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Chapter 19 ‒ Global Human Resource Management
19-7
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
Chapter 19 ‒ Global Human Resource Management
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Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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
Chapter 19 ‒ Global Human Resource Management
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Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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,
Chapter 19 ‒ Global Human Resource Management
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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
Chapter 19 ‒ Global Human Resource Management
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Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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:
Chapter 19 ‒ Global Human Resource Management
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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
