordinationIntegration

InternationalLow

Low National differentiation, Responsiveness

Multi-National

High

Trans-National

Irwin/McGraw-Hill

MNC’s STRATEGIC AND ORGANIZATIONAL TASK: DEVELOPING MULTIPLE CAPABILITIES

TOYOTA

G.MFIAT

NEED FOR GLOBAL COORDINATION, INTEGRATION

- DRIVEN BY SCALE AND TECHNOLOGY

- REINFORCED BY GLOBAL COMPETITION

- DRIVEN BY SCOPE AND MARKETS

- REINFORCED BY GOVERNMENTS

NEED FOR NATIONAL DIFFERENTIATION, RESPONSIVENESS

Key Trends

• 63,000 transnational companies account for more than half (2/3) of world trade.

• The top 100 companies account for 14% of worldwide sales, 12% of assets, and 13% of employment.

• Physical location of value creation is very difficult to determine.

• Much of the force of globalisation comes through mergers and acquisitions.

Impact of globalisation on the nature of work

• Outsourcing to low labor countries– First manufacturing, then processing services, now

white collar work.

Questions for HR professionals• Do we have a strategy for becoming an international firm?• What type of managers will we need to be successful?• How can I find out about the way that HRM is conducted in

other countries (laws, trade unions, labor market).• What will be the impact of cultural norms on our HR

policies.• How will we choose whether to send expatriates or use

local employees.• How do we move people to different locations• How do we manage transfer of knowledge across borders

Parent-country Nationals

Advantages Control and co-ordination by

HQ is maintained. Promising managers get

international experience. PCNs may be the best

people for the job. Assurance that the

subsidiary will comply with company objectives policies etc.

Disadvantages HCNs promotion

opportunities are limited. Adaptation to host country

may take a long time. PCNs may impose an

inappropriate HQ style. Compensation differences

between PCNs and HCNs may cause problems.

Host-country NationalsAdvantages• No problems with

language and culture. • Reduced hiring costs. • No work permits required. • Continuity of management

improves since HCNs stay longer in positions.

• Govt. policy may force hiring of HCNs.

• Promotional opportunities not limited - so higher morale among HCNs.

Disadvantages• HQ may have less control

over operations. • HCNs may still have

limited career opportunities outside the subsidiary.

• Hiring HCNs limits opportunities for PCNs to gain overseas experience.

• Hiring HCNs may encourage a federation of disintegrated national units rather than one integrated global unit.

Third-country Nationals

Advantages• Salary and

compensation may be lower than for PCNs.

• May be more familiar with host country than the PCNs.

Disadvantages• Transfers must

consider national animosities.

• Host government may resent TCNs as much as PCNs.

• TCNs may not comply with HQ style of management.

• TCNs may not want to return after assignment.

International Recruitment and Selection

• A selection program for international assignments involves assessing prospective candidates on certain criteria thought to be associated with assignment effectiveness.

• In order to have a successful selection program there needs to be a broad range of prospective candidates from which to choose criteria of effectiveness and valid procedures for assessing candidates on them.

• empathy • flexibility • patience • openness • reliability • confidence • emotional stability • communication skills • tolerance for differences • humor • resourcefulness • sensitivity • teaching skills

ability to handle alcoholcuriositypositive regard for othersacceptability of assignmentdesire to be abroadnon ethnocentrismhigh motivationcourtesyadaptabilitytolerance for ambiguitylanguage skillsinterest in host culture

International Training and Development

• Empirical literature give guarded support to the proposition that cross cultural training has a positive impact on cross cultural effectiveness.

• Cultural awareness training is not just for the employee going overseas. It has numerous applications domestically that will increase organizational effectiveness. Findings indicate that it should be a regular part of personnel training especially management development. The realities of a more pluralistic society and international business make this a necessity.

Area studies programs Culture assimilator programs Language training programs Sensitivity training programs Field experience programs

International Training and Development

International Compensation

• If compensation is high then problems may be encountered on return to head office.

• If compensation is not adequate then there may be no incentive to go for the international assignment given the hardships that are usually involved in doing so.

International Compensation

Expatriation PremiumCost of Living Allowance Swamp Pay AllowanceShelter AllowanceEducational AllowanceHome Leave

Repatriation

• Virtually all repatriated personnel experienced some personal difficulty in reintegrating on return home. The main complaints were loss of status loss of autonomy lack of recognition of the value of the experience and lack of career direction.

Repatriation: Reverse Culture-shock

JOB RELATED FACTORS• “Out of sight out of mind”• International experience

devalued• Loss of status and pay relatively

peaking• Changes in the HQ

SOCIAL FACTORS• Expat assignment - different type

of social interaction (going from a very close expat community to where everyone is very busy with their own lives)

• Problems of spouse returning to the workforce

• Lack of peer support for teenagers

International Human Resource Management MGMT414 Assoc. Prof. Dr. Cem Tanova.

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