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CHAPTER 15
MANAGING HUMAN RESOURCES GLOBALLY
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. explain staffing decisions with a focus on expatriates.
2. identify training and development needs for expatriates and host-country nationals.
3. discuss compensation and performance appraisal issues.
4. understand labor relations in both home and host countries.
5. discuss how the institution-based and resource-based views shed additional light on
HRM.
6. participate in two leading debates concerning HRM.
7. draw implications for action.
GENERAL TEACHING SUGGESTIONS
If you have a student in your class who has lived in another country, launch your coverage of this
chapter by asking the student to describe life in the other country. Ask for tips about the culture
and daily life that could help a new resident succeed. Also, ask students to identify personal
characteristics that would help them succeed in that environment.
OPENING CASE DISCUSSION GUIDE
Emerging Markets: Samsung’s Global Strategy Group
Samsung Group is the leading conglomerate in South Korea. To expand outside Korea, Samsung
needs more non-Korean managers. Samsung established the Global Strategy Group, which
consists of non-Korean MBA graduates. The group is designed to “(1) develop a pool of global
managers, (2) enhance Samsung’s business performance, and (3) globalize Samsung.” It seems
to be working. The group has completed many global strategy projects and non-Korean
employees have stayed with the company. Samsung has continued to expand successfully.
CHAPTER OUTLINE: KEY CONCEPTS AND TERMS
Sections I through VII of Chapter 15
I. STAFFING
1. Key Concept
International staffing primarily relies on ethnocentric, polycentric, and geocentric
approaches. Expatriates (primarily PCNs and, to a lesser extent, TCNs) play multiple
challenging roles and often have high failure rates. They need to be carefully selected,
taking into account a variety of factors.
2. Key Terms
Ethnocentric approach is an emphasis on the norms and practices of the parent
company (and the parent country of the MNE) by relying on PCNs.
Expatriation is the process of selecting, managing, and motivating expatriates to
work abroad.
Geocentric approach is a focus on finding the most suitable managers, who can be
PCNs, HCNs, or TCNs.
Host-country national (HCN) is an individual from the host country who works for
an MNE.
Human resource management (HRM) is activities that attract, select, and manage
employees.
Parent-country national (PCN) is an individual who comes from the parent country
of the MNE and works at its local subsidiary.
Polycentric approach is an emphasis on the norms and practices of the host country.
Staffing is HRM activities associated with hiring employees and filling positions.
Third-country national (TCN) is an individual who is from neither the parent
country nor the host country of the MNE.
II. TRAINING AND DEVELOPMENT
1. Key Concept
Expatriates need to be properly trained and cared for during expatriation and
repatriation. Training and development of HCNs are now an area of differentiation
among many MNEs.
2. Key Terms
Development is the long-term, broader preparation to improve managerial skills for
a better career.
Psychological contract is an informal understanding of expected delivery of benefits
in the future for current services.
Repatriate is a returning expatriate.
Repatriation is the process of facilitating the return of expatriates.
Training is specific preparation to do a particular job.
III. COMPENSATION AND PERFORMANCE APPRAISAL
1. Key Concepts
Expatriates are compensated using the going rate and balance sheet approaches. Top
talent HCNs now increasingly command higher compensation. Performance appraisal
needs to be done carefully to achieve its intended purposes.
2. Key Terms
Balance sheet approach is a compensation approach that balances the cost of living
differences relative to parent country levels and adds a financial inducement to make
the package attractive.
Compensation is the determination of salary and benefits.
Going rate approach is a compensation approach that pays expatriates the
prevailing (going) rate for comparable positions in a host country.
Performance appraisal is the evaluation of employee performance for promotion,
retention, or termination purposes.
IV. LABOR RELATIONS
1. Key Concept
Despite efforts to revive unions, the power of unions has been declining in developed
countries. The power of unions in most developing countries requires some attention but
is mostly limited.
2. Key Terms
Labor relation is a firm’s relation with organized labor (unions) in both home and
host countries.
V. INSTITUTIONS, RESOURCES AND HUMAN RESOURCE MANAGEMENT
1. Key Concept
HRM is significantly shaped by formal and informal rules of the game—both at home
and abroad. As HRM becomes more strategic, VRIO dimensions are now more
important.
2. Key Terms
None
VI. DEBATES AND EXTENSIONS
1. Key Concept
Leading debates consist of (1) best fit versus best practice and (2) expatriation versus
inpatriation.
2. Key Terms
Inpatriation is relocating employees of a foreign subsidiary to the MNE’s
headquarters for the purposes of filling skill shortages at headquarters and
developing a global mindset for such inpatriates.
VII. MANAGEMENT SAVVY
1. Key Concept
HR managers need to have the four Cs: being curious, competent, courageous, and
caring about people. Non-HR managers need to proactively develop an international
career mindset.
2. Key Terms
None
