Human Resource Management: International Dimension

1. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter International Dimensions of 13
Human Resource
Management
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

3. UUnnddeerrssttaannddiinngg tthhee TTeerrmmss
Global corporation – a corporation that has become an “insider” in
any market or nation where it operates and is thus competitive with
domestic firms operating in local markets. Unlike domestic firms,
however, the global corporation has a global strategic perspective
and claims its legitimacy from its effective use of assets to serve its
far-flung customers
 Expatriate – also known as a foreign-service employee, is a
generic term applied to anyone working outside her or his home
country with a planned return to that or a third country
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

4. UUnnddeerrssttaannddiinngg tthhee TTeerrmmss
Home country – the expatriate’s country of residence
Host country – the country in which the expatriate is working
 Third-country national – an expatriate who has transferred to an
additional country while working abroad
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5. The Framework ooff CCuullttuurraall UUnnddeerrssttaannddiinngg
 Ten broad classifications help managers assess any culture and
examine its people systematically
 Sense of self and space
 Dress and appearance
 Food and eating habits
 Communication, verbal and nonverbal
 Time and time sense
 Relationships
 Values and norms
 Beliefs and attitudes
 Work motivation and practices
 Mental processes and learning
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6. The Expatriate: RReeccrruuiittmmeenntt SSttrraatteeggiieess
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 Recruitment: Three basic models
 Ethnocentrism – selection from the national group of the parent
company only
 Recruitment from within the parent company’s country and the
country where the branch is located
 Geocentrism – adoption of an international perspective with emphasis
on the unrestricted use of all nationalities

7. The Expatriate: SSeelleeccttiioonn SSttrraatteeggiieess
 Selection criteria: Seeing beyond technical qualifications
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 Personality
 Extroversion
 Agreeableness
 Emotional stability
 Skills
 Technical
 Communication
 Home- and host-country languages
 Verbal and Nonverbal
 Interpersonal relations
 Stress management

8. The Expatriate: SSeelleeccttiioonn SSttrraatteeggiieess
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 Attitudes
 Tolerant attitudes toward people who may differ significantly in race,
creed, color, values, personal habits, and customs
 Motivation
 Eliminate those only looking to get out of their own country for a change
of scenery
 Behavior
 Concern for other members of a group
 Tolerance of ambiguity
 Respect for people and customs different from one’s own
 Nonjudgmental behavior

9. The Expatriate: OOrriieennttaattiioonn SSttrraatteeggiieess
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 Three phases to orientation
 Initial Orientation
 Cultural briefing – traditions, history, government, economy, living
conditions, clothing, housing requirements, health requirements, visa
applications
 Assignment briefing – length of assignment, vacations, salary and
allowances, tax consequences, repatriation policy
 Relocation requirements – shipping, packing, or storage; home sale or
rental; information about housing at the new location

10. The Expatriate: OOrriieennttaattiioonn SSttrraatteeggiieess
 Three phases to orientation (continued)
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 Predeparture orientation
 Introduction to the language
 Further reinforcement of important values, especially open-mindedness
 En route, emergency, and arrival information
 Post-arrival orientation
 Orientation toward the environment
 Orientation toward the work unit and fellow employees
 Orientation to the actual job

11. The Expatriate: TTrraaiinniinngg SSttrraatteeggiieess
 Three areas of training provide skills to survive, cope, and succeed:
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 Culture
 Language
 Day-to-day matters
 Culture shock – usually occurs 4-6 months after arrival
 Symptoms – homesickness, boredom, withdrawal, a need for excessive
amounts of sleep, compulsive eating or drinking, irritability,
exaggerated cleanliness, marital stress, family tension, conflict
(involving children), hostility toward host-country nationals, loss of
ability to work effectively, physical ailments of a psychosomatic
nature

12. OObbjjeeccttiivveess ffoorr aann EEffffeeccttiivvee
IInntteerrnnaattiioonnaall CCoommppeennssaattiioonn PPoolliiccyy
 Attract and retain employees who are qualified for overseas service
 Facilitate transfers between foreign affiliates and between home-country
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
and foreign locations
 Establish and maintain a consistent relationship between the
compensation of employees of all affiliates, both at home and
abroad
Maintain compensation that is reasonable in relation to the practices
of leading competitors

13. Types of Expatriate CCoommppeennssaattiioonn PPllaannss
 Localization – practice of paying expatriates on the same scale as
local nationals; salary and benefits may be supplemented with one-time
or temporary transition payments
 Works well under specific conditions
 When the transferring employee has very limited home-country experience
 In the case of permanent, indefinite, or extremely long (e.g., 10-year)
transfers
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14. Types of Expatriate CCoommppeennssaattiioonn PPllaannss
 “Higher-of-home-or-host” – localizes expatriates in the host-country
salary program, but establishes a compensation floor based
on home-country compensation so that expatriates never receive
less than they would be paid at home for a comparable position
 Works well under specific conditions
 Transfers within regions – notably in Latin America and in the European
Union
 Assignments of unlimited duration
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15. Types of Expatriate CCoommppeennssaattiioonn PPllaannss
 Balance-sheet approach – the most common method used in North
American, European, and, increasingly, Japanese global
organizations; its primary objective is to ensure that expatriates
neither gain nor lose financially compared with their home-country
peers
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 Advantages
 Preserves the purchasing power of expatriates in a cost-effective manner
 Facilitates mobility among expatriates

16. Components of IInntteerrnnaattiioonnaall
CCoommppeennssaattiioonn PPaacckkaaggeess
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 Benefits
 Best-of-both-worlds benefits – the expatriate is given home-country
benefits coverage, for example pensions and medical coverage, and,
where there may be no home-country plan, in areas such as disability
insurance, the employee may join the host-country plan
 Premiums
 Housing allowance
 Education allowance
 Income tax equalization allowance
 Hardship pay for living in areas with climactic extremes, political
instability, or poor living conditions
 Home leave
 School allowance

17. Components of IInntteerrnnaattiioonnaall
CCoommppeennssaattiioonn PPaacckkaaggeess
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 Pay Adjustments and Incentives
 Incentives that work in the home country may be impractical and
detrimental in the host country
 Equity norm – the most universal reward allocation practice; rewards
are distributed to group members based on their contributions

18. Special Issues iinn tthhee RReeppaattrriiaattiioonn
ooff OOvveerrsseeaass EEmmppllooyyeeeess
 Three elements contribute to repatriation anxiety – personal
finances, reacclimation to the U.S. lifestyle, readjustment to the
corporate structure
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 Possible solutions
 Planning
 Prior to the assignment, the firm should define one or more of the three
primary purposes for sending a particular expatriate abroad:
 executive development
 coordination and control between headquarters and foreign operations, and
 transfer of information and technology
 Careful inclusion of expatriation and repatriation moves in comprehensive
planning will help reduce uncertainty and the fear that accompanies it

19. Special IIssssuueess iinn RReeppaattrriiaattiioonn
ooff OOvveerrsseeaass EEmmppllooyyeeeess
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 Possible solutions (continued)
 Career management
 Appoint a “Career Sponsor”
 Looks out for the expatriate’s career interests while she or he is abroad and
keeps the expatriate abreast of company developments
 Is sensitive to the “job shock” the expatriate may suffer when she or he returns
 Is trained to counsel the returning employee (and her or his family as well)
until resettlement is deemed complete
 Compensation
 Use mobility premiums (e.g., 3 months’ pay) – one-time compensation for
each move—overseas, back home, or to another overseas assignment
 Low-cost loans and other financial assistance for housing
 Financial counseling