Chapter 14 – Human Resource Selection and Development Across Cultures
Chapter 14: Human Resource Selection and Development
Across Cultures
Learning Objectives and Chapter Summary
1. IDENTIFY the three basic sources that MNCs can tap in filling management
vacancies in overseas operations in addition to options of subcontracting and
outsourcing.
MNCs can use four basic sources for filling overseas positions: home-country
nationals (expatriates), host-country nationals, third-country nationals, and
inpatriates. The most common reason for using home-country nationals, or
expatriates, is to get the overseas operation under way. Once this is done, many
MNCs turn the top management job over to a host-country national who is familiar
with the culture and language and who often commands a lower salary than the
2. DESCRIBE the selection criteria and procedures used by the organization and
individual managers when making final decisions.
Many criteria are used in selecting managers for overseas assignments. Some of
these include adaptability, independence, self-reliance, physical and emotional
health, age, experience, education, knowledge of the local language, motivation, the
support of spouse and children, and leadership.
Compensating expatriates can be a difficult problem, because there are many
variables to consider. However, most compensation packages are designed around
five common elements: base salary, benefits, allowances, incentives, and taxes.
Working within these elements, the MNC will tailor the package to fit the specific
situation. In doing so, there are five different approaches that can be used: balance-
sheet approach, localization, lump sum method, the cafeteria approach, and the
regional method. Whichever one (or combination) is used, the package must be
both cost-effective and fair.
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A manager might be willing to take an international assignment for a number of
reasons: increased pay, promotion potential, the opportunity for greater
often does not occur.
3. 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.
At some time, most expatriates return home, usually when the predetermined tour is
over. Sometimes, managers return because they want to leave early; other times,
4. DESCRIBE the training process, the most common reasons for training, and the
types of training that often are provided.
Training is the process of altering employee behavior and attitudes to increase the
probability of goal attainment. Many expatriates need training before (as well as
during) their overseas stay. A number of factors will influence a company’s
programs: standard and tailor-made. Research shows that small firms usually rely
on standard programs and larger MNCs tailor their training. Common approaches to
training include elements such as cultural orientation, cultural assimilators,
language training, sensitivity training, and field experience.
5. EXPLAIN how cultural assimilators work and why they are so highly regarded.
A cultural assimilator is a programmed learning approach that is designed to expose
members of one culture to some of the basic concepts, attitudes, role perceptions,
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The World of International Management: The Challenge of Talent
Retention in India
1. Summary:
This vignette explores the challenges of retaining talented employees in India.
Many companies today are moving operations to India to take advantage of the
country’s highly skilled, yet relatively low-cost workforce. However, many
companies may be surprised by the fact that employee turnover is a huge problem
in the country―one with costs that can easily offset the benefits of India’s lower
wage rates. To avoid this problem, MNCs in India need to develop strategies to
retain their employees. This involves gaining an understanding of the culture in the
country and how it affects motivation. Many companies try to encourage employee
loyalty by simply offering workers more money, but in India’s relationship-oriented
culture, this strategy will not be successful. Indians tend to be better motivated by
intrinsic rewards such as a sense of progress and the opportunity to do meaningful
work. The more engaged the individual is, the more likely he or she will stay
.
Four factors (HR practices) to keep employees engaged:
1. Performance management
2. Professional development
3. Management support
4. Social responsibility
2. Suggested Class Discussion:
1. Discuss the perceptions of many foreign companies operating in India regarding
employee retention. Why do efforts to increase compensation fail to reduce
employee turnover?
2. How can companies in India limit employee turnover?
3. Related Internet Sites:
BusinessWeek: {http://www.businessweek.com}.
Chapter Outline with Lecture Notes and Teaching Tips
The Importance of International Human Resources
1) Human resources is an essential part of any organization since it provides the human
capital that keeps operations running. Human resource management is also key to an
efficient, productive workplace.
2) By focusing on the employees, or the human resources themselves, organizations have
found that positive organizational structure leads to company success in the market.
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a) Compensation, such as competitive salaries, good benefits, promotions, training,
education opportunities, and so forth, has been known to motivate employees and
reduce turnover.
d) Recognizing the potential in employees and encouraging teamwork can lead to greater
risk taking and innovations.
Getting the Employee Perspective
1) It is important to get a sense of how employees feel they are being treated.
2) By focusing on employees and tailoring human resource management to the individual,
people are naturally influenced to stay longer and be more committed to the organization
they have joined.
Employees as Critical Resources
1) Attracting the most qualified employees and matching them to the jobs for which they are
best suited are important to the success of any organization.
2) Most companies continue to deploy human resources around the world as they are needed,
although the range of options for filling human resources needs is expanding.
Investing in International Assignments
1) Because of the high costs of expatriate failure, many companies are hiring locals or third
country nationals.
a) The emergence of highly trained technical and scientific employees in emerging
2) Adjustment problems of expats undertaking international assignments can be reduced
through careful selection and training (language and cross-culture).
Economic Pressures
1) Human resource departments are faced with ongoing pressures for reduced costs and
increased efficiencies.
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a) HR departments are now focusing on boosting productivity by helping employees
better understand what’s expected of them and by showing managers how to be more
effective.
b) Table 14–1 shows how companies are responding to the global economic recession in
terms of employee compensation and benefits.
2) The Towers Perrin Pulse Survey, conducted in January 2009:
a) 42 percent of organizations were planning hiring freezes and reductions as well as pay
cuts.
3) Aberdeen Group―the five most critical workforce challenges faced in 2009 were:
a) Retaining top talent
b) Developing leadership skills of existing managers
Sources of Human Resources
1) MNCs can tap four basic sources for positions:
a) Home country nationals
b) Host country nationals
c) Third country nationals
d) Inpatriates
Home-Country Nationals
1) Terms:
a) Home-country nationals are expatriate managers who are citizens of the country where
the multinational corporation is headquartered.
b) Expatriates are managers who live and work away from their home country.
Teaching Tip: This is a website available on the Internet that may be of interest to your
students. This website provides helpful information for expatriates from different
countries, as well as forums to talk to one another and share their experiences. The site is
available at {http://www.expatfocus.com}.
Teaching Tip: A broad array of information about expatriate performance is provided by
the Integrated Resources Group at {http://www.expat-repat.com}. This site is well worth
a visit and can provide excellent lecture material.
2) In many instances, host-country nationals may be better suited for the job.
a) Richards investigated staffing practices:
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i) Local managers were most effective in subsidiaries located in developing countries
or those that relied on a local customer base.
ii) Expatriates were most effective when they were in charge of larger subsidiaries or
those with a marketing theme similar to that at headquarters.
b) Reasons for using home-country nationals:
i) To start up operations
ii) To provide technical expertise
manager of either race would result in political or social problem
ix) The company’s conviction that it must maintain a foreign image in the host
country
x) The belief of some companies that a home country manager is the best person for
the job
3) In recent years, there has been a trend away from using home-country nationals, given the
costs, somewhat uncertain returns, and increasing availability of host-country and third-
country nationals and inpatriates.
Host-Country Nationals
1) Host-country nationals are local managers who are hired by the MNC.
2) Governments sometimes expect the MNC to hire local talent, and the use of host country
nationals is a good way to meet this expectation.
3) Issues:
a) It would be unlikely to have enough available managers, and the cost of transferring
and maintaining them in the host country would be prohibitive.
b) In some cases government regulations dictate selection practices and mandate at least
some degree of “nativization.”
4) The International Management in Action box, “Important Tips on Working for
Foreigners,” gives examples of how Americans can better adapt to foreign bosses.
Third-Country Nationals
1) Third-country nationals are citizens of countries other than the one in which the MNC is
headquartered or the one in which the managers are assigned to work by the MNC.
2) Advantages:
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a) The salary and benefit package usually is less than that of a home-country national,
although in recent years, the salary gap between the two has begun to diminish.
b) The TCN may have a very good working knowledge of the region or speak the same
language as the local people.
headquarters personnel.
e) In joint ventures, TCNs can demonstrate a global or transnational image and bring
unique cross-cultural skills to the relationship.
3) Inpatriates
a) Inpatriates are individuals from a host-country or a third-country national who are
assigned to work in the home-country.
b) The growing use of inpats is helping MNCs better develop their global core
competencies.
i) A new breed of multilingual, multiexperienced, so-called global managers or
Subcontracting and Outsourcing
1) Offshore outsourcing is made possible by the increasing organizational and technological
capacity of companies to separate, coordinate, and integrate geographically dispersed
human resources.
2) While politically controversial and challenging to coordinate, outsourcing can save
companies significant costs and is very profitable for those firms that specialize in
providing these services on a contract basis.
3) Outsourcing can create quality control problems for some companies.
4) Despite limitations, offshore subcontracting will remain an important tool for managing
and deploying international human resources. If anything, the trend is accelerating
a) Individuals in home countries were often worried about losing jobs to host countries,
exacerbated by the fact that higher-end jobs are now being shipped overseas.
b) It is becoming increasingly difficult for managers to find the appropriate talent at
home, so they are looking elsewhere; this opens jobs globally.
c) See Figure 14–2.
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Selection Criteria for International Assignments
1) International selection criteria are factors used to choose personnel for international
assignments.
2) MNCs usually give serious consideration to five or six criteria. Table 14–2 shows the
importance of selection criteria to managers from different countries.
General Criteria
1) A company sending people overseas for the first time often will have a much longer list of
criteria than will an experienced MNC that has developed a “short list.”
2) Typically, both technical and human criteria are considered. Firms that fail to consider
both often find that their rate of failure is quite high.
Adaptability to Cultural Change
1) Overseas managers must be able to adapt to change. They also need a degree of cultural
toughness.
a) Initially many managers are exhilarated.
b) In time, culture shock creeps in.
c) Following these phases, they tend to identify more with the host-country culture.
2) Characteristics used to determine whether an individual is sufficiently adaptable:
a) Work experiences with other cultures, previous overseas travel, knowledge of foreign
languages, recent immigration background or heritage
b) Others include:
i) The ability to integrate with different people, cultures, and types of business
organizations
in addition to individual difference
v) Flexibility in managing operations on a continuous basis despite lack of assistance
and gaps in information
3) Coping strategies:
a) Feeling comfortable that their work challenges can be met
b) Being able to adjust to their new living conditions
4) Research shows that greater contact with host nationals can help with cross-cultural
adjustment.
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Physical and Emotional Health
1) Most organizations require that their overseas managers have good physical and emotional
health.
Age, Experience, and Education
1) Most MNCs strive for a balance between age and experience.
a) There is evidence that younger managers are more eager for international assignments.
However, young people often are the least developed in terms of management
experience and technical skills; they lack real-world experience.
b) To gain the desired balance, many firms send both young and seasoned personnel to
the same overseas post.
2) Many companies consider an academic degree, preferably a graduate degree, to be of
critical importance to an international executive; however, universal agreement regarding
the ideal type of degree is nonexistent.
Language Training
1) The ability to speak the local language can be extremely valuable to expat managers. One
recognized weakness of many MNCs is that they do not give sufficient attention to the
importance of language training.
2) Traditionally, U.S. managers have done very poorly in the language area.
Motivation for a Foreign Assignment
1) Although individuals being sent overseas should have a desire to work abroad, this usually
is not sufficient motivation.
2) International management experts content that the candidate also must believe in the
importance of the job and even have something of an element of idealism or a sense of
mission.
3) Some motivations:
a) A desire for adventure or a pioneering spirit
b) The desire to increase one’s chances for promotion
4) Technologies have allowed companies to globalize in new ways.
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Spouses and Dependents or Work-Family Issues
1) Spouses and dependents are another important consideration when a person is to be
chosen for an overseas assignment. If the family is not happy, the manager often performs
poorly.
a) Some firms interview both the spouse and the manager before deciding whether to
approve the assignment.
2) Adaptability screening is the process of evaluating how well a family is likely to stand up
to the stress of overseas life.
3) An unhappy executive will be unproductive on the job and the individual will want to
transfer home long before the tour of duty is complete.
4) The factors associated with employee willingness to work overseas and concluded that:
a) Unmarried employees are more willing than any other group to accept expat
assignments.
b) Married couples without children at home or those with non-teenage children are
probably the most willing to move.
willingness to move overseas.
f) Employee and spouse perceptions of organizational support for expatriates are critical
to employee willingness to work overseas.
5) Table 14–3 shows activities that are important for expatriate spouses.
Leadership Ability
1) The ability to influence people to act in a particular way, commonly called leadership, is
another important criterion in selecting managers for an international assignment.
2) Many firms look for specific characteristics, such as maturity, emotional stability, the
ability to communicate well, independence, initiative, creativity, and good health.
Other Considerations
1) Applicants also can take certain steps to prepare themselves better for international
assignments. Tu and Sullivan suggested the applicant can carry out a number of different
phases.
a) Phase one involves self-evaluation and general awareness.
b) Phase two is characterized by a concentration on activities that should be completed
before a person is selected. They include:
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