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Copyright © 2017 Pearson Education, Inc.
Part Five
Enrichment Topics in Human Resource Management
Chapter 17
Managing Global Human Resources
Lecture Outline:
The Manager’s Global Challenge
What Is International Human Resource Management?
Adapting Human Resource Activities to Intercountry Differences
Cultural Factors
Economic Systems
HR Abroad Example: The European Union
HR Abroad Example: China
Improving Performance: HR Practice Around the Globe
Staffing the Global Organization
International Staffing: Home or Local?
Improving Performance: HR as a Profit Center
Trend Shaping HR: Digital and Social Media
Management Values and International Staffing Policy
Ethics and Codes of Conduct
Selecting International Managers
Diversity Counts: Sending Women Managers Abroad
Avoiding Early Expatriate Returns
Improving Performance: HR Tools for Line Managers and Small Businesses
Training and Maintaining Employees Abroad
Orienting and Training Employees on International Assignment
Performance Appraisal of International Managers
Compensating Managers Abroad
Union Relations Abroad
Terrorism, Safety, and Global HR
Improving Performance: HR Practices Around the Globe
Repatriation: Problems and Solutions
Employee Engagement Guide for Managers
Engagement Around the Globe
Managing HR Locally: How to Put into Practice a Global HR System
Improving Performance: The Strategic Context
Developing a More Effective Global HR System
Making the Global HR System More Acceptable
Implementing the Global HR System
Chapter Review
Chapter 17: Managing Global Human Resources 17- 2
Copyright © 2017 Pearson Education, Inc.
Where Are We Now…
The purpose of this chapter is to improve your effectiveness at applying your human resource
knowledge and skills when global challenges are involved. The topics we’ll discuss include the
manager’s global challenge, adapting human resources activities to intercountry differences,
staffing the global organization, training and maintaining employees abroad, employee
engagement globally, and managing HR locally: how to implement a global HR system.
Interesting Issues:
A few years ago the Japanese industrial giant Hitachi embarked on a strategy to streamline its
business into six market-based but integrated groups around the world, and to meld these into
what is called “One Hitachi.” Its HR group needed a new human resource strategy to support
this. We’ll see what they did.
Learning Objects:
17-1: List the HR challenges of international business.
17-2: Illustrate with examples how intercountry differences affect HRM.
17-3: List and briefly describe the main methods for staffing global organizations.
17-4: Discuss some important issues to keep in mind in training, appraising, and compensating
international employees.
17-5: Discuss similarities and differences in employee engagement around the globe.
17-6: Explain with examples how to implement a global human resource management program.
Annotated Outline:
I. The Manager’s Global Challenge – global challenges include understanding that what may
work in one country may not work in another. There is an array of political, social, legal,
and cultural differences among countries and people abroad.
A. What Is International Human Resource Management? – employers rely on
international human resource management (IHRM) to deal with global
HR challenges like these. We can define IHRM as the human resource management
concepts and techniques employers use to manage the human resource challenges of
their international operations. IHRM generally focuses on three main topics:
1. Managing human resources in global companies (for example, selecting,
training, and compensating employees who work abroad).
2. Managing expatriate employees (those the employer sends abroad).
3. Comparing human resource management practices in different countries.
Chapter 17: Managing Global Human Resources 17- 3
Copyright © 2017 Pearson Education, Inc.
II. Adapting Human Resource Activities to Intercountry Differences
A. Cultural Factors – countries differ widely in their cultures, which are the basic values
to which their citizens adhere. Cultural differences from country to country
necessitate corresponding differences in management practices among a company’s
subsidiaries because local cultural norms can undermine employer’s attempts to have
uniform codes of conduct.
1. The Hofstede Study – Professor Geert Hofstede illustrates international
cultural differences. Hofstede says societies differ in five values: power
distance, individualism, masculinity, uncertainty avoidance, and long-term
orientation.
2. Legal Factors – employers expanding abroad must also be familiar with the
labor laws in the countries they’re entering.
B. Economic Systems – translate into differences in intercountry HR practices. The three
systems are market economies, planned economies, and mixed economies.
C. HR Abroad Example: The European Union – the EU refers to the unification of
separate European countries in the 1990s into a common market for goods, services,
capital, and labor. EU directives are binding on all member countries, which
necessitate adjustments to both EU directives and individual country laws. Variances
in HR practices affect minimum EU wages, working hours, and employee
representation.
D. HR Abroad Example: China – it implemented a new labor contract which adds
numerous new employment protections for employees and makes it correspondingly
more expensive for employers to implement certain personnel actions. There are wide
variations in how companies in China deal with HR issues such as recruiting,
selection, compensation, and labor unions.
E. Improving Performance: HR Practice Around the Globe
III. Staffing the Global Organization
A. International Staffing: Home or Local? – multinational companies (MNCs) employ
several types of international managers. Locals are citizens of the countries where
they are working. Expatriates (“expats”) are non-citizens of the countries in which
they are working. Home-country nationals are citizens of the country in which the
multinational company has its headquarters. Third-country nationals are citizens of a
country other than the parent or the host-country. More flexible expatriate
assignments involving no formal relocation are becoming increasingly popular and are
aided by technological advances.
B. Improving Performance: HR as a Profit Center
C. Trending Shaping HR: Digital and Social Media
D. Management Values and International Staffing Policy – ethnocentric firms staff
foreign subsidiaries with parent-country nationals because they believe that home
country attitudes, management styles, and knowledge are superior to anything the
host-country would offer. Polycentric-run firms staff foreign subsidiaries with host-
country nationals because they are the only ones that can really understand the culture
and the behavior of the host-country market. Geocentric firms staff foreign
subsidiaries with the best people for key jobs regardless of nationality because they
Chapter 17: Managing Global Human Resources 17- 4
Copyright © 2017 Pearson Education, Inc.
believe that the best manager for any specific position anywhere on the globe may be
in any of the countries in which the firm operates.
E. Ethics and Codes of Conduct – employers should have set policies on things like
discrimination, harassment, bribery, and Sarbanes-Oxley.
F. Selecting International Managers – is similar to selecting domestic managers, but
firms need to determine whether managers for foreign assignments can cope
internationally. Selection criteria include technical/professional skills, expatriates’
willingness to go, experience in the country, personality factors (including flexibility),
leadership skills, the ability to work with teams, and previous performance appraisals
in the selection process.
G. Diversity Counts: Sending Women Managers Abroad – while women represent about
50% of the middle management talent in U.S. companies, they represent only 20% of
managers sent abroad. What accounts for this? Many misperceptions still exist. Line
managers make these assignments, and many assume that women don’t want to work
abroad, are reluctant to move their families abroad, or can’t get their spouses to move.
In fact, this survey found, women do want international assignments, they are not less
inclined to move their families, and their male spouses are not necessarily reluctant.
H. Avoiding Early Expatriate Returns – international assignments fail for various reasons
including personality, the person’s intentions, and non-work factors. Family pressures
are frequent. Three things help the adjustment: language fluency, having preschool age
children rather than school-age or no children, and a strong bond of closeness between
spouse and ex-pat partner.
I. Improving Performance: HR Tools for Line Managers and Small Businesses
IV. Training and Maintaining Employees Abroad
A. Orienting and Training Employees on International Assignment – international assignees
do best when they receive special training. Some recommended programs aim to provide
the following: (1) the basics of the new country's history, politics, business norms,
education system, and demographics; (2) an understanding of how cultural values affect
perceptions, values, and communications; and (3) examples of why moving to a new
country can be difficult, and how to manage these challenges.
B. Performance Appraisal of International Managers Appraising Managers Abroad – the
appraisal process can be improved by:
1. Adapt the performance criteria to the local job and situation.
2. Weighing the evaluation more toward the on-site manager’s appraisal than toward
the home-site manager’s.
3. If the home-office manager does the actual written appraisal, having him or her
use a former expatriate from the same overseas location for advice.
C. Compensating Managers Abroad – compensation presents some tricky problems due to
the question of whether or not to maintain companywide pay scales and policies.
Companies may be faced with three choices: 1) continue paying based on the person’s
current home-country, 2) pay based on what locals in the new country are paid, or 3) pay
so the person’s home-country standard of living stays the same. The balance sheet
approach is the most common approach to formulating expatriate pay and use of
incentives.
D. Union Relations Abroad – differ from those in the United States.
Chapter 17: Managing Global Human Resources 17- 5
Copyright © 2017 Pearson Education, Inc.
E. Terrorism, Safety, and Global HR – new federal anti-terrorism laws are affecting an
employer’s ability to import and export workers.
1. Taking Protective Measures – many firms have instituted more comprehensive
safety plans abroad including evacuation plans to get employees to safety.
2. Kidnapping and Ransom (K&R) Insurance – since hiring crisis teams and paying
ransoms can be prohibitively expensive, many employers buy kidnapping and
ransom insurance. The insurance itself typically covers several costs associated
with kidnappings, abductions, or extortion attempts. These costs might include,
for instance, hiring a crisis team, the actual cost of the ransom payment to the
kidnappers or extortionists, insuring the ransom money in case it’s lost in transit,
legal expenses, and employee death or dismemberment.
F. Improving Performance: HR Practices Around the Globe
G. Repatriation: Problems and Solutions – some common repatriation problems are
fearing that out of sight is out of mind; returning to mediocre or makeshift jobs;
returnees are taken aback when the trappings of the overseas job are lost upon return;
being overlooked for promotions; and experiencing culture shock. Some possible
solutions are written repatriation agreements, sponsors, career counselors, open
communications, and reorientation programs.
V. Employee Engagement Guide for Managers
A. Engagement Around the Globe – the global average of engaged employees is about
61%. The top drivers of employee engagement around the globe is career
opportunities.
VI. Managing HR Locally: How to Put into Practice a Global HR System – global companies
seek to be integrated.
A. Improving Performance: The Strategic Context
B. Developing a More Effective Global HR System
1. Form global HR networks.
2. Remember that it’s more important to standardize ends and
competencies than specific methods.
C. Making the Global HR System More Acceptable
1. Remember global systems are more accepted in truly global
organizations.
2. Investigate pressures to differentiate and determine their legitimacy.
3. Try to work within the context of a strong corporate culture.
D. Implementing the Global HR System
1. Remember, “You can’t communicate enough.”
2. Dedicate adequate resources for the global HR effort.
Chapter Review
Chapter Section Summaries:
17-1: Dealing with global human resource challenges as a manager isn’t easy.
