SHRM N ch14

CHAPTER 14:

GLOBAL HUMAN RESOURCE MANAGEMENT

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International ImperativeInternational ImperativeInternational ImperativeInternational Imperative

• Why organizations expand internationallyWhy organizations expand internationally– To capture enhanced market opportunities that foreign To capture enhanced market opportunities that foreign

countries may presentcountries may present– To achieve economies of scale in production & To achieve economies of scale in production &

administration by expanding scope & volume of operations to administration by expanding scope & volume of operations to international marketsinternational markets

– Keeping up with industry leaders may require organization Keeping up with industry leaders may require organization enter foreign marketsenter foreign markets

– Acquiring ownership of foreign-based organization or Acquiring ownership of foreign-based organization or subsidiarysubsidiary

• Why organizations expand internationallyWhy organizations expand internationally– To capture enhanced market opportunities that foreign To capture enhanced market opportunities that foreign

countries may presentcountries may present– To achieve economies of scale in production & To achieve economies of scale in production &

administration by expanding scope & volume of operations to administration by expanding scope & volume of operations to international marketsinternational markets

– Keeping up with industry leaders may require organization Keeping up with industry leaders may require organization enter foreign marketsenter foreign markets

– Acquiring ownership of foreign-based organization or Acquiring ownership of foreign-based organization or subsidiarysubsidiary


How International & Domestic HRM How International & Domestic HRM DifferDiffer

How International & Domestic HRM How International & Domestic HRM DifferDiffer

• International HRM requiresInternational HRM requires– Managing broader range of functional areasManaging broader range of functional areas– Becoming more involved in employees’ personal Becoming more involved in employees’ personal

liveslives– Setting up several different HRM systems for Setting up several different HRM systems for

different geographic locationsdifferent geographic locations– Dealing with more complex external constituenciesDealing with more complex external constituencies– Participating in international assignments that have Participating in international assignments that have

heightened exposure to personal riskheightened exposure to personal risk

• International HRM requiresInternational HRM requires– Managing broader range of functional areasManaging broader range of functional areas– Becoming more involved in employees’ personal Becoming more involved in employees’ personal

liveslives– Setting up several different HRM systems for Setting up several different HRM systems for

different geographic locationsdifferent geographic locations– Dealing with more complex external constituenciesDealing with more complex external constituencies– Participating in international assignments that have Participating in international assignments that have

heightened exposure to personal riskheightened exposure to personal risk


International ExpansionInternational ExpansionInternational ExpansionInternational Expansion

• Strategies for expanding internationallyStrategies for expanding internationally– Exporting locally produced goods to host countryExporting locally produced goods to host country– Subcontracting or licensing production of certain Subcontracting or licensing production of certain

goods or services to foreign partnergoods or services to foreign partner– Entering into joint venture with foreign partnerEntering into joint venture with foreign partner– Setting up operations (making a direct investment) Setting up operations (making a direct investment)

in form of foreign branch or subsidiaryin form of foreign branch or subsidiary

• Strategies for expanding internationallyStrategies for expanding internationally– Exporting locally produced goods to host countryExporting locally produced goods to host country– Subcontracting or licensing production of certain Subcontracting or licensing production of certain

goods or services to foreign partnergoods or services to foreign partner– Entering into joint venture with foreign partnerEntering into joint venture with foreign partner– Setting up operations (making a direct investment) Setting up operations (making a direct investment)

in form of foreign branch or subsidiaryin form of foreign branch or subsidiary


Assessing Culture:Assessing Culture: Hofstede’s Cultural Differences Hofstede’s Cultural Differences

Dimensions Dimensions

Assessing Culture:Assessing Culture: Hofstede’s Cultural Differences Hofstede’s Cultural Differences

Dimensions Dimensions

• Individualism or collectivismIndividualism or collectivism– Individualistic societies value development of & focus on Individualistic societies value development of & focus on

individualindividual– Collective societies value group relationshipsCollective societies value group relationships

• Power distancePower distance– Extent to which society is hierarchical, & how power is Extent to which society is hierarchical, & how power is

distributed among its membersdistributed among its members• Uncertainty avoidanceUncertainty avoidance

– Extent to which society feels comfortable with ambiguity & Extent to which society feels comfortable with ambiguity & values & encourages risk-takingvalues & encourages risk-taking

• Quantity versus quality of lifeQuantity versus quality of life

• Individualism or collectivismIndividualism or collectivism– Individualistic societies value development of & focus on Individualistic societies value development of & focus on

individualindividual– Collective societies value group relationshipsCollective societies value group relationships

• Power distancePower distance– Extent to which society is hierarchical, & how power is Extent to which society is hierarchical, & how power is

distributed among its membersdistributed among its members• Uncertainty avoidanceUncertainty avoidance

– Extent to which society feels comfortable with ambiguity & Extent to which society feels comfortable with ambiguity & values & encourages risk-takingvalues & encourages risk-taking

• Quantity versus quality of lifeQuantity versus quality of life


Exhibit 14-1Exhibit 14-1

Assessing CultureAssessing CultureExhibit 14-1Exhibit 14-1

Assessing CultureAssessing Culture


Hall’s Model of Cultural DifferencesHall’s Model of Cultural DifferencesHall’s Model of Cultural DifferencesHall’s Model of Cultural Differences

• TimeTime– Importance or sense of time in daily activitiesImportance or sense of time in daily activities

• Space (distance)Space (distance)– Amount of physical distance individuals attempt to maintain between Amount of physical distance individuals attempt to maintain between

themselves & othersthemselves & others

• Material goodsMaterial goods– Emphasis or inferences on possession of goods to signify power, Emphasis or inferences on possession of goods to signify power,

success & statussuccess & status

• FriendshipsFriendships– Importance of friendships in conferring status Importance of friendships in conferring status

• AgreementsAgreements– Considers how agreements are reachedConsiders how agreements are reached

• TimeTime– Importance or sense of time in daily activitiesImportance or sense of time in daily activities

• Space (distance)Space (distance)– Amount of physical distance individuals attempt to maintain between Amount of physical distance individuals attempt to maintain between

themselves & othersthemselves & others

• Material goodsMaterial goods– Emphasis or inferences on possession of goods to signify power, Emphasis or inferences on possession of goods to signify power,

success & statussuccess & status

• FriendshipsFriendships– Importance of friendships in conferring status Importance of friendships in conferring status

• AgreementsAgreements– Considers how agreements are reachedConsiders how agreements are reached


Strategic HR Issues in Global Strategic HR Issues in Global AssignmentsAssignments


• Approaches to sending employees abroadApproaches to sending employees abroad– Administrative approachAdministrative approach

• Assisting employee destined for international assignment with Assisting employee destined for international assignment with paperwork & minor logisticspaperwork & minor logistics

– Tactical approachTactical approach • Managing “risk or failure” factor of overseas assignment by Managing “risk or failure” factor of overseas assignment by

providing paperwork assistance & modest amount of trainingproviding paperwork assistance & modest amount of training

– Strategic approachStrategic approach • Extensive support & coordination of international assignment Extensive support & coordination of international assignment

& strategized repatriation program at end of assignment& strategized repatriation program at end of assignment

• Approaches to sending employees abroadApproaches to sending employees abroad– Administrative approachAdministrative approach

• Assisting employee destined for international assignment with Assisting employee destined for international assignment with paperwork & minor logisticspaperwork & minor logistics

– Tactical approachTactical approach • Managing “risk or failure” factor of overseas assignment by Managing “risk or failure” factor of overseas assignment by

providing paperwork assistance & modest amount of trainingproviding paperwork assistance & modest amount of training

– Strategic approachStrategic approach • Extensive support & coordination of international assignment Extensive support & coordination of international assignment

& strategized repatriation program at end of assignment& strategized repatriation program at end of assignment




• Strategic management of global assignmentsStrategic management of global assignments1.1. Establish specific purpose for assignmentEstablish specific purpose for assignment2.2. Select appropriate employee for assignmentSelect appropriate employee for assignment3.3. Organizational & individual purposes for assignment must Organizational & individual purposes for assignment must

be identified & matchedbe identified & matched4.4. Assess adaptability to host culture of both employee & any Assess adaptability to host culture of both employee & any

family members who will be accompanying employee family members who will be accompanying employee 5.5. Provide appropriate training for employee & family Provide appropriate training for employee & family

membersmembers6.6. Simultaneous training should be conducted for Simultaneous training should be conducted for

headquarters staffheadquarters staff

• Strategic management of global assignmentsStrategic management of global assignments1.1. Establish specific purpose for assignmentEstablish specific purpose for assignment2.2. Select appropriate employee for assignmentSelect appropriate employee for assignment3.3. Organizational & individual purposes for assignment must Organizational & individual purposes for assignment must

be identified & matchedbe identified & matched4.4. Assess adaptability to host culture of both employee & any Assess adaptability to host culture of both employee & any

family members who will be accompanying employee family members who will be accompanying employee 5.5. Provide appropriate training for employee & family Provide appropriate training for employee & family

membersmembers6.6. Simultaneous training should be conducted for Simultaneous training should be conducted for

headquarters staffheadquarters staff



Strategic Strategic IssuesIssues


Strategic Strategic IssuesIssues



Strategic HR IssuesStrategic HR IssuesExhibit 14-3Exhibit 14-3

Strategic HR IssuesStrategic HR Issues


Determining Expatriate Determining Expatriate CompensationCompensation

Determining Expatriate Determining Expatriate CompensationCompensation

• Balance sheet methodBalance sheet method– Expatriate salary based Expatriate salary based

on home country pay on home country pay – Additional expenses Additional expenses

associated with associated with relocation & assignment relocation & assignment

– Hardship & incentives to Hardship & incentives to determine overall determine overall reimbursement & reimbursement & compensation levelcompensation level

• Balance sheet methodBalance sheet method– Expatriate salary based Expatriate salary based

on home country pay on home country pay – Additional expenses Additional expenses

associated with associated with relocation & assignment relocation & assignment

– Hardship & incentives to Hardship & incentives to determine overall determine overall reimbursement & reimbursement & compensation levelcompensation level

• Higher-of-home-or-Higher-of-home-or-host methodhost method

– Employee’s salary at Employee’s salary at home adjusted upward home adjusted upward to account for higher to account for higher cost of living Localization cost of living Localization approachapproach

– Salary converted to host Salary converted to host country’s equivalent country’s equivalent when employee is on when employee is on permanent assignmentpermanent assignment

• Higher-of-home-or-Higher-of-home-or-host methodhost method

– Employee’s salary at Employee’s salary at home adjusted upward home adjusted upward to account for higher to account for higher cost of living Localization cost of living Localization approachapproach

– Salary converted to host Salary converted to host country’s equivalent country’s equivalent when employee is on when employee is on permanent assignmentpermanent assignment


Four Approaches to IHRMFour Approaches to IHRMFour Approaches to IHRMFour Approaches to IHRM

• Make strategic decision as to level of Make strategic decision as to level of standardization desired across locationsstandardization desired across locations

– Ethnocentric approachEthnocentric approach• Exporting organization’s home country practices & policies Exporting organization’s home country practices & policies

to foreign locationsto foreign locations

– Polycentric approach Polycentric approach • Allowing each location to develop own practices & policiesAllowing each location to develop own practices & policies

– Regiocentric approach Regiocentric approach • Developing standardized practices & policies by geographic Developing standardized practices & policies by geographic

regionregion

– Geocentric approach Geocentric approach • Developing one set of global practices & policies applied at Developing one set of global practices & policies applied at

all locationsall locations

• Make strategic decision as to level of Make strategic decision as to level of standardization desired across locationsstandardization desired across locations

– Ethnocentric approachEthnocentric approach• Exporting organization’s home country practices & policies Exporting organization’s home country practices & policies

to foreign locationsto foreign locations

– Polycentric approach Polycentric approach • Allowing each location to develop own practices & policiesAllowing each location to develop own practices & policies

– Regiocentric approach Regiocentric approach • Developing standardized practices & policies by geographic Developing standardized practices & policies by geographic

regionregion

– Geocentric approach Geocentric approach • Developing one set of global practices & policies applied at Developing one set of global practices & policies applied at

all locationsall locations



Setting Strategic HR StandardsSetting Strategic HR StandardsExhibit 14-4Exhibit 14-4

Setting Strategic HR StandardsSetting Strategic HR Standards



RepatriationRepatriationExhibit 14-5Exhibit 14-5

RepatriationRepatriation


Reading 14.1Reading 14.1

Managing Global Workforce: Managing Global Workforce: Challenges & StrategiesChallenges & Strategies



• Challenges:Challenges:– Deployment in getting right skills to right place in Deployment in getting right skills to right place in

organization regardless of geographic locationorganization regardless of geographic location– Knowledge & innovation dissemination & transfer Knowledge & innovation dissemination & transfer

where all business units concurrently receive & where all business units concurrently receive & provide informationprovide information

– Talent identification & development of those Talent identification & development of those employees with abilities & skills to function employees with abilities & skills to function effectively in global organizationeffectively in global organization

• Challenges:Challenges:– Deployment in getting right skills to right place in Deployment in getting right skills to right place in

organization regardless of geographic locationorganization regardless of geographic location– Knowledge & innovation dissemination & transfer Knowledge & innovation dissemination & transfer

where all business units concurrently receive & where all business units concurrently receive & provide informationprovide information

– Talent identification & development of those Talent identification & development of those employees with abilities & skills to function employees with abilities & skills to function effectively in global organizationeffectively in global organization






• Strategies for managing global workforceStrategies for managing global workforce– Develop aspatial careers for employees to provide rich Develop aspatial careers for employees to provide rich

contextual knowledge of environments & cultures Provide contextual knowledge of environments & cultures Provide specific awareness building assignments that develop cross-specific awareness building assignments that develop cross-sensitivity in high potential employees in short timesensitivity in high potential employees in short time

– Utilize expert SWAT teams deployed on short-term basis for Utilize expert SWAT teams deployed on short-term basis for operational problems technical projectsoperational problems technical projects

– Adopt virtual solutions by using electronic communication Adopt virtual solutions by using electronic communication technologies to connect local employees to distant problemstechnologies to connect local employees to distant problems

• Strategies for managing global workforceStrategies for managing global workforce– Develop aspatial careers for employees to provide rich Develop aspatial careers for employees to provide rich

contextual knowledge of environments & cultures Provide contextual knowledge of environments & cultures Provide specific awareness building assignments that develop cross-specific awareness building assignments that develop cross-sensitivity in high potential employees in short timesensitivity in high potential employees in short time

– Utilize expert SWAT teams deployed on short-term basis for Utilize expert SWAT teams deployed on short-term basis for operational problems technical projectsoperational problems technical projects

– Adopt virtual solutions by using electronic communication Adopt virtual solutions by using electronic communication technologies to connect local employees to distant problemstechnologies to connect local employees to distant problems



Diagnosing ChallengesDiagnosing ChallengesReading 14.1Reading 14.1

Diagnosing ChallengesDiagnosing Challenges

• Deployment challengeDeployment challenge– Contact time requiredContact time required– Extent to which skills can be applied out of cultural contextExtent to which skills can be applied out of cultural context

• Knowledge & innovation dissemination challengeKnowledge & innovation dissemination challenge– Choosing among four strategies depends on technical Choosing among four strategies depends on technical

complexity of information to be shared & extent to which it complexity of information to be shared & extent to which it must be culturally embeddedmust be culturally embedded

• Talent identification & development challengeTalent identification & development challenge– Organizations should select well, then developOrganizations should select well, then develop

• Deployment challengeDeployment challenge– Contact time requiredContact time required– Extent to which skills can be applied out of cultural contextExtent to which skills can be applied out of cultural context

• Knowledge & innovation dissemination challengeKnowledge & innovation dissemination challenge– Choosing among four strategies depends on technical Choosing among four strategies depends on technical

complexity of information to be shared & extent to which it complexity of information to be shared & extent to which it must be culturally embeddedmust be culturally embedded

• Talent identification & development challengeTalent identification & development challenge– Organizations should select well, then developOrganizations should select well, then develop



Four Seasons Goes to ParisFour Seasons Goes to ParisReading 14.2Reading 14.2

Four Seasons Goes to ParisFour Seasons Goes to Paris

• Model of corporate culture consists of Model of corporate culture consists of four componentsfour components– Underlying assumptions, such as Underlying assumptions, such as

subordinates should fulfill job requirementssubordinates should fulfill job requirements– ValuesValues

• ““Espoused values”Espoused values”• ““Enacted values”Enacted values”

• Model of corporate culture consists of Model of corporate culture consists of four componentsfour components– Underlying assumptions, such as Underlying assumptions, such as

subordinates should fulfill job requirementssubordinates should fulfill job requirements– ValuesValues

• ““Espoused values”Espoused values”• ““Enacted values”Enacted values”



Four Seasons Goes to ParisFour Seasons Goes to ParisReading 14.2Reading 14.2

Four Seasons Goes to ParisFour Seasons Goes to Paris

– Employee perceptions of management practices – Employee perceptions of management practices – culture is what employees perceive management culture is what employees perceive management believesbelieves

– Cultural artifactsCultural artifacts• If espoused values are enacted, culture may emerge If espoused values are enacted, culture may emerge

in which senior management & employees share in which senior management & employees share similar service-relevant thoughts, feelings, & similar service-relevant thoughts, feelings, & patterns of behaviorpatterns of behavior

• Potential to enhance customer value & contribute to Potential to enhance customer value & contribute to competitive advantagecompetitive advantage

– Flexibility versus consistencyFlexibility versus consistency

– Employee perceptions of management practices – Employee perceptions of management practices – culture is what employees perceive management culture is what employees perceive management believesbelieves

– Cultural artifactsCultural artifacts• If espoused values are enacted, culture may emerge If espoused values are enacted, culture may emerge

in which senior management & employees share in which senior management & employees share similar service-relevant thoughts, feelings, & similar service-relevant thoughts, feelings, & patterns of behaviorpatterns of behavior

• Potential to enhance customer value & contribute to Potential to enhance customer value & contribute to competitive advantagecompetitive advantage

– Flexibility versus consistencyFlexibility versus consistency



Adapting to Boundaryless WorldAdapting to Boundaryless WorldReading 14.3Reading 14.3

Adapting to Boundaryless WorldAdapting to Boundaryless World

• 90% of companies base international selections on 90% of companies base international selections on technical expertise, ignoring other areastechnical expertise, ignoring other areas

• Openness to profound personal transformation is Openness to profound personal transformation is most fundamental sign of expatriate readinessmost fundamental sign of expatriate readiness

• Personality aspects that impede adaptationPersonality aspects that impede adaptation– AuthoritarianismAuthoritarianism– RigidityRigidity– EthnocentrismEthnocentrism

• Clarification of expectancies beforehandClarification of expectancies beforehand

• 90% of companies base international selections on 90% of companies base international selections on technical expertise, ignoring other areastechnical expertise, ignoring other areas

• Openness to profound personal transformation is Openness to profound personal transformation is most fundamental sign of expatriate readinessmost fundamental sign of expatriate readiness

• Personality aspects that impede adaptationPersonality aspects that impede adaptation– AuthoritarianismAuthoritarianism– RigidityRigidity– EthnocentrismEthnocentrism

• Clarification of expectancies beforehandClarification of expectancies beforehand





• Need to provide continued hands-on training Need to provide continued hands-on training rather than just pre-departure awareness trainingrather than just pre-departure awareness training

• Training is opportunity to provide social supportTraining is opportunity to provide social support• Executives should learn to view identification Executives should learn to view identification

with host as compatible with identification with with host as compatible with identification with parent cultureparent culture

• Expatriates need to become aware of Expatriates need to become aware of consequences that old repertoire of coping consequences that old repertoire of coping responses has in host cultureresponses has in host culture

• Need to provide continued hands-on training Need to provide continued hands-on training rather than just pre-departure awareness trainingrather than just pre-departure awareness training

• Training is opportunity to provide social supportTraining is opportunity to provide social support• Executives should learn to view identification Executives should learn to view identification

with host as compatible with identification with with host as compatible with identification with parent cultureparent culture

• Expatriates need to become aware of Expatriates need to become aware of consequences that old repertoire of coping consequences that old repertoire of coping responses has in host cultureresponses has in host culture





• Employer should facilitate integration into a local Employer should facilitate integration into a local or regional network of other expatriatesor regional network of other expatriates

• Delicate equilibrium among multiple stakeholders Delicate equilibrium among multiple stakeholders calls for skills similar to those possessed by calls for skills similar to those possessed by political diplomatspolitical diplomats

• Parent organization should not create additional Parent organization should not create additional role conflict for the expatriate with policies that role conflict for the expatriate with policies that are insensitive to cultural differencesare insensitive to cultural differences

• Employer should facilitate integration into a local Employer should facilitate integration into a local or regional network of other expatriatesor regional network of other expatriates

• Delicate equilibrium among multiple stakeholders Delicate equilibrium among multiple stakeholders calls for skills similar to those possessed by calls for skills similar to those possessed by political diplomatspolitical diplomats

• Parent organization should not create additional Parent organization should not create additional role conflict for the expatriate with policies that role conflict for the expatriate with policies that are insensitive to cultural differencesare insensitive to cultural differences





• RepatriationRepatriation– Feeling that others do not share multicultural Feeling that others do not share multicultural

identification can create sense of isolationidentification can create sense of isolation– Frequent loss of autonomyFrequent loss of autonomy– Unrealistic expectations about being Unrealistic expectations about being

promoted upon returnpromoted upon return

• RepatriationRepatriation– Feeling that others do not share multicultural Feeling that others do not share multicultural

identification can create sense of isolationidentification can create sense of isolation– Frequent loss of autonomyFrequent loss of autonomy– Unrealistic expectations about being Unrealistic expectations about being

promoted upon returnpromoted upon return

SHRM N ch14

Leadership & Management

Transcript of SHRM N ch14