© 2008 by Prentice Hall 14-1

Human Resource Management 10th EditionChapter 14

GLOBAL HUMAN RESOURCE MANAGEMENT

© 2008 by Prentice Hall 14-2

Cultural Differences Affecting Global Human Resource Management

Cultural differences vary from country to country with corresponding differences in HR practices

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Country’s Culture

• Set of values, symbols, beliefs, languages, and norms that guide human behavior within country

• Learned behavior that develops as individuals grow from childhood to adult

• Countries are recognizing that they need to understand culture of countries in which they do business

© 2008 by Prentice Hall 14-4

Evolution of Global Business

• Not long ago, Mercedes-Benz was still a German company, General Electric was American, and Sony was Japanese

• Many United States firms such as Coca-Cola, Procter & Gamble, and Texas Instruments do most of their business and employ most of their workers outside the U.S.

• Many non-U.S. companies make products here such as with Toyota American making their cars in Kentucky

© 2008 by Prentice Hall 14-5

Evolution of Global Business

• Exporting - Selling abroad retaining foreign agents and distributors

• Licensing - Organization grants foreign firm right to use intellectual properties

• Franchising - Parent company grants another firm right to do business in prescribed manner

© 2008 by Prentice Hall 14-6

Evolution of Global Business (Cont.)

• Multinational corporation - Firm based in one country and produces goods or provides services in one or more foreign countries

• Global corporation - Corporate units in countries are integrated to operate as one organization worldwide - Operates as if the entire world were one entity

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Global Professional in Human Resources (HRCI)

• Strategic international HR management

• Organizational effectiveness and employee development

• Global staffing

• International assignment management

• Global compensation

• International employee relations and regulations

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Global Human Resource Management

Global HR managers develop and work through integrated global human resource management system similar to one they experience domestically

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Environment of Global Human Resource Management

1

Human Resource

Management

Other Functional

Areas

OperationsMarketing

Finance

Lega

l Con

side

ratio

ns E

cono

my

Technology

Society

Shareholders

Unions

Customers Competition Labor Market

Human Resource

Development

Com

pens

atio

n

Staffing

Em

ployee and

Labor Relations

Safety and Health

INTERNAL ENVIRONMENT

EXTERNAL ENVIRONMENT UNITED STATES

GLOBAL ENVIRONMENTU

nanticipated Events

© 2008 by Prentice Hall 14-10

Global Staffing

• Types of Global Staff Members

• Approaches to Global Staffing

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Types of Global Staff Members

• Expatriate - Employee working in firm who not citizen of country in which firm is located but citizen of country where organization is headquartered

• Host-country national - Employee’s nationality same as location of subsidiary

• Third-country national - Citizen of one country, working in second country, and employed by organization headquartered in third country

© 2008 by Prentice Hall 14-12

Approaches to Global Staffing

• Ethnocentric staffing - Companies primarily hire expatriates to staff higher-level foreign positions

• Polycentric staffing - When more host-country nationals are used throughout the organization, from top to bottom

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Approaches to Global Staffing (Cont.)

• Regiocentric staffing - Regional groups of subsidiaries reflecting organization’s strategy and structure work as a unit

• Geocentric staffing - Uses worldwide integrated business strategy

© 2008 by Prentice Hall 14-14

Expatriate Selection Stages

• Self-selection - Employees determine if they are right for a global assignment (family also)

• Creating a candidate pool

• Technical skills assessment

• Making a mutual decision

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Background Investigation

• Conducting background investigations is equally, or more, important

• Differences across cultures and countries often put up barriers to overcome

• Each country has own laws, customs and procedures for background screenings

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Global Human Resource Development

• Expatriate Training & Development

• Continual Development: Online Assistance and Training

• Repatriation Orientation and Training

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Expatriate Preparation and Development Program

Expatriate Preparation and Development

Prior to Departure: Orientation and Training

During Assignment: Continual Development

Near Completion: Repatriation Orientation Training

Language Culture History Local Customs Living Conditions

Expanding Skills Career Planning Home-Country Development

U.S. Lifestyle U.S. Workplace U.S. Employees

© 2008 by Prentice Hall 14-18

Trends & Innovations: Global E-learning

• Globalization has created special need for e-learning

• Challenges for global e-learning implementation are language and localization issues

• Companies that want to offer courses in several languages usually turn to translators

© 2008 by Prentice Hall 14-19

Compensation for Host-Country Nationals

• Organizations should think globally but act locally

• Compensation - Normally, it is slightly above prevailing wage rates in the area

• Variations in laws, living costs, tax policies, and other factors all must be considered

© 2008 by Prentice Hall 14-20

Compensation for Host-Country Nationals (Cont.)

• Factors to consider: minimum wage requirements, which often differ from country to country and even from city to city within a country; working time information such as annual holidays, vacation time and pay, paid personal days, standard weekly working hours, probation periods, and overtime restrictions and payments; and hiring and termination rules and regulations covering severance practices

© 2008 by Prentice Hall 14-21

Compensation for Host-Country Nationals (Cont.)

• Culture often plays a part in determining compensation

• North American compensation practices encourage individualism and high performance

• Continental European programs typically emphasize social responsibility

• Traditional Japanese approach considers age and company service as primary determinants of compensation

© 2008 by Prentice Hall 14-22

Expatriate Compensation

• Cost 3 - 5 times an assignee’s host-country salary per year and more if currency exchange rates become unfavorable

• Largest expatriate costs include overall remuneration, housing, cost-of-living allowances and physical relocation

• U.S. citizens living overseas can exclude up to $80,000 of income earned abroad

© 2008 by Prentice Hall 14-23

Expatriate Compensation (Cont.)

• Country’s culture can affect compensation

• People in U.S. derive great status from high pay

• Nations in large parts of Europe and Asia shun conspicuous wealth

• In Italy, teamwork is more valued than individual initiative

© 2008 by Prentice Hall 14-24

Global Safety and Health

• Important because employees who work in safe environment and enjoy good health more likely to be productive and yield long-term benefits to organization

• U.S.-based global operations are often safer and healthier than host-country operations, but not as safe as similar operations in U.S.

© 2008 by Prentice Hall 14-25

Global Employees and Labor Relations

• Unionism maintains much of its strength abroad

• Foreign unions less adversarial with management

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Global Employees and Labor Relations in European Countries

• Codetermination, which requires firms to have union or worker representatives on their boards of directors, is very common

• Laws make it hard to fire workers, so companies are reluctant to hire

• Generous and lengthy unemployment benefits discourage the jobless from seeking new work

© 2008 by Prentice Hall 14-27

Global Employees and Labor Relations in South American Countries

• In countries such as Chile, collective bargaining for textile workers, miners, and carpenters is prohibited

• Unions are generally allowed only in companies of 25 workers or more. Practice has encouraged businesses to split into small companies to avoid collective bargaining

© 2008 by Prentice Hall 14-28

North American Free Trade Agreement (NAFTA)

• Between Canada, Mexico, and United States

• Facilitated movement of goods across boundaries within North America

• Free-trade zone of over 400 million people

• Combined gross domestic profit of about $12 trillion

© 2008 by Prentice Hall 14-29

Central American Free Trade Agreement

• Ratified by America’s Congress after long political battle, and signed into law in 2005

• Could provide huge economic boost for region

© 2008 by Prentice Hall 14-30

Political and Legal Factors

Nature and

stability of

political and

legal systems

vary throughout

globe

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Tariffs and Quotas

• Tariffs - Taxes collected on goods shipped across national boundaries

• Quotas - Limit number or value of goods imported across national boundaries

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Global Bribery

• Foreign Corrupt Practices Act

• Law has teeth • Not having ability to use

bribery as tool of doing business has been costly for American companies

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Global Equal Employment Opportunity

• Women constitute more than 20% of total expatriate workforce percent of U.S. expatriate managerial workforce

• Some cultures today will not accept woman as a boss

• Sexual harassment is global problem

• Sexual harassment laws differ from country to country

© 2008 by Prentice Hall 14-34

Virtual Teams in Global Environment

• Necessity of everyday working life

• Enable companies to accomplish things more quickly and efficiently

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Difficulties that Virtual Teams Confront

• Do not feel as connected or committed to team

• Communication problems directly proportional to number of time zones separating them

• Language problems

© 2008 by Prentice Hall 14-36