International Management

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International Management

© 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 14

Human Resource Selection and Development across Cultures

© 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives

Identify the three basic sources that MNCs can tap when filling management vacancies in overseas operations in addition to options of subcontracting and outsourcing

Describe the selection criteria and procedures used by organizations and individual managers when making final decisions

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3

Learning Objectives (continued 1)

Discuss the reasons why people return from overseas assignments, and present some of the strategies used to ensure a smooth transition back into the home-market operation

Describe the training process, the most common reasons for training, and the types of training that often are provided

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4

Learning Objectives (continued 2)

Explain how cultural assimilators work and why they are so highly regarded

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5

Challenge of Talent Retention in India

MNCs mistakenly use the same methods to try to retain employees in India as in the home country

Key to high retention – Employee engagement

HR practices to keep employees engaged

Performance management

Professional development

Manager support

Organizational commitment to a larger social purpose

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Importance of International Human Resources

Human resource management is key to an efficient and productive workplace

Understanding how employees feel they are being treated is important

Retention and commitment to the organization is achieved by focusing on employees and tailoring human resource management to the individual

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Importance of International Human Resources (continued)

Success of firms depends on attracting the most qualified employees and matching them to the jobs for which they are best suited

Sending employees overseas can be expensive

Investment in recruiting and training is required

Nature of the human resources process is changing as a result of ongoing pressures for reduced costs and increased efficiencies

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Sources for Human Resources

Home-country nationals

Host-country nationals

Third-country nationals

Inpatriates

Other potential sources

Subcontracting

Offshore outsourcing

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Home-Country Nationals

Managers who are citizens of the country where the MNC is headquartered

Called headquarters nationals or expatriates

Reasons to use home-country nationals

Start up operations

Provide technical expertise

Develop promising managers

Facilitate coordination and control

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Host-Country Nationals

Local managers hired by the MNC

Reasons to use host-country nationals

Countries expect the MNC to hire local talent

Cut cost of transferring and maintaining home-country personnel

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Third-Country Nationals (TCNs)

Managers who are citizens of countries other than the country in which:

MNC is headquartered

Managers are assigned to work by the MNC

Advantages of using TCNs

Salary and benefit package is less than that of a home-country national

Good working knowledge of the region or familiarity with the local language

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Third-Country Nationals (TCNs)(continued)

Achieve corporate objectives is more effective than with expatriates or local nationals

Substitute for expatriates and offer new perspectives to viewpoints of local nationals and headquarters personnel during rapid expansion

Possible to demonstrate a global or transnational image and bring unique cross-cultural skills to the relationship in joint ventures

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Inpatriates

Individuals from a host country or third country who are assigned to work in the home country

Called inpats

Help MNCs develop their global core competencies

Global managers or transnational managers are now emerging

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Offshore Outsourcing

Presents significant opportunities for cost savings, lower overhead, and access to qualified personnel

Politically controversial – Union groups, politicians, and NGOs have challenged MNCs’ right to engage in labor arbitrage

Can create quality control problems

Tool for managing and deploying international human resources

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Selection Criteria for International Assignments

General criteria

Adaptability to cultural change

Physical and emotional health

Age, experience, and education

Language training

Motivation for a foreign assignment

Spouse and family adaptability

Leadership ability

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Expat Assignments

Objective – To fill a managerial or technical gap

Employee benefits – Faster promotions, higher pay, stronger performance ratings, and more mobility within the company

Rejected due to family and spouse's career concerns

Extremely expensive and return on investment is difficult to quantify

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International Human Resource Selection Procedures

Tests and interviews

Adjustment model

Anticipatory adjustments – Carried out before the expat leaves for the assignment

In-country adjustments – Takes place once the expatriate is on site

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Factors Influencing Anticipatory and In-Country Adjustments

Anticipatory adjustments

Pre-departure training

Previous experience the expat may have had with the assigned country

In-country adjustments

Ability to maintain a positive outlook

The job itself

Organizational culture and how easily the expat can adjust to it

Nonwork matters

Ability to develop effective socialization tactics

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Compensation

Base salary – Amount of money that an expatriate receives in the home country

Benefits – One-third of compensation for regular employees

Allowances – Expensive feature that covers a variety of expenses

Cost-of-living, relocation, housing, education, and hardship allowances

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Compensation (continued)

Incentives – Ongoing premiums are replaced with a one-time, lump-sum premium

Tax equalization – Any taxes that exceed what would have been imposed in the home country are paid by the MNC

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Approaches to Tailor the Compensation Package

Balance-sheet approach: Ensures the expat does not lose money by taking the assignment

Negotiation approach – Involves working out a special, ad hoc arrangement that is acceptable to both the company and the expat

Localization: Pays the expat a salary comparable to that of local nationals

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Approaches to Tailor the Compensation Package (continued)

Lump-sum method: Gives expats a predetermined amount of money and lets them decide how to spend it

Cafeteria approach: Gives expats a series of options and lets them decide how to spend the available funds

Regional system: Sets a compensation system for all expats who are assigned to a particular region

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Individual and Host-Country Viewpoints

Candidate motivations

Greater demand for their talents abroad than at home

Individual achievement and advancement

Security and good working conditions

Earning and fringe benefits

Host-country desires

Preference for a managerial style similar to that of their own country

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Repatriation

Return to one’s home country from an overseas assignment

Reasons for returning

Agreed-on tour of duty is over

Family concerns

Difficulty faced by spouses in acclimating to a new culture

Desire to educate children in a home-country school

Company restructuring

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Repatriation: Readjustment Problems

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26

Demotion of permanent position

Lack of opportunities to put foreign experience to work

Lack of communication about what would happen after return

Loss of salary and fringe benefits

Difficulty in adjusting to lower standard of living

Absence of cultural lifestyles

Less significance on international experiences

Transition Strategies

Help smooth the adjustment from an overseas to a stateside assignment

Repatriation agreements: Firm:

Agrees with the individual the duration of overseas posting

Promises to give the individual, on return, a job that is mutually acceptable

Some firms rent or maintain expatriates’ homes until they return

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Transition Strategies (continued 1)

Arranging an event to welcome and recognize the employee and family

Establishing support to facilitate family reintegration

Offering repatriation counseling or workshops to ease the adjustment

Assisting the spouse with job counseling, résumé writing, and interviewing techniques

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Transition Strategies (continued 2)

Providing educational counseling for the children

Providing the employee with a thorough debriefing by a facilitator

Offering international outplacement to the employee and reentry counseling

Arranging a postassignment interview with the expatriate and spouse

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Training in International Management

Helps ensure that employees' full potential is tapped in overseas assignments

Aids in understanding the customs, cultures, and work habits of the local culture

Simplest training – Placing a cultural integrator in each foreign operation

Topics in cultural training – Social and business etiquette, customs, economics, history, and politics

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Philosophies That Influence Training Programs

Ethnocentric MNC

Stresses nationalism and puts home-office people in charge of key international management positions

Polycentric MNC

Places local nationals in key positions and allows these managers to appoint and develop their own people

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Philosophies That Influence Training Programs (continued)

Regiocentric MNC

Relies on local managers from a particular geographic region to handle operations in and around that area

Geocentric MNC

Seeks to integrate diverse regions of the world through a global approach to decision making

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Reasons for Training

Organizational reasons

Help overcome ethnocentrism

Ethnocentrism: Belief that one’s way of doing things is superior to that of others

Improve the flow of communication

Increase overall efficiency and profitability

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Reasons for Training (continued)

Personal reasons

Improve overseas managers' ability to interact effectively with local people and their personnel

Develop foreign language skills

Deal with arrogance, overruling of decisions, and criticism

Improve overall management style

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Types of Training Programs

Small firms rely on standard training programs

Example – Quantitative analysis

Tailor-made training programs

Employed by larger firms

Created for the specific needs of the participants

Designed to provide a new set of skills for a new culture

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Cultural Assimilators

Expose members of one culture to some of the concepts, attitudes, role perceptions, customs, and values of another culture

Include critical incidents and alternative responses that are validated for their effectiveness

Expensive but can be applied to nearly all cultures

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Positive Organizational Behavior (POB)

Study and application of positively oriented human resource strengths and psychological capacities

Can be measured, developed, and effectively managed for performance improvement in today’s workplace

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Positive Organizational Behavior (POB) (continued)

Positivity in workplace has been linked to employee satisfaction

Positive individual traits, internal and external states, and systems promote positive behavior

Results in positive organizational citizenship behavior (OCB)

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Future Trends

Localization of expatriates

Integration of talent management and international assignment mobility

Emergence of cross-border commuters

Employees who regularly move back and forth between countries

Rise and growth of emerging markets

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Be the Management Consultant

Given the Russian government’s history of interfering with private business, would you make as large an investment in Russia as BP has done?

What are the pros and cons of this investment?

Does the fact that BP’s investment is suffering from Ukraine-related sanctions affect your decision to invest in the country in any sense?

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Review and Discuss

A New York-based MNC is in the process of staffing a subsidiary in New Delhi, India

Why would it consider using expatriate managers, local managers, or third-country managers in the unit?

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Review and Discuss (continued 1)

What selection criteria are most important in choosing people for an overseas assignment?

Identify and describe the four that you judge to be of most universal importance, and defend your choice

What are the major common elements in an expat’s compensation package?

Besides base pay, which would be most important to you? Why?

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Review and Discuss (continued 2)

Why are individuals motivated to accept international assignments?

Which of these motivations would you rank as positive reasons?

Which would you regard as negative reasons?

Why do expatriates return early?

What can MNCs do to prevent this from happening?

Identify and discuss three steps they can take

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Review and Discuss (continued 3)

What kinds of problems do expatriates face when returning home?

Identify and describe four of the most important

What can MNCs do to deal with these repatriation problems effectively?

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Review and Discuss (continued 4)

How do the following types of MNCs differ: ethnocentric, polycentric, regiocentric, and geocentric?

Which type is most likely to provide international management training to its people?

Which is least likely to provide international management training to its people?

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Review and Discuss (continued 5)

IBM is planning on sending three managers to its Zurich office, two to Madrid, and two to Tokyo, and none of these individuals has any international experience

Would you expect the company to use a standard training program or a tailor-made program for each group?

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Review and Discuss (continued 6)

Zygen Inc., a medium-sized manufacturing firm, is planning to enter into a joint venture in China

Would training be of any value to those managers who will be part of this venture?

If so, what types of training would you recommend?

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Review and Discuss (continued 7)

Hofstadt & Hoerr, a German-based insurance firm, is planning on expanding out of the EU and opening offices in Chicago and Buenos Aires

How would a cultural assimilator be of value in training the MNC's expatriates?

Is the assimilator a valid training tool?

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Review and Discuss (continued 8)

Ford is in the process of training managers for overseas assignments

Would a global leadership program be a useful approach?

Why or why not?

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Review and Discuss (continued 9)

Microsoft is weighing setting up a new R&D facility in India to develop new software applications

Should it staff it with Microsoft employees or Indian employees? Or should it subcontract with an Indian firm?

Explain your answer and some of the potential challenges in implementing it

© 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

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