PART 5
FUNCTIONAL AREA EXCELLENCE
CHAPTER 17
HUMAN RESOURCE MANAGEMENT IN THE GLOBAL FIRM
Instructor’s Manual by Marta Szabo White, Ph.D.
I. LECTURE STARTER/LAUNCHER
■ This chapter discusses the strategic role of human resources in international
business. As firms become increasingly international, and their subsidiaries span many
countries over many continents, there is a greater need for more internationally oriented
managers, and more employees from the involved countries and regions. Hiring and
retaining thousands and often hundreds of thousands of people to work at an
international firm requires tremendous skill and close coordination. It is also complicated
for a SME to hire just a few employees to work internationally.
■ Before lecturing about this chapter, one approach is to ask students to do a short
assignment. Ask them to choose a fairly large international company and find out how
many employees work at the company. By visiting company websites, students can
often find out if a company predominantly hires home country nationals, host country
nationals, or third country nationals.
■ For example, Global firms such as Siemens, Hutchison Whampoa, IBM, ArcelorMittal,
Nestlé, Matsushita, McDonald’s, Unilever, Volkswagen, and Walmart each has more
than 100,000 employees working outside their home countries.
■ Ask students to discuss the possible advantages (and disadvantages) of hiring all
three types of staff: home country, host country, and third country employees. They
might note that home country staff can bring aspects of corporate culture to the
overseas location. The host country employees, however, can bring local knowledge of
business practices, markets, networks, and other relationships. Third country
employees, those who are hired, neither from the home where the host country, are
often the best professionals in the business. You may wish to write these points on the
board and refer to them later as you continue your lecture.
◘ A parent-country national (PCN) (home country) is an employee who is a
citizen of the country where the MNE is headquartered
◘ A host-country national (HCN) is an employee who is a citizen of the country
where the MNE subsidiary or affiliate is located
◘ A third-country national (TCN) is an employee who is a citizen of a country
other than the home or host country
■ Exhibit 17.6 illustrates the percentage of workers in each country that have formal
union memberships.
■ Note the recent gradual decline of union membership in many advanced economies.
◘ It has fallen to less than 12% of workers in the United States and less than
18% in Australia, Germany, Japan, and Mexico
◘ However, union membership is relatively high in Sweden, where more than
65% of workers, mostly government employees, are unionized
■ Ask students to discuss whether the recent global financial crisis has impacted labor
union membership
II. LEARNING OBJECTIVES AND THE OPENING VIGNETTE
LEARNING OBJECTIVES
After studying this chapter, students should be able to:
17.1 Understand the strategic role of human resources in international business.
17.2 Explain international staffing policy.
17.3 Know about preparation and training of international employees.
17.4 Discuss performance appraisal and compensation of international employees.
17.5 Understand international labor relations.
17.6 Describe diversity in the international workforce.
Key Themes
■ In this chapter, there are six themes:
[1] The strategic role of human resources in international business
[2] International staffing policy
[3] Preparation and training of international employees
[4] Performance appraisal and compensation of international employees
[5] International labor relations
[6] Diversity in the international workforce
■ This chapter addresses the complexities of compensating managers who work
abroad, the complex nature of international labor relations, and the value of maintaining
a diverse workforce, especially of managers with varied global experience.
■ The principal theme of this chapter is the need for international companies to select,
train, employee, and retain employees in a strategic fashion.
■ This means that the company’s human resource policies should fit their strategic
positioning and organizational structure.
■ For example, a company that professes to use a global and highly integrated strategy
is advised to adopt a global or geocentric approach to hiring staff, as opposed to an
approach that would limit hiring policies to home, or parent country nationals.
■The final theme is a contemporary, complex, and challenging one- Diversity in the
international workforce- experienced MNEs include people from diverse backgrounds,
nationalities, and gender who bring a wealth of experience and knowledge to
addressing the firm’s problems and opportunities.
◘ Success comes from understanding and accepting differences, and then
leveraging them to enhance planning, strategy, and the firm’s operations
◘ Firms can take several steps to ensure women achieve increasing equality in
international business
Teaching Tips
■ Continuing with the approach discussed in the Lecture Launcher, it helps to provide
students with examples of critical human resource decisions that companies make as
they expand internationally.
■ One example is the shifting of technology service support offshore to Central America
and India: Ask students about their experiences when calling for computer or wireless
customer support.
■ How does this type of human resource decision affect workers in the home country?
Workers in the host country? How does it affect the company’s strategy?
Commentary on the Opening Vignette:
INTERNATIONAL HUMAN RESOURCE MANAGEMENT AT JOHNSON & JOHNSON
Key message
■ The cornerstone of Johnson & Johnson’s (J&J) six-decade old Credo is their high
regard for human resources. This vignette underscores the importance of world class
human resources, especially for international firms.
■ J&J (www.jnj.com) is positioned as a company that is acutely concerned with the care
and management of its people. Its 126,000 employees work in over 260 business units
operating in more than 60 countries worldwide.
■ J&J claims to have the “best and the brightest” employees worldwide, with long
tenures, decentralized decision-making, a “total rewards” compensation system, with
opportunities worldwide for learning and development, e.g. J&J Law School, an online
curriculum, or the J&J Leadership Development Program, which rotates participants
through classroom and on-the-job training.
■ Employees learn new skills across functional boundaries and international immersion
assignments.
■ The diversity emphasis of hiring minorities, women, and people from varied cultural
backgrounds cultivates leadership initiatives in emerging markets, e.g. India, and fosters
competitive advantage worldwide.
Uniqueness of the situation described
■ J&J is a leading global manufacturer of pharmaceutical and consumer health care
products, with well-known brands such as Band-Aid, Tylenol, Neutrogena, and Listerine.
■ Worldwide sales exceeded $74 billion, about half of which come from North America,
one-quarter from Europe, 20% from Asia-Pacific and Africa, and the rest from Latin
America and other regions.
■ J&J’s HR strategy appears to match its corporate international strategy, i.e. it employs
a decentralized decision-making approach in its international business units as well as
in its hiring and retention strategies.
■ The Credo provides an overarching policy for delegating decision making to HR
directors worldwide. For example, in India HR managers have the freedom to approve
employee expenses as well as a variety of other local employee decisions, without
seeking authorization from higher management levels.
Classroom discussion
■ Ask students to think about some of the cultural issues that might arise as a result of
such a progressive HR strategy.
■ For example, how might J&J’s decentralized approach be perceived in a culture that
values centralized authority (i.e., Hofstede’s high power distance)?
■ How might the active promotion of women and minorities be perceived in a culture
that values traditional gender roles (i.e., Hofstede’s high masculinity)?
■ How might MNCs such as J&J mitigate any conflict or misunderstandings that might
arise as a result of these perceptions?
■ For more information on Hofstede’s national cultural dimensions, go to
http://www.geert-hofstede.com/.