978-1259929441 Chapter 19 Part 2

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Chapter 19 ‒ Global Human Resource Management

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The key issue in international labor relations is the degree to which organized labor is

able to limit the choices available to an international business.

Another Perspective: The International Labor Organization (ILO) supports worker issues

throughout the world. To see some of the issues the ILO is currently involved in, go to:

{http://www.ilo.org/}.

The Concerns of Organized Labor

The bargaining power of unions comes from their ability to threaten to disrupt production

by striking or protesting.

Strategy of Organized Labor

Organized labor has responded to the increased bargaining power of multinational

However, none of those efforts has been very successful.

Another Perspective: The use of child labor in some countries is always controversial. To

learn more about child labor in the production of cobalt, go to:

{https://www.bloomberg.com/news/articles/2017-11-23/cobalt-producer-to-tackle-child-

labor-concerns-with-supply-probe}.

Approaches to Labor Relations

Many firms are recognizing that the way in which work is organized within a plant can be

a major source of competitive advantage.

CRITICAL THINKING AND DISCUSSION QUESTIONS

QUESTION 1: What are the main advantages and disadvantages of the ethnocentric,

polycentric, and geocentric approaches to staffing policy? When is each approach

appropriate?

ANSWER 1: An ethnocentric staffing policy is one in which key management positions

are filled by parent country nationals. The advantages of the ethnocentric approach are:

(1) overcomes lack of qualified managers in host country; (2) unified culture; and (3)

helps transfer core competencies. The disadvantages of the ethnocentric approach are: (1)

produces resentment in host country and (2) can lead to cultural myopia. An ethnocentric

approach is typically appropriate for firms utilizing an international strategy. A

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career mobility and (2) isolates headquarters from foreign subsidiaries. A polycentric

approach is typically appropriate for firms utilizing a multidomestic strategy. A

geocentric staffing policy seeks the best people for key jobs throughout the organization,

regardless of nationality. The advantages of a geocentric approach are: (1) uses human

resources efficiently and (2) helps build strong culture and informal management

network. The disadvantages of the geocentric staffing policy are: (1) national

immigration policies may limit implementation and (2) is expensive to implement. A

geocentric approach is typically appropriate for firms unitizing a global or transnational

strategy.

QUESTION 2: Research suggests that many expatriate employees encounter problems

that limit both their effectiveness in a foreign posting and their contribution to the

company when they return home. What are the main causes and consequences of these

problems, and how might a firm reduce the occurrence of such problems?

ANSWER 2: The primary causes of expatriate problems are the inability of the spouse to

adjust, inability of the employee to adjust, other family problems, personal/emotional

maturity, and an inability to cope with the larger overseas responsibilities. The

consequences of such problems include an employee may be ineffective or detrimental

overseas and/or may return prematurely before the assigned job tasks are completed. A

firm can reduce the occurrence of expatiate problems by developing an effective selection

QUESTION 3: What is the link between an international business’s strategy and its

human resource management policies, particularly with regard to the use of expatriate

employees and their pay scale?

ANSWER 3: In firms pursuing a localization strategy, a polycentric staffing approach is

most common and there are relatively few expatriates or the associated pay issues.

Expatriates are more common in firms with international strategies, and when an

ethnocentric staffing approach is utilized. In this situation the pay is often based on home

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become particularly complex, as allowances must be made for home country norms, host

country costs and expectations, and global norms across the company.

QUESTION 4: In what ways can organized labor constrain the strategic choices of an

international business? How can an international business limit these constraints?

ANSWER 4: Organized labor can significantly constrain the choices firms make with

respect to location. International firms (or domestic ones for that matter) often choose to

locate new facilities in places where there is relative labor peace and harmonious working

relations. Labor can also raise objections and threaten disruptive behavior if a firm

QUESTION 5: Reread the Management Focus on McDonald’s global compensation

practices. How does McDonald’s approach help the company take into account local

differences when reviewing the performance of different country managers and awarding

bonus pay?

ANSWER 5: When McDonald’s revamped its global compensation practices it asked for

input from local managers on how the new system should work. By doing so,

McDonald’s not only identified the issues local managers felt were important, the

QUESTION 6: Why is diversity good for an international business? What actions can a

company take to foster greater diversity?

ANSWER 6: A diverse global workforce goes hand in hand with competitive advantage

and superior financial performance. Having a workforce comprised of different genders,

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CLOSING CASE: AstraZeneca

Summary

The closing case explores the HRM policies of AstraZeneca, a pharmaceutical company

based in London. AstraZeneca believes that it is important to have a global workforce

with managers who are comfortable in a variety of cultures and countries. To develop

such managers, AstraZeneca moves executives to other countries for three year

assignments. AstraZeneca carefully selects individuals to participate in the program, and

then provides extensive preparation for the foreign assignment. Discussion of the case

can begin with the following questions:

QUESTION 1: What international staffing policy is AstraZeneca pursuing with regard to

its “high–potential” employees?

ANSWER 1: AstraZeneca’s strategy for foreign assignments involves selecting only

QUESTION 2: Why does AstraZeneca limit this policy to just high-potential employees?

Can you see a drawback in doing this?

ANSWER 2: AstraZeneca sends only “high–potential” employees on foreign assignments

because of the high cost involved with expatriates. AstraZeneca believes it is critical to

not only carefully screen employees assigned to foreign locations, but also to provide

QUESTION 3: What staffing policy is AstraZeneca adopting with regard to its

subsidiaries in places like China? Is this an appropriate policy?

ANSWER 3: AstraZeneca has found staffing policy particularly challenging in China

where its operations have more than tripled in the last decade. Because skilled employees

are hard to find, AstraZeneca has focused on raising local skill levels and sending local

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and host country operations. Therefore, the company must be careful to ensure that it

does not lose touch with the local market situation.

QUESTION 4: Do you think the company is doing enough to limit the well-known risks

and costs associated with high expatriate failure rates? Is there anything else it might do?

ANSWER 4: Beginning with its selection process, AstraZeneca devotes considerable

resources to ensuring that its managers are in the best position possible to be successful in

their foreign assignments. AstraZeneca chooses only those managers with proven track

QUESTION 5: What do you think about AstraZeneca’s efforts to increase employee

diversity? How might this benefit the company?

ANSWER 5: Most students will probably applaud AstraZeneca’s recognition of the

importance of increasing employee diversity and taking steps to do so. Already, women

Another Perspective: To learn more about AstraZeneca, go to the company’s website at

{http://www.astrazeneca.com/}.

Teaching Tip: To extend this discussion, consider Audi Trains Mexican Auto Workers in

Germany in the International Business Library at http://bit.ly/MHEIBVideo. Click

“Ctrl+F” on your keyboard to search for the video title.

MHE INTERNATIONAL BUSINESS VIDEO LIBRARY

Please click here to visit our International Business Video Library which provides an

ongoing stream of updated video suggestions correlated by key concept and major topic.

Every new clip posted is supported by teaching notes and discussion questions. Please

feel free to leave comments in the library that you feel might be helpful to your

colleagues.

INCORPORATING globalEDGE™ EXERCISES

Use the globalEDGE™ site {globaledge.msu.edu/} to complete the following exercises:

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Exercise 1

The impact of strikes and lockouts on business activities can be substantial. Since your

manufacturing company is planning to expand its operations in the Asian markets, you

have to identify the countries where strikes and lockouts could introduce interruptions to

your operations. Using labor statistics from the International Labour Organization (ILO)

to develop your report, identify the three Asian countries with the highest number of

strikes and lockouts, as well as the total number of lost worker days. What types of

precautions can your company take to prevent interruptions from occurring in these

markets?

Exercise 2

You work in the human resources department at the headquarters of a multinational

corporation. Your company is about to send a number of managers overseas as

expatriates (or expats) to France and New Zealand. You need to create an executive

summary evaluating, comparing, and contrasting the possible issues expats may

encounter in these two countries. Your manager tells you that a tool called Expat

Explorer created by HSBC can assist you in your task.

Answers to Exercises

Exercise 1 Answer

Additional Info:

ILOSTAT is a database of labor statistics, providing annual labor market statistics for

Exercise 2 Answer

Additional Info:

HSBC’s website dedicated to providing resources to expatriates (expats). The Expat