CHAPTER 16
HIRING AND MANAGING EMPLOYEES
LEARNING OBJECTIVES:
16.1 Explain the three types of staffing policies that companies use.
16.2 Describe the key human resource recruitment and selection issues.
16.3 Summarize the main training and development programs that firms use.
16.4 Explain how companies compensate managers and workers.
16.5 Describe the importance of labor–management relations.
CHAPTER OUTLINE:
Introduction
International Staffing Policies
Ethnocentric Staffing
Advantages of Ethnocentric Staffing
Disadvantages of Ethnocentric Staffing
Polycentric Staffing
Advantages and Disadvantages of Polycentric Staffing
Geocentric Staffing
Advantages and Disadvantages of Geocentric Staffing
Recruiting and Selecting Human Resources
Human Resource Planning
Recruiting Human Resources
Current Employees
Recent College Graduates
Local Managerial Talent
Nonmanagerial Workers
Selecting Human Resources
Culture Shock
Reverse Culture Shock
Dealing with Reverse Culture Shock
Training and Development
Methods of Cultural Training
Environmental Briefings and Cultural Orientations
Cultural Assimilation and Sensitivity Training
Language Training
Field Experience
Compiling a Cultural Profile
Nonmanagerial Worker Training
Employee Compensation
Managerial Employees
Bonus and Tax Incentives
Cultural and Social Contributors to Cost
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Nonmanagerial Workers
Labor–Management Relations
Importance of Labor Unions
International Labor Movements
A Final Word
A comprehensive set of specially designed PowerPoint slides is available for use
with Chapter 16. These slides and the lecture outline below form a completely integrated
package that simplifies the teaching of this chapter’s material.
Lecture Outline
I. INTRODUCTION
Human resource management (HRM) is the process of staffing a company and
ensuring that employees are as productive as possible. It requires managers to be
effective in recruiting, selecting, training, developing, evaluating, and
compensating employees and in forming good relations.
International HRM differs considerably from HRM in a domestic setting
because of differences in national business environments.
II. INTERNATIONAL STAFFING POLICIES
Staffing policy is the means by which a company staffs its offices; staffing policy
is influenced by international involvement. The main approaches to the staffing of
international operations are ethnocentric, polycentric, and geocentric. Companies
will often blend different staffing policies.
A. Ethnocentric Staffing
Individuals from the home country manage operations abroad. Appeals to
companies that want control over decision making in offices abroad and
1. Advantages of ethnocentric staffing
a. Locally qualified people are not always available. In
developing and newly industrialized countries, there is
often a shortage of qualified personnel—resulting in a
highly competitive local labor market.
b. Companies use ethnocentric staffing to recreate operations
in the image of home-country operations.
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c. Expatriate managers infuse branch offices with the
corporate culture; important to shared values in each
international office implementing global strategies. The
image of home-office operations can ease the transfer of
2. Disadvantages of ethnocentric staffing
a. Relocating managers from the home country is expensive.
Bonuses for relocating, plus relocation expenses for
families, increase the cost of a manager. Cultural
differences and long periods away from relatives and
friends contribute to the failure of international
assignments.
b. Can create barriers for the host-country office. Home-
country managers in the host country encourage a “foreign”
image of the business; lower-level employees feel that
managers do not understand their needs. Expatriate
managers may not overcome cultural barriers or understand
the needs of their local employees or their local customers.
B. Polycentric Staffing
Individuals from the host country manage operations abroad.
1. Well-suited to companies that want to grant autonomy in decision
making. But this policy does not mean that host-country managers
practices.
3. Advantages and disadvantages of polycentric staffing:
a. Places managerial responsibility in the hands of people
familiar with the local business environment.
b. Managers with deep cultural understanding of the local
market can be an enormous advantage.
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f. For a firm following a global strategy, a lack of integration,
knowledge sharing, and a common image may negatively
affect performance.
C. Geocentric Staffing
Best-qualified individuals, regardless of nationality, manage operations
abroad. The local manager is from the host country, from the home
country, or from a third country, depending on specific needs. Reserved
for top-level managers.
1. Advantages and disadvantages of geocentric staffing:
a. Develops global managers who adjust to any business
environment and to cultural differences.
b. Useful for companies trying to break down nationalistic
III. RECRUITING AND SELECTING HUMAN RESOURCES
Companies try to recruit and select qualified managers and nonmanagerial
workers who are well suited to their tasks and responsibilities. How does a
company recruit and select the best available individuals?
A. Human Resource Planning
1. Forecasting both a company’s human resources needs and supply.
2. Phase one: take inventory of a company’s current human
resources. Data is collected on employees, including education, job
people to fill vacant and anticipated new positions.
5. A firm must make plans for reducing its workforce—a process
called decruitment—when HR levels are greater than anticipated.
B. Recruiting Human Resources
Identifying and attracting qualified applicants for vacant positions.
1. Current employees
a. Likely candidates within the company are those managers
2. Recent college graduates
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a. Companies also recruit recent college graduates who have
3. Local managerial talent
a. Hiring local managers is common when cultural
understanding is a key job requirement.
b. Hiring local managers with government contacts may speed
the approval process for local operations.
c. Governments may force a company to recruit local
managers to develop its own managerial talent.
d. Governments may restrict the number of international
managers that can work in the host country.
4. Nonmanagerial workers
a. Companies recruit locally for nonmanagerial positions if
there is little need for specialized skills or training.
local population.
d. Countries sometimes permit the importation of
nonmanagerial workers.
C. Selecting Human Resources
1. Screening and hiring the best-qualified applicants with the greatest
performance potential.
2. For international assignments, it is essential to measure a person’s
ability to bridge cultural differences.
3. Expatriate managers must adapt to a new way of life in the host
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spouse to adapt is the most common reason for the expatriate
failure.
D. Culture Shock
1. Culture shock is a psychological process that affects people living
abroad, characterized by homesickness, irritability, confusion,
aggravation, and depression.
4. The higher cost of expatriate failure is convincing many companies
to invest in cultural-training programs for employees sent abroad.
E. Reverse Culture Shock
1. Reverse culture shock is the psychological process of re-adapting
to one’s home culture.
2. Values and behavior that once seemed so natural now seem
strange, and returning managers find that either no position or a
difficulty blending back into the company culture.
5. Spouses and children often have difficulty leaving the adopted
culture and returning home.
6. Dealing with reverse culture shock
a. Home-culture reorientation programs and career-counseling
sessions for returning managers and their families can be
highly effective.
b. The employer might bring the family home for a short stay
before the return to prepare for reverse culture shock.
c. Good career development programs help companies retain
valuable managers. Ideally, a career development plan is
created before an employee goes abroad.
d. Mentors can be assigned to returning managers; mentor
becomes a confidant so the expatriate manager can discuss
problems about work, family, and readjustment to the home
culture.
IV. TRAINING AND DEVELOPMENT
After recruitment and selection, a company identifies the skills and knowledge
needed to perform duties. Employees lacking the necessary skills or knowledge
go into training or development programs. Companies realize the need for in–
depth training and development programs if they want maximum productivity
from managers abroad.
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A. Methods of Cultural Training (See Figure 16.1)
1. The extent of a company’s international involvement requires a
corresponding level of cultural knowledge from employees.
2. Companies that are highly international need employees with
informed, open-minded, and flexible managers with a level of
cultural training appropriate to the duties required of them.
4. Environmental briefing and cultural orientations
a. Environmental (area) briefings include information on
local housing, health care, transportation, schools, and
climate.
b. Cultural orientations offer insight into social, political,
legal, and economic institutions.
5. Cultural assimilation and sensitivity training
a. Cultural assimilation teaches the culture’s values, attitudes,
manners, and customs.
b. Guerilla linguistics, which involves learning some phrases
understanding of other peoples’ feelings and emotions.
6. Language training
a. This level of training gets a trainee “into the mind” of local
7. Field experience
a. Field experience means visiting the culture, walking the
streets of its cities and villages, and becoming absorbed by
it for a short period of time.
b. The trainee enjoys the unique cultural traits and feels the
stresses inherent in living in the culture.
B. Compiling a Cultural Profile
Cultural profiles can be quite helpful in deciding whether to accept an
international assignment. Sources for constructing a cultural profile
include:
1. CultureGrams: This guide can be found in the reference section of
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c. The U.S. government permits citizens working abroad to
exclude “foreign–earned income” from their taxable income
in the United States.
6. Cultural and social contributors to cost
a. Culture is a key to the compensation of expatriate
managers.
b. Some nations offer more paid holidays, free medical care,
and plans for taking seriously ill expatriates and family
members home or to nearby countries.
c. Companies that hire managers in the local market might
encounter additional costs engendered by social attitudes
(e.g., paid maternity leave).
d. Host-country managers receive the same pay as managers
who work for local companies but receive special perks.
B. Nonmanagerial Workers
Two main factors influence the wages of nonmanagerial workers.
1. First, their compensation is strongly influenced by increased cross-
border business investment.
2. Employers can relocate fairly easily to nations where wages are
lower. Often, workers at home must accept lower wages or see
jobs lost.
6. Although labor laws in Europe are more stringent than in the
United States, EU countries have abolished the requirement that
workers from one EU nation obtain visas to work in another (e.g.,
if workers in Spain have no work or the pay is inadequate, they can
move to another EU country). This is referred to as the Free
Movement of Labor.
VI. LABOR–MANAGEMENT RELATIONS
When management and workers realize they depend on each other, the company
is better prepared to meet its goals and surmount unexpected obstacles. Giving
workers a greater stake in the company—through profit-sharing plans—can
increase morale and generate commitment to improved quality and customer
service. Because relations between laborers and managers are human relations,
they are rooted in culture and are affected by political movements.
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A. Importance of Labor Unions
1. The strength of labor unions where a company has operations
affects performance and the selection of a location.
2. Developing and emerging markets in Asia are popular for
international companies, and some Asian governments appeal to
between company management and labor unions.
4. Labor unions are stronger in France and Germany although union
membership in Germany has fallen.
5. Under codetermination, German workers enjoy a direct say in the
strategies and policies of their employers.
6. International labor movements
a. Unions around the globe try to improve the treatment of
workers and reduce incidents of child labor.
b. It is difficult for a union in one nation to support its
counterpart abroad. Events abroad are difficult to
comprehend, and workers compete for jobs at multinational
companies.
c. Labor unions in one country might offer concessions to
This chapter concludes our survey of international business. We studied how
firms, ranging from small- and medium-size businesses to large global companies,
hire and manage their most important resource—their employees. We hope we
piqued your interest in the goings-on of the global marketplace and in the
activities of international companies of all types and sizes.
Quick Study Questions
Quick Study 1
1. Q: A firm that staffs its operations abroad with home-country nationals uses a
staffing policy called?
2. Q: Polycentric staffing is when a company staffs its operations with people from
where?
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A: In polycentric staffing, operations outside the home country are managed by
3. Q: Geocentric staffing is typically reserved for whom?
Quick Study 2
1. Q: The process of forecasting a company’s human resource needs and supply is
called what?
A: Human resource planning is important in order for the firm to forecast its
2. Q: When recruiting employees, from where can employers attract qualified
applicants?
A: Companies recruit their employees internally or through external sources.
Likely candidates within the company (current employees) are those managers
3. Q: Culture shock is a psychological process that affects people who live where?
Quick Study 3
1. Q: What constitutes the most basic level of cultural training?
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briefings typically include information on local housing, health care,
transportation, schools, and climate. Cultural orientations offer insight into social,
political, legal, and economic institutions. Cultural assimilation teaches the
culture’s values, attitudes, manners, and customs. Sensitivity training teaches
people to be considerate and understanding of other peoples’ feelings and
emotions. In-depth language training gets a trainee “into the mind” of local
people to learn why people behave as they do. Field experience means visiting the
culture, and becoming absorbed by it for a short period of time.
Nonmanagers also have a need for training and development, especially in
developing countries where basic educational opportunities are limited and
industrial experience may be new. In many countries, national governments
cooperate with businesses to train nonmanagerial workers. Japan and Germany
lead the world in vocational training and apprenticeship programs for
nonmanagerial workers.
2. Q: What type of training is said to get one “into the mind” of the local people?
Quick Study 4
1. Q: A manager who goes to work in an unstable country might receive a bonus
called what?
2. Q: Some factors that contribute to the compensation of expatriate managers
include what?
Quick Study 5
1. Q: Because labor–management relations are human relations they are rooted in
what? A: Labor–management relations are the positive or negative condition of relations
Copyright © 2019 Pearson Education, Inc.
2. Q: German workers have a direct say in the strategies and policies of their
employers under a plan called what?
Ethical Challenge
You are an expatriate manager at a manufacturing facility in Asia on your first
assignment abroad. You are aware of increasing concern among your employees (mostly
young women) about wages that barely permit them to live at subsistence level. The plant
is not unionized, and you know that your superiors in your home country are not
particularly supportive of efforts to organize workers. In fact, despite the calm demeanor
when the subject of unions is raised, you believe that upper management in the home
country could react severely if workers unionized. Headquarters would likely shift
production elsewhere, close the plant, and transfer you elsewhere.
16-5 Can you propose anything that might improve conditions for workers that would
also get the approval of upper management?
16-6 If you attempted what you proposed above but then failed, would you encourage
workers to unionize? Explain.
Teaming Up
Suppose you and several of your classmates are a team assembled by your employer to
decide whether to begin personality testing all employees. A British firm found that the
Ch 16: Hiring and Managing Employees
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top three reasons people quit or underperform are rooted in personality rather than skill,
knowledge, or qualification. Personality testing in the workplace is widespread in
Australia, Europe, and the United States, but is catching on in Asia.
16-7 What personality traits might help explain poor performance? Explain.
A: Do personality traits affect performance? Such question is always relevant.
also within groups. Key personality traits include: emotional stability,
extroversion, openness to experience, agreeableness and conscientiousness.
(a) Emotional stability represents the degree to which an employee might be
anxious, depressed, any and insecure. This is important because it involves
less negative thinking and can lead to poor performance.
16-8 Could the reason why Asian societies have not used such testing in the past be
rooted in culture? Explain.
16-9 What advantages might global aptitude tests offer firms doing business globally?
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Practicing International Management Case
Expatriation or Discrimination?
16-12 Q: In addition to those mentioned in the case, what are some other advantages
associated with the hiring of local managers in emerging markets?
16-13 Q: What steps should a company take to ensure that, if taken to court, it can
demonstrate that staffing cuts have not been discriminatory?