IHRM: Sustaining international business operations

1
Chapter 3

• IHRM Sustaining international business operations

2
Chapter objectives
The previous two chapters concentrated on the
global environment and organizational contexts.
We now focus on the managing people aspect. The
aim is to establish the role of HRM in sustaining
international business operations and growth. We
cover the following

• issues relating to the various approaches to
  staffing foreign operations
• the reasons for using international assignments
  position filling, management development and
  organizational development
• (cont.)

3
Chapter objectives (cont.)

• the various types of international assignments
  short-term, extended and longer-term and
  non-standard arrangements commuter, rotator,
  contractual and virtual
• the role of expatriates and non-expatriates
  (international business travelers) in supporting
  international business activities
• the role of the corporate HR function.

4
Approaches to staffing

• Factors affecting approaches to staffing
• General staffing policy on key positions at
  headquarters and subsidiaries
• Ethnocentric
• Polycentric
• Geocentric
• Regiocentric
• Constraints placed by host government
• Staff availability

5
Ethnocentric

• Strategic decisions are made at headquarters
• Limited subsidiary autonomy
• Key positions in domestic and foreign operations
  are held by headquarters personnel PCNs manage
  subsidiaries

6
Polycentric

• Each subsidiary is a distinct national entity
  with some decision-making autonomy
• HCNs manage subsidiaries who are seldom promoted
  to HQ positions
• PCNs rarely transferred to subsidiary positions

7
Geocentric

• A global approach - worldwide integration
• View that each part of the organization makes a
  unique contribution
• Nationality ignored in favour of ability
• Best person for the job
• Colour of passport does not matter when it comes
  to rewards, promotion and development

8
Figure 3-1 Geocentric staffing requirements
9
Regiocentric

• Reflects a regional strategy and structure
• Regional autonomy in decision making
• Staff move within the designated region, rather
  than globally
• Staff transfers between regions are rare

10
Table 3-1 The advantages and disadvantages of
using PCNs, TCNs and HCNs
11
Figure 3-2 Determinants of IHRM approaches and
activities
12
Reasons for international assignments

• Position filling
• Eg. Skills gap, launch of new endeavour,
  technology transfer
• Management development
• Training and development purposes, assisting in
  developing common corporate values
• Organizational development
• Need for control, transfer of knowledge,
  competence, procedures and practices

13
Types of international assignments

• Short term
• Up to 3 months
• Extended
• Up to 1 year
• Long term
• Varies from 1 to 5 years
• The traditional expatriate assignment

14
Non-standard assignments

• Commuter assignments
• Rotational assignments
• Contractual assignments
• Virtual assignments

Some of these arrangements assist in overcoming
the high cost of international assignments but
are not always effective substitutes for the
traditional expatriate assignment
15
Figure 3-3 Factors influencing virtual
assignments
16
Roles of an expatriate

• Agent of direct control
• Agent of socialization
• Network builder
• Boundary spanner
• Language node
• Transfer of competence and knowledge

17
Figure 3-4 The roles of an expatriate
18
The role of non-expatriates

• People who travel internationally yet are not
  considered expatriates as they do not relocate to
  another country
• Road warriors, globetrotters, frequent fliers
• Much of international business involves visits to
  foreign locations, eg.
• Sales staff attending trade fairs
• Periodic visits to foreign operations

19
A glamorous life?

• International business travelers cite the
  positives as
• Excitement and thrills of conducting business
  deals in foreign locations
• Life style (top hotels, duty-free shopping,
  business class travel)
• General exotic nature

20
But a high level of stress!

• Home and family issues frequent absences
• Work arrangements domestic side of position
  still has to be attended to
• Travel logistics waiting in airports, etc.
• Health concerns poor diet, lack of sleep, etc.
• Host culture issues limited cultural training

21
Table 3-2 Various roles of corporate HR
22
The role of the corporate HR function

• Can we manage our people like a global product?
  The feasibility of
• The concept of a global internal labour market
• Standardization of work practices and HR
  activities
• What HR matters require central control and what
  can be decentralized?

23
Chapter summary
This chapter has expanded on the role of IHRM in
sustaining international business operations. We
have

• Looked at the various approaches to staffing
  international operations ethnocentric,
  polycentric, geocentric and regiocentric
  examining their advantages and disadvantages and
  factors that may determine the choice of these
  options.
• Considered the reasons for using international
  assignments position filling, management
  development and organization development.
• (cont.)

24
Chapter summary (cont.)

• Discussed the various types of international
  assignments short, extended and long-term
  (traditional) and non-standard forms such as
  commuter, rotational, contractual and virtual
  assignments.
• Examined the various roles of the expatriate as
  an agent for direct control, as an agent for
  socialization, as network builders, as boundary
  spanners and as language nodes. These various
  roles of the expatriate help to explain why
  expatriates are utilized and illustrates why
  international assignments continue to be an
  important aspect of international business from
  the organizations perspective.
• (cont.)

25
Chapter summary (cont.)

• Recognized that non-expatriates are also critical
  to international business operations.
  International business travelers present their
  own challenges, such as the effect of frequent
  absences on family and home life, the possible
  negative health effects and other stress factors.
  The management of such individuals, however, does
  not appear to fall within the domain of the HR
  department.
• Looked at the role of the corporate HR function
  as the firm grows internationally, building on
  sections from Chapters 1 and 2.