CHAPTER 10
DEVELOPING A GLOBAL MANAGEMENT CADRE
LECTURE OUTLINE
General Outline
Opening Profile: The Expat Life
The Role of Women in International Management
Management in Action: Women in Management Around the World
Working Within Local Labor Relations Systems
The Impact of Unions on Businesses
Under the Lens: Ford’s Bitter Struggle to Close a Plant in Belgium
Organized Labor around the World
Convergence versus Divergence in Labor Systems
Under the Lens: Vietnam: The Union Role in Achieving Manufacturing Sustainability
and Global Competitiveness
Chapter Learning Objectives
10-1. To appreciate the importance of international assignments in developing top
managers with global experience and perspectives
10-2. To recognize the need to design programs for the careful preparation,
adaptation, and repatriation of the expatriate and any accompanying family,
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10-3. To become familiar with the use of global management teams to
coordinate host country and cross-border business
Opening Profile: The Expat Life and Chapter Learning Goals (see slides 10-4, 10-5,
&10-6)
What is it like to take an assignment abroad? Is it an adventure or a hardship?
Experiences vary by job type, and especially by location. In many circumstances the
adventure, which started out with many concerns, turns out to be one that the expats and
their families do not want to end. The opening segment discusses life as an Expat and
Assignments in some locations can turn out to be more challenging. One
example is that of Mr. Deffontaines, who moved to Yemen in 2008 as the local manager
for Total, the French oil giant, along with his family. Since then, Mr. Deffontaines has
seen his main export pipeline damaged by terrorists, endured devastating flash floods,
and sent expatriate families back home because of security concerns.
Further advice from a well-travelled expat comes from Philip Shearer, Group
President, Clinique, Estee Lauder. His mother was French, his father British, and he was
A crucial factor in global competitiveness is the ability of the firm to maximize long term
its global human resources. To do this, attention must be paid to several important areas
(see slide 10-7):
• To maximize long-term retention and use of international cadre through career
management so that the company can develop a top management team with global
experience
• To develop effective global management teams
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I. Chapter Learning Goals and Expatriate Career Management (see slides 10-8 & 10-9)
A. Preparation, Adaptation, and Repatriation (see slide 10-10)
For the firm, the ability to develop a top management team, globally experienced,
depends largely on the success of expatriates’ assignments—and that depends on the
ability to well manage the transitions for the expatriate and any accompanying
family members. The importance of this was determined by the 2011 Global
Relocation Trends survey that found that “only 22% of respondents had formal
career-management processes for international assignees and 18% of respondents
had a formal candidate pool for international assignments.”
1. Effective human resources management of a company’s international cadre does
not end with the overseas assignment. It ends with the successful repatriation of
the executive into company headquarters. A study by Heidrick and Struggles
revealed that international experience has become much more important to get to
2. Reverse culture shock occurs primarily because of difficulty of reintegration
into the organization, but also, the longer a person is away, the more difficult
it is to get back into the swing of things.
3. For companies to maximize the long-term use of their global cadre, they
need to make sure that the foreign assignment and the reintegration process are
positive experiences. This means careful career planning, support while
overseas, and the use of the increased experience and skills of returned managers
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B. The Role of Expatriate Spouse (see slide 10-13)
1. Many companies are beginning to recognize the importance of providing
support for spouses and children. Firms often use informal means, such as
2. Research on 321 American expatriate spouses around the world shows that
effective cross-cultural adjustments by spouses is more likely (1) when firms
firms).
C. Expatriate Retention (see slide 10-14)
1. Support services provide timely help for the manager and therefore are part of
the effective management of an overseas assignment. It comprises three phases
of transition and adjustment that must be managed for successful socialization
country.
II. Expatriates: “Handle with Care”? (see slide 10-15)
A. In the international assignment, both the manager and the company benefit from
the enhanced skills and the experience gained by the expatriate. Many returning
executives report an improvement in their managerial skills and self-confidence.
B. In addition to the managerial and cross-cultural skills acquired by expatriates, (see
slide 10-16) the company benefits from the knowledge and experience those
managers gain about how to do business overseas, and what new technology, local
C. Knowledge Transfer
Traditionally, it has been assumed that the role of expatriates is partly to bring
knowledge from the corporate headquarters to subsidiaries; however, it is clear
that there is a potential strategic advantage when expatriates acquiring knowledge
while on international assignment bring it back to the center of the organization or
disseminate it across other subsidiaries.
• Knowledge about what (such as differences in customer preferences)
Under the Lens: Expatriates’ Careers Add to Knowledge Transfer (see slides 10-19)
Developments around the world and in an expatriate’s “original” country can redirect
an expatriate’s career choices in unexpected ways, and at the same time affect the firms
involved. Sometimes those world developments are not particularly positive, causing
unwanted upheaval to the lives of expats and their families. Such has been the case in
Libya. After booming with international businesses taking advantage of the oil-rich
country, the war to overthrow Col. Gaddafi drove out foreign businesses and their
III. Global Management Teams (see slide 10-20)
A. Global management teams are collections of managers from several countries
who must rely upon group collaboration if each member is to experience the
optimum of success and goal achievement. The role of, and importance of,
international teams increase as the firm progresses in its scope of international
Teaching Resource: Welcome Home Stranger—Video presents the problems faced by
expatriate workers upon their return to their home countries. Available from Copeland-
Griggs film distribution.
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and interactions that take place at many boundaries.
C. When a firm responds to its global environment with a global strategy and then
organizes with a networked “global” structure, various types of international
teams are necessary for global integration and local differentiation. These
include headquarters-subsidiary teams and those coordinating alliances outside
the organization. In joint ventures, in particular, multicultural teams work at all
levels of strategic planning and implementation, and on the production and
assembly floor.
Many of these challenges have been noted by virtual team leaders from Alcoa
Company’s operations in 20 diverse countries. (Alcoa is the world leader in the
production of aluminum and has 63,000 employees in 31 countries.) The teams
are called parallel Global Virtual Teams (pGVTs)— teams that operate outside
the formal structure, focusing on innovation and improvement. All their
meetings are conducted electronically through videoconferencing,
teleconferencing, discussion boards, e-mail, instant messaging, knowledge
repositories, and planning and scheduling tools.
E. Managing Transnational Teams (see slide 10-23)
1. The ability to develop effective transnational teams is essential in light of the
increasing proliferation of foreign subsidiaries, joint ventures, and other
transnational alliances.
2. The advantages (see slide 10-24) of synergy include: greater opportunity for
global competition by being able to share experiences, technology, and a pool
3. Important variables in building global teams according to Govindarajan and
Gupta are:
• Cultivating trust among members
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• Overcoming communication barriers
• Aligning goals of individual team members
• Obtaining clarity regarding team objectives
• Ensuring that the team possesses necessary knowledge and skills
What other techniques do managers actually use to deal with the challenge of
achieving cross-cultural collaboration in multinational horizontal projects? (see slide
10-25) A comparative study of European project groups in several countries by Sylvie
Chevrie revealed three main strategies:
• Setting up transnational cultures: Here the managers used the common
professional,
or occupational, culture, such as the engineering profession, to bring the disparate
members together within a common understanding and process.
IV. Chapter Learning Goals (see slide 10-26)
Whether in global management teams, as expatriates, or as host-country
nationals, the importance of women as a valuable, and often-underused resource
Management Focus: The Role of Women in International Management (see slides
10-27, 10-28, &10-29)
Women are making their way into international management, but their numbers and
clout vary around the world.
The 2015 ranking by Fortune magazine of the most
powerful women in business in the United States includes a record 27 CEOs of large
companies: Mary Barra, CEO of General Motors; Indra Nooyi, PepsiCo Chairman and
Japanese women are now employed, including half of Japanese mothers. When Yuko
Suzuki, a Japanese woman, went into business for herself, she found that customers only
pretended to listen to her. She was often asked by potential customers about her boss, so
she hired a man to go along with her on sales calls. Having a man by her side helped
Yuko increase sales.
V. Chapter Learning Goals and Working Within Local Labor Relations Systems (see
slides 10-31 & 10-32)
A. The impact of Unions on Business (see slide 10-33)
1. European businesses are undermined by poor labor relations and inflexible
regulations. Businesses move jobs overseas to cut labor costs, resulting from a
refusal of unions to grant reduction in employment protection or benefit
Non-European firms operating in Europe must consider labor relations.
Under the Lens: Ford’s Bitter Struggle to Close a Plant in Belgium
When Ford announced that it would close its factory in Belgium in 2014, 4,300
employees, 5,000 suppliers, the community, and Ford, paid a high price.
The economic downturn in Europe restricted demand for cars, resulting in the need to
Some change may be on the horizon to provide relief to businesses in Europe
as some unions grant concessions to firms in order to keep their jobs.
2. The term labor relations refer to the process through which managers
and workers determine their workplace relationships. This process may be
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3. The prevailing labor relations system in a country is important to the
international manager because it can constrain the strategic choices and
operational activities of a firm operating there. The three main dimensions
of the labor-management relationship, which the manager will consider are
B. Organized Labor Around the World (see slide 10-34)
1. The percentage of workers in the industrialized world that belong to labor
unions has declined in the last decade, especially in Europe. In the United
States, union membership fell from a 20.1 percent in 1983 to 11.1 percent in
2014. In most countries, a single dominant industrial relations system
applies to almost all workers; but in both Canada and the United States there
are two systems—one for the organized and one for the unorganized.
2. The traditional trade union structures in Western industrialized societies have
been in industrial unions, representing all grades of employees in a specific
3. Industrial labor relations systems across countries can only be understood i
the context of the variables in their environment and the sources of origins of
unions. These include government regulation of unions, economic and
unemployment factors, technological issues, and the influence of religious
organizations. Any of the basic processes or concepts of labor unions,
Teaching Resource: The AFL-CIO is a federation of 78 labor unions representing some
13.6 million working men and women. Through organizing, collective bargaining, and
4. In the industrialized world, tumbling trade barriers are also reducing the
power of trade unions because competitive multinational companies have
more freedom to choose alternative production and sourcing locations. Most
new union workers—about 75 percent—will be in emerging nations, like
China and Mexico, where wages are low and unions are scarce. However, in
some countries, such as India, outmoded labor laws are very restrictive for
5. At Foxconn Technology, for example, which is a major supplier to several
electronics giants such as Hewlett Packard, Apple, and Microsoft, there were
large protests in January 2012 by workers at its Wuhan plant that involved
threats from some workers to commit suicide. The employees were
C. Convergence versus divergence in labor systems
In October 2006 the International Trade Union Confederation (ITUC) was
formed in Vienna, comprising the affiliated organizations of the former ICFTU
(International Confederation of Free Trade Unions) and WCL (World
Confederation of Labor), plus eight other national trade union organizations, to
form a global body. The ITUC is the world’s largest trade union and, as of 2012,
represents 175 million workers through its 308 affiliated organizations in 153
countries and territories. Its objective is to provide “a countervailing force in a
society that has changed enormously, with workers’ rights being flouted under
the pressure created by the current trajectory of ‘race to the bottom’
globalization.”
1. Political changes, external competitive forces, increased open trade, and
frequent moves of MNCs around the world are forces working toward
convergence in labor systems. Convergence occurs as the migration of
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organization and industrial relations practices. It also occurs as harmonization
is sought, such as for the EC countries, and as competitive pressures in free-
trade zones, such as the NAFTA countries, eventually bring about demands for
some equalization of benefits for workers.
2. Other pressures toward convergence of labor relations practices around the
world come from the activities and monitoring of labor conditions worldwide
Under the Lens: Vietnam the Union Role in Achieving Manufacturing Sustainability
and Global Competitiveness (see slide 10-35)
Vietnam’s appearance as a global competitor is comparatively recent. After the North
and South were united in 1975, the country languished for ten years. Finally in 1986, the
Vietnamese government woke up and initiated an overall economic renewal policy,
known as doi moi. Business privatization was encouraged, commerce restrictions came
MODERN INDUSTRIAL PARKS
In visiting Ho Chi Minh City in 2011, the industrial developments look quite modern.
Closest to the city is the Saigon High Tech Park, which is in the early stages of
developing a world-class industrial park. Intel is in the process of a $1 billion investment
on those grounds. A few kilometers further out are the Linh Trung Processing Zone,
Vietnam Singapore Industrial Park, and Song Than Park. Along with Western firms, such
as Siemens and Kimberly Clark, are various apparel and footwear manufacturers owned
by Asian outsourcers. The industrial parks are very similar to Western-style developments
in terms of the grounds, infrastructure, cleanliness, and the spaciousness of the layouts.
WAGES AND HOUSING (see slide 10-36)
The typical factory worker comes from farming provinces in order to earn higher
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oversight and threats to keep factories from being exploitative. Better Work Vietnam is an
NGO sponsored by the World Bank and the International Labor Organization (ILO). It
has been vocal and credible in its reporting. Their most recent report indicates widespread
noncompliance with government overtime standards, as well as health and safety
3. Labor Systems and Adapting to Local Industrial Relations Systems (see slides
10-37 & 10-38)
a. Although there are forces for convergence in labor relations systems
around the world as discussed above, for the most part, MNCs still adapt
their practices to a great extent to the traditions of national industrial
relations systems, and there is considerable pressure to do so. Those
4. NAFTA and Labor Relations in Mexico (see 10-39)
a. About 40 percent of the total work force in Mexico is unionized, with
about 80 percent of workers in industrial organizations which employ over
25 workers, unionized. However, government control over union activities
is very strong, and although there are some strikes, union control over
Mexico to break up independent unions.
Comparative Management in Focus: Labor Relations in Germany (see slide 10-40)
It is noteworthy that the German economy has done very well over the last couple of
years— while the rest of Europe staggered—leading Angel Gurría, the O.E.C.D.’s
secretary general, to say in a speech in Berlin in February 2012 that Germany’s “growth
model has been so successful in navigating through the stormy waters of the crisis.”
Germany’s codetermination law (mitbestimmung)—which refers to the participation of
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restructuring, and the expansion of the service sector. That pressure is increasingly taking
the form of concession bargaining to keep jobs at home. Still, some companies—tired of
restrictions on their strategic decisions and necessary job cuts—are side- stepping those
restrictions by registering as public limited companies in the United Kingdom.
Under pressure from global competition, German unions have incurred huge membership
Foreign companies recognize the high labor costs of Germany, including the cost of
terminating an employee. Companies can incur costs that include severance pay,
retraining costs, costs to find another job, and other termination expenses.
Conflicting opinions over the value of codetermination are increasingly evident, as
business practices become increasingly subject to EU policies. A major concern was that
firms from other countries, considering cross-border mergers, would be discouraged by
the EU statute that would oblige them to incorporate codetermination if the new company
includes significant German interests.
Conclusion (see slide 10-41)
Internet Resources
Chapter Discussion Questions
10-1. What steps can the company’s IHRM department take to maximize the
effectiveness of the expatriate’s assignment and the long-term benefit to the
company?
Learning Objective: 1; AASCB: Analytic skills
Companies benefit from the knowledge and experience expatriate managers gain
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10-2. Discuss the role of reverse culture shock in the repatriation process. What can
companies do to avoid this problem? What kinds of skills do managers learn
from a foreign assignment, and how can the company benefit from them?
What is the role of repatriation in the company’s global competitive situation?
Learning Objective: 2; AASCB: Multicultural and diversity understanding
Management of the reentry phase of the career cycle is as vital as management of
the cross-cultural entry and training. Many expatriates and their families have a
difficult time readjusting to their old culture and its different behavioral
10-3. What are the reasons for the small numbers of female expatriates? What more
can companies do to use women as a resource for international management?
Learning Objective: 4; AASCB: Ethical understanding and reasoning abilities
Acceptable norms for the professional role of women in most other cultures greatly
restrict the number of job opportunities available to them. In addition, women are
expected to closely adapt themselves to the cultural norms for women that exist in
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10-4. What is a virtual global management team? How do the members interact?
Discuss the advantages and the challenges faced by these teams. Suggest some
ways to maximize the effectiveness of virtual teams across borders.
Learning Objective: 3; AASCB: Use of information technology
Virtual teams use computer mediated communication systems to interact, linking
them together across time, space, and organizational boundaries. The advantages of
10-5. Discuss the reasons behind the growing convergence and interdependence of
labor unions around the world.
Learning Objective: 5; AASCB: Dynamics of the global economy
The refrain of the communist movement “workers of the world unite” has never
Application Exercise
10-6. Interview one or more managers who have held positions overseas. Try to find
a man and a woman. Ask them about their experiences both in the working
environment and in the foreign country generally. How did they and their
families adapt? How did they find the stage of reentry to headquarters, and
what were the effects of the assignment on their career progression? What
differences do you notice, if any, between the experiences of the male and the
female expatriates?
Learning Objective: 2; AASCB: Multicultural and diversity understanding
The detailed material in the chapter can help students plan this exercise. Before
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Experiential Exercise
Form groups of six students, divided into two teams, one rep- resenting union
members from a German company and the other representing union members from
a Mexican company. These companies have recently merged in a joint venture, with
the subsidiary to be located in Mexico. These union workers, all line supervisors,
will be working together in Mexico. You are to negotiate six major points of
agreement regarding union representation, bargaining rights, and worker
participation in management, as discussed in this chapter. Present your findings to
the other groups in the class and discuss. (It may help to read the Comparative
Management in Focus: Motivation in Mexico feature in Chapter 11)
This exercise is intended to highlight the difference found between German and Mexican
End-of-Chapter Case Study: Expatriate Management at AstraZeneca
10-7. Critically analyze AstraZeneca’s expatriate management practices.
Learning Objective: 2; AASCB: Multicultural and diversity understanding
AZ has a very effective method for preparing expats for their assignments – they
select the candidates carefully and give them training and support – which are
10-8. Surveys show that most expats report feeling the strain of managing the
demands of work and home while adjusting to the foreign environment,
leading to more anxieties at home and at the workplace. What steps can an
organization take to mitigate this?
Learning Objective: 1; AASCB: Analytic skills
Organizations can take a lesson from AZ: Once on assignment, expats stay in touch
10-9. What decisions related to expatriates can organizations take to maximize the
benefits to the company despite the economic downturn? Do you think a
company that paid more careful attention to selection could further boost its
chances of success?
Learning Objective: 1; AASCB: Dynamics of the global economy
Organizations should learn from the experiences of AZ: first, there should be a
compelling business reason for sending the expat abroad and there should be
Web Exercise
Do a search for “global management teams”. Compare the services offered by the
consulting firms that are profiled. How do they compare with the background provided in
the text under “Global Management Teams” as far as meeting the needs of a truly global
company? What are the resources these consultants bring to the table? Would you choose
to hire a consultant or develop your own in-house IHRM team to work with your
expatriates?