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Chapter 16
Managing Human Resources Globally
This chapter discusses the HR issues that organizations must address in a world of global
competition. The chapter begins by describing how the global nature of business is affecting
human resource management in modern organizations. Next, it identifies how global differences
among countries affect an organization’s decisions about human resources. The following
sections explore HR planning, selection, training, and compensation practices in international
settings. Finally, the chapter examines guidelines for managing employees sent on international
assignments.
Chapter Outline
HRM in a Global Environment
• More companies are entering international markets by exporting and operating foreign
facilities.
• Organizations need employees who understand customers, suppliers, local laws, and
customs in other countries and are able to adapt their plans to local situations.
• Organizations may hire a combination of parent-country, host-country, and third-country
nationals.
Factors Affecting HRM in International Markets
• Other influences on international HRM is the foreign country’s culture, education,
economic system, and political-legal system.
• A country’s economic system, as well as the government’s involvement in the economy,
is a strong factor determining HRM practices.
Human Resource Planning in a Global Economy
• HR planning involves decisions about where and how many employees are needed for
each international facility.
Selecting Employees in a Global Labor Market
• Organizations fill foreign positions with host-country, parent-country, or third-country
nationals.
• Expatriates often feel culture shock, the disillusionment and discomfort that occur
during the process of adjusting to a new culture and its norms, values, and perspectives.
Training and Developing a Global Workforce
• Training and development programs should be effective for all participating employees,
regardless of their country of origin.
• When organizations hire employees to work in a foreign country or transfer them to
another country, the employer needs to provide the employees with training in how to
handle the challenges associated with working in the foreign country.
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Performance Management across National Boundaries
• Organizations have to consider legal requirements, local business practices, and national
cultures when they establish performance management methods in other countries.
Compensating an International Workforce
• Pay structures can differ substantially among countries in terms of pay level and the
relative worth of jobs.
International Labor Relations
• Organizations establish policies and goals for labor relations, for overseeing labor
agreements, and for monitoring labor performance.
Managing Expatriates
• Cross-cultural training for the assignment as well as preparation for repatriation after
the assignment are critical success factors.
• Communication of changes at home and validation of a job well done abroad help
expatriate through repatriation process.
Learning Objectives
LO 16-1: Summarize how the growth in international business activity affects human resource
management.
LO 16-2: Identify the factors that most strongly influence HRM in international markets.
LO 16-3: Discuss how differences among countries affect HR planning at organizations with
international operations.
LO 16-4: Describe how companies select and train human resources in a global labor market.
LO 16-5: Discuss challenges related to managing performance and compensating employees
from other countries.
LO 16-6: Explain how employers prepare managers for international assignments and for their
return home.
Society for Human Resource Management Body of Competency &
Knowledge
This chapter contains content, which may be identified within the following content areas:
• HR in the Global Context
• Diversity & Inclusion
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• Risk Management
• Business & HR Strategy
• Organizational Effectiveness & Development
• Workforce Management
• Corporate Social Responsibility
• Employee Relations
Human Resource Certification Institute’s A Guide to the HR Body
of Knowledge
*Important to note that knowledge specific to global practices is NOT included within this guide,
but instead pertains to the Human Resource Certification Institute’s Global Professional in HR
(GPHR) exam. However, below one may find topical areas within the textbook and how they
may pertain to the different areas of the GPHR exam content outline:
• Strategic HR Management
• Workforce Relations and Risk Management
• Talent and Organizational Development
• Global Talent Acquisition and Mobility
• Global Compensation and Benefits
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Question Guidance to Vignettes and Discussion Questions
Best Practices
Chobani’s Global Outlook Was in Place from Its Founding
1. What signs of a “global” business environment can you identify in this description of
Chobani?
2. Thinking about the HR activities you have studied in the previous chapters, identify some
activities that you expect would be affected by Ulukaya’s decision to hire refugees and
other immigrants.
HR Oops!
Cross-Cultural Management Missteps
1. Based on the information given, how respectfully and effectively did Andrew Pickup
handle his mistake in seeking feedback?
2. How respectfully and effectively did Debbie Nicol handle her mistake in the training
schedule?
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HRM Social
Online Communities Support Expats’ Spouses
1. What pros and cons do you see in having an organization set up its own social network
for accompanying spouses?
2. What pros and cons do you see in referring an accompanying spouse to an outside social
network?
HR How To
Making the Most of an Overseas Assignment
1. What aspects of an expatriate assignment described here sound most appealing to you?
2. What aspects sound most difficult? How could an HR department assist with these?
Did You Know?
The Most Expensive Cities Are Concentrated in Asia
1. Why might an organization choose to locate a facility in one of the most expensive cities,
in spite of the higher costs?
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End of Chapter Questions and Cases
Thinking Ethically
What Do Employers Owe LGBT Employees in Expat Assignments?
1. How would you apply the principle of justice or fairness to employers’ decisions about
whether and how to offer foreign assignments to LGBT employees?
2. What would be the most ethical way for employers to address the safety risks of asking a
gay employee to work in a country such as Dubai, Russia, or Uganda, where laws are
hostile to homosexuality?
Review and Discussion Questions
1. Identify the parent country, host country(ies), and third country(ies) in the following
example: A global soft-drink company called Cold Cola is headquartered in Atlanta,
Georgia. It operates production facilities in Athens, Greece, and in Jakarta, Indonesia.
The company has assigned a manager from Boston to head the Athens facility and a
manager from Hong Kong to manage the Jakarta facility. (LO16-1)
2. What are some HRM challenges that arise when a U.S. company expands from domestic
markets by exporting? When it changes from simply exporting to operating as an
international company? When an international company becomes a global company?
(LO16-2)
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Hill Education.
Answer: HR challenges facing companies that expand into foreign markets by exporting
include—preparing to draw from a larger labor market, which will include individuals
with diverse backgrounds and education levels. As the organizations continue to expand
into the international marketplace, HR challenges increase. These challenges include—
deciding on choices for location and determining availability of suitable human
resources. If the companies become global, there is an increased need for HRM practices
that encourage flexibility and are based on an in-depth knowledge of differences among
countries. Global organizations must be able to recruit, develop, retain, and use managers
who can get results across national boundaries.
3. In recent years, many U.S. companies have invested in Russia and sent U.S. managers
there in an attempt to transplant U.S.-style management. According to Hofstede, U.S.
culture has low power distance, uncertainty avoidance, and long-term orientation and
high individuality and masculinity. Russia’s culture has high power distance and
uncertainty avoidance, low masculinity and long-term orientation, and moderate
individuality. In light of what you know about cultural differences, how well do you think
U.S. managers can succeed in each of the following U.S.-style HRM practices? (Explain
your reasons.) (LO16-2)
a. Selection decisions based on extensive assessment of individual abilities.
b. Appraisals based on individual performance.
c. Systems for gathering suggestions from workers.
d. Self-managing work teams.
4. Besides cultural differences, what other factors affect human resource management in an
organization with international operations? (LO16-2)
5. Suppose you work in the HR department of a company that is expanding into a country
where the law and culture make it difficult to lay off employees. How should your
knowledge of that difficulty affect human resource planning for the overseas operations?
(LO16-3)
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6. Why do multinational organizations hire host-country nationals to fill most of their
foreign positions, rather than sending expatriates for most jobs? (LO16-4)
7. Suppose an organization decides to improve collaboration and knowledge sharing by
developing an intranet to link its global workforce. It needs to train employees in several
different countries to use this system. List the possible cultural issues you can think of
that the training program should take into account. (LO16-4)
8. For an organization with operations in three different countries, what are some
advantages and disadvantages of setting compensation according to the labor markets in
the countries where the employees live and work? What are some advantages and
disadvantages of setting compensation according to the labor market in the company’s
headquarters? Would the best arrangement be different for the company’s top executives
and its production workers? Explain. (LO16-5)
9. What abilities make a candidate more likely to succeed in an assignment as an expatriate?
Which of these abilities do you have? How might a person acquire these abilities? (LO16-
6)
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10. In the past, a large share of expatriate managers from the United States have returned
home before successfully completing their foreign assignments. Suggest some possible
reasons for the high failure rate. What can HR departments do to increase the success of
expatriates? (LO16-6)
Taking Responsibility
Automation Changes Bangladesh Garment Industry
1. Based on the information given, and from the perspective of a clothing company’s
management, what social, economic, and legal forces make Bangladesh an attractive
labor market for producing apparel? What forces make it a difficult labor market?
2. Looking at the information in this case in terms of social responsibility, would you
recommend that clothing brands operate or buy from Bangladeshi factories or that they
go elsewhere? Which stakeholders are you considering in your answer (for example,
mainly customers, employees, investors, or communities)?
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Managing Talent
Geely Goes Global with Volvo (and Others)
1. Would you categorize Geely as an international, multinational, or global organization?
Why?
2. Suppose you are a Geely HR executive, and Li asks you to consider the idea of sending
expatriate managers from China to run it various subsidiaries, rather than letting the units
operate independently and share technical knowledge. Summarize some pros and cons of
this approach to managing the subsidiaries.
HR in Small Business
How 99designs Created a Global Enterprise with Just a Few Employees
1. Identify two advantages and two challenges of 99designs’ strategy of growing by adding
employees in local markets rather than in a single corporate headquarters.
2. If you were advising 99designs on HRM issues, would you recommend the same level of
compensation for country managers in all locations? If so, why? If not, what adjustments
would you recommend?
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Recommended Connect Activities
Country Differences and HRM
Learning Objective: 16-02 Identify the factors that most strongly influence HRM in
international markets.
Activity Summary: Students will match which factor most strongly influences human resource
management with each country.
Follow-Up Activity: Using a flipped classroom or as an activity for test preparation, small
groups of students would first select a country to further research. In a presentation to the class,
each small group would then describe the cases for and against why a company would choose to
locate a business (subsidiary) inside that country.
International Employees
Learning Objective: 16-03 Discuss how differences among countries affect HR planning at
organizations with international operations.
Activity Summary: In this case analysis, students will learn which characteristics provide the
best employee fit for expansion into China.
Follow-Up Activity: The article Passport Revoked: When Brands Fail Internationally from CBC
Radio One does a very good job of detailing the issues that five U.S.-based companies had in
expanding to international markets. In small groups, have students present their findings on each
situation and if there was anything the companies could have done to increase their chances of
success. Answers should be more strategic and focused on the management of employees or the
cost to implement the correct labor programs.
Hofstede’s Cultural Dimensions
Learning Objective: 16-02 Identify the factors that most strongly influence HRM in
international markets.
Activity Summary: Students will match the examples to each of the cultural dimensions.
Follow-Up Activity: The HR Analytics & Decision Making box feature on page 510 of the
textbook details the cultural differences that may exist inside of one country. To enhance further
understanding of Hofstede’s five dimensions of culture, students should apply each one to
differences exhibited in the U.S.
Coming Home
Learning Objective: 16-06 Explain how employers prepare managers for international
assignments and for their return home.
Activity Summary: The case analysis provides understanding on the issues employees
encounter when re-entering their home country.
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Follow-Up Activity: One strategy that might improve the return home experience would be to
look at the pre-selection process when searching for potential expatriates. Have students review
Table 16.2, Selected Topics for Assessing Candidates for Overseas Assignments on page 525 of
the textbook. Which categories or questions should have additional decision making weight, so
that the return home experience would go more smoothly?
Fundamentals of Human Resource Management, 8e Instructor’s Manual
Classroom Exercises
Students may benefit from exercises that illustrate the concepts of the chapter. Use these along
with CONNECT activities.
1. International HRM
Instructors may engage students in a general discussion meant to support the
understanding of international HRM. Review and Discussion question #3 may be used to
facilitate this discussion. Furthermore, instructors may wish to engage students in
discussion concerning the Managing Talent vignette.
2. Expatriates and International Assignments
Students may be asked to discuss and identify the concepts of parent country, host
country, and third country, as well as international assignments. Review and Discussion
question #1 may be used to start the conversation, with Review and Discussion question
#9 as a follow-up. Review and Discussion questions #6 and #10 may be used to facilitate
a conversation not only for expatriates, but to discuss the overall difficulties faced by
employees within global companies, and how HR may help support those employees.
3. Cross-Cultural Skills
Instructors may facilitate a discussion for students to discuss the skills necessary for
successful cross-cultural managers. The HR Oops! vignette may be a good starting point
with students, and then asked to discuss question #2 of the Managing Talent vignette.
4. HRM Career Considerations
Instructors may wish to have students identify components in Chapter 16 within both the
Society for Human Resource Management Body of Competency & Knowledge and the
Human Resource Certification Institute’s A Guide to the HR Body of Knowledge.
Discussion could focus on how these chapter concepts are important to the development
of their careers and potential certification.
5. Vignette Discussions
Any of the vignettes (see above), may be employed for classroom discussion. Students
could be asked to respond as individuals or placed into groups for discussion. Individuals
and/or groups may then be asked to defend their responses and rationale when comparing
and contrasting other responses.