International Human Resources Management

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International HumanResources Management

• Chapter 10, Part 1

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Chapter Outline

• International human resources management (IHRM)
• Human resources management (HRM)
• Adapting HRM practices to global business
• Types of employees in global organizations
• Home-country nationals
• Host-country nationals
• Third-country nationals
• Inpatriates
• Legal documents passports and visas

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Chapter Outline (2)

• Expatriate vs. home country managers
• Criteria for making this decision
• Is the expatriate worth it?
• Financial costs of expatriates
• Risk of expatriate failure
• Benefits of having managers with international
  experience
• International cadre another choice

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Chapter Outline (3)

• Choosing the right expatriate for the job
• Key success factors
• Matching the candidate and the job

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Human Resources Management (HRM) and HRM Functions

• HRM deals with the entire relationship of the
  employee with the organization
• Recruitment process of identifying and
  attracting qualified people to apply for vacant
  positions
• Selection process of filling vacant positions in
  the organization

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HRM Functions (2)

• Training and development giving employees the
  knowledge, skills, and abilities to perform
  successfully
• Performance appraisal system to measure and
  assess employees work performance

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HRM Functions (3)

• Compensation (pay and benefits) organizations
  entire reward package, including financial
  rewards, benefits, and job security
• Labor relations ongoing relationship between an
  employer and those employees represented by labor
  organizations

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International Human Resource Management

• All HRM functions, adapted to the international
  setting
• Two added complexities compared to domestic HRM
• Must choose a mixture of international employees
• Must decide the extent of adaptation to local
  conditions

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Key Questions aboutAdapting HRM Practices

• How can we identify talented local employees?
• How can we attract these employees to apply for
  jobs?
• Can we use our home countrys training methods
  with local employees?
• What types of appraisal methods are customary and
  legal?

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Key Questions aboutAdapting HRM Practices (2)

• What types of rewards do local people value?
• How can we retain and develop employees with a
  high potential as future managers?
• Do any local laws affect staffing, pay, benefits,
  and training decisions?

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Types of Employees inMultinational Companies

• Home country nationals
• Host country nationals
• Third-country nationals
• Inpatriates

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Home-country Nationals

• Are citizens of the country where the company is
  headquartered but live and work elsewhere
• Often used
• To start up operations (most common reason)
• To provide technical or managerial expertise
• To help the company maintain financial control
• In top management positions
• Companies sometimes start with home-country
  nationals and switch to host-country nationals as
  qualified people become available.

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Host-country Nationals

• Citizens of the country where they live and work
• They are familiar with the culture and know the
  language
• They are less expensive than home-country
  personnel
• Host-country governments often prefer use of
  host-country nationals and some require it
• Hiring them is good public relations
• U. S. companies tend to rely heavily on
  host-country nationals

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Third-country Nationals

• People who are citizens of neither the home
  country or the host country
• Example A Mexican, employed by an American
  company, working in Argentina
• The employee's native country and the country
  where he works are often in the same geographic
  region

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Advantages of Third-Country Nationals

• They often require less compensation than
  home-country nationals
• They usually have experience with the company.
  They know the company's culture, values, and
  policies.
• If they are from the same geographic region as
  the host country and also know the company's
  culture, they can often achieve objectives better
  than other types of managers.

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Inpatriates

• Persons who work in the home country and are
  citizens of a different country
• Advantages of inpatriates
• Help to develop global core competencies
• Provide diversity and an international
  perspective in the home office
• Improve career opportunities for company managers
  who are not from the home country avoids the
  "glass ceiling"

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Passports and Visas

• A passport is a document that identifies its
  owner as the citizen of a particular country.
• A visa is a document from a foreign government
  that allows the visa owner to enter the foreign
  country for a particular purpose or reason, such
  as personal travel, work, or study.
• Most visas are valid for a specified period of
  time. Some visas can be renewed.
• Many governments have different rules for people
  from different countries.

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Expatriate

• Any person who lives and works outside the
  country of which he or she is a citizen
• Includes home-country nationals, third-country
  nationals, and inpatriates
• In most countries, expatriates must have work
  visas in order to work.
• Exception By 2011, citizens of most EU countries
  will be able to work in any EU country without a
  visa.

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Expatriate or Host Country Manager?

• Using expatriate managers
• Do they have the appropriate skills?
• Are they willing to take expatriate assignments?
• Do any laws affect the assignment of expatriate
  managers?
• Using host country managers
• Do they have the expertise for the position?
• Can we recruit them from outside the company?

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Is the Expatriate Worth It?

• Consider costs, risks, and benefits
• High financial costs
• High failure rate of expatriates
• Benefits of international experience to the
  company
• Expatriate failure occurs when
• An expatriate is recalled to the home country
  because of poor performance OR
• An expatriate comes home early because the
  manager or family cannot adjust to the foreign
  country.

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Reasons for U.S. Expatriate Failure

• Individual
• Personality of the manager poor interpersonal
  relationships or communication
• Lack of technical proficiency
• No motivation for assignment
• Family
• Spouse or family members fail to adapt
• Spouse cannot find a job
• Family members or spouse do not want to be there

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Reasons for U.S. Expatriate Failure (2)

• Cultural
• Manager fails to adapt
• Manager fails to develop relationship with key
  people (company, customers, suppliers,
  government). Poor performance may result.
• Organizational
• Excessively difficult responsibilities
• Company fails to pick the right person
• Company fails to provide technical support or
  training

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Reasons for Expatriate FailureCross-country
Comparison

• A study of American, European, and Japanese
  managers found that
• Expatriate failure is highest among Americans,
  somewhat lower among Europeans, and lowest among
  Japanese.
• For Americans and Europeans, family issues are
  the most common cause of expatriate failure.
• For Japanese managers, not having the needed job
  skills is the most common cause of failure

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How Companies Benefit fromManagers'
International Experience

• Helps managers acquire international skills
• Helps coordinate and control operations dispersed
  activities
• Communication of local needs/strategic
  information to headquarters
• In-depth knowledge of local markets
• These benefits can be strategically important to
  the company.
• Some companies now require international
  experience for high-level managers.

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International Cadre Another Choice

• Separate group of expatriate managers who
  specialize in a career of international
  assignments
• Have permanent international assignments
• Move from one international assignment to another
• May be recruited from any country
• Sent to worldwide locations to develop
  cross-cultural skills

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Key Success Factors for Expatriate Assignments

• Technical and managerial skills to do the job
• Personality traits
• Ability to relate well to people from different
  cultures
• Family situation
• International motivation
• Language ability

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Matching the Candidateand the Job

• Assignment length
• For short assignments, technical and professional
  skills are usually the most important criteria
• For longer assignments, other factors are also
  important
• Cultural similarity it is easier to work in a
  culture similar to your own.

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Matching the Candidateand the Job

• Amount of interaction with local people higher
  levels of interaction require better skills in
  developing relationships across cultures.
• Job complexity and responsibility high-level
  jobs require a higher level of experience.
• Cultural acceptance in the host country
• Employees and business contacts in Asian
  countries may feel insulted if they have to deal
  with older managers in high-level positions