Chapter 9 Homework Exhibit 97 See Slide 928 Shows Various

Chapter 9

STAFFING, TRAINING, and COMPENSATION for

GLOBAL OPERATION

LECTURE OUTLINE

General Outline

Opening Profile: Staffing Company Operations in Emerging Markets

The Role of IHRM in Global Strategy Implementation

Staffing for Global Operations

Under the Lens: Tata’s Staffing Challenges in the United States

Managing Expatriates

Global Team Performance Management

Expatriate Training and Development

Cross-Cultural Training

Training Techniques

Compensating Expatriates

Training and Compensating Host-Country Nationals

Training HCNs

Management in Action: Success! Starbucks’ Java Style Helps to Recruit, Train,

and Retain Local Managers in Beijing

Chapter Learning Objectives

9-1. To understand the strategic importance to the firm of the IHRM function and

its various responsibilities.

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careful selection, training, and compensation.

9-4. To discuss the role of host country managers and the need for their training

and appropriate compensation packages

.

Opening Profile: Staffing Company Operations in Emerging Markets (see slide 9-4)

The opening profile describes the challenges involved in recruiting and retaining suitable

1. Brand: that is, a global “name brand” known for its excellence and with a distinctive

competence in a particular area, for example technology, in which new recruits would

have confidence in their future.

2. Purpose: that is, a company that is breaking into new markets with new models and

strategy, giving new employees a chance to be part of something meaningful.

I. Major Challenges in IHRM (see slides 9-8)

A vital component of implementing global strategy is international human resource

management (IHRM). Executives questioned about the major challenges the HR

function faces in the global arena cited:

1) Enhancing global business strategy;

2) aligning HR issues with business strategy;

IHRM is therefore increasingly being recognized as a major determinant of

success or failure in international business.

II. Chapter Learning Goals (see slides 9-9)

A. Alternate philosophies of managerial staffing abroad are known as the

ethnocentric, polycentric, regiocentric, and global approaches. (see slide 9-10)

1. Firms using the ethnocentric approach fill key managerial positions with

persons from headquarters. They use PCNs—parent company nationals. Using

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2. With a polycentric staffing policy, local managers (HCNs—host country

nationals) are hired to fill key positions in their own company. This approach

3. In the global staffing approach (see slide 9-11), the best managers are

recruited from within or outside of the company, regardless of nationality—a

practice used for some time by many European multinationals. This policy

provides a greater pool of applicants to choose from. Third country nationals

Under the Lens: Tata’s Staffing Challenges in the United States

Tata Consultancy Services (TCS) provides IT services, business solutions, and

outsourcing around the world. The Indian company, which sends thousands of employees

abroad to work in client locations, is part of the Tata Group—one of India’s largest

industrial conglomerates—and operates in 43 countries. Over half of TCS’s revenue is

from North America, with about 16,000 employees. TCS was anxious to compete for the

estimated $52 billion in U.S. federal contracts. In 2011, TCS had 450 employees in Ohio,

nearly all American, partly because of the difficulty of getting visas for Indians, and the

company had plans to hire a further 500 plus, adding to its 215,000 strong global

workforce. Factors affecting TCS’s staffing practices in the United States include the

Ohio government’s ban in September 2010 of the outsourcing of government contracts to

overseas operations, a protectionist move that sent a chill through the Indian outsourcing

industry.

6. Among the factors influencing the choices of staffing policy are the strategy

and organizational structure of the firm, as well as the factors related to the

particular subsidiary (such as the duration of the particular foreign operation,

13)

7. The initial phase of setting up criteria for global selection, then, is to consider

which overall staffing approach or approaches would most likely support the

8. Most MNCs (see slide 9-14) tend to start their operations in a particular

region by selecting primarily from their own pool of managers. Over time, and

with increasing internationalization, they tend to move to a predominantly

III. Managing Expatriates

A. A 2014 survey concluded that only 22 percent of respondents had a formal

career management process in place HR. managers are unaware that

expatriates are unhappy until they lose them to another company.

B. Expatriate selection

1. Research by Mansour Javidan points to three major global mind-set attributes

that successful expatriates possess: (see slide 9-15)

– Intellectual capital, or knowledge, skills, understanding, and cognitive

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customers.

2. The selection of personnel for overseas assignments is a complex process. (see

slides 9-16 & 9-17). The criteria for selection are based on the same success

factors as in the domestic setting, but additional criteria must be considered

related to the specific circumstances of each international position. There are

five expatriate success factors: 1) job factors; 2) relational dimensions, such as

cultural empathy and flexibility; 3) motivational state; 4) family situation; and

5) language skills. The relative importance of each factor is highly situational

and difficult to establish.

3. The need to ascertain whether potential expatriates have the necessary cross

cultural awareness and interpersonal skills is too often overlooked. (see slide

9-18). In one study, the results found that the greatest predictive value of

success in an overseas assignment was in the expatriate characteristics of

stress tolerance and extraversion.

C. Expatriation Performance Management (see slides 9-19 & 9-20)

When staffing overseas assignments with expatriates, many other reasons, besides

poor selection, contribute to expatriate failure among U.S. multinationals. A large

The following is a synthesis of the factors frequently mentioned by researchers

and firms as the major causes of expatriate failure:

• Selection based on headquarters criteria rather than assignment needs

• Inadequate preparation training and orientation for the assignment

• Alienation or lack of support from headquarters

Under the Lens: Tales from Trailing Husbands

Stay-at-home men who accompany their wives on overseas postings are looking for

support, Spouses Trailing Under Duress Successfully is an expatriate network-cum-social

Comparative Management in Focus: Expatriate Performance Management Practices:

Samples from Five Countries (see slide 9-21)

Shih et al. conducted a study in which they interviewed expatriates and human

resource professionals in global information technology companies headquartered in five

countries. Shih et al. found that companies used standardized forms from headquarters

D. Global Team Performance Management (see slide 9-22)

Expatriate performance often includes teamwork with team members in various

countries cultures, and time zones, conducted through teleconferencing,

Skyping, and social media, but also personally. Care must go into the selection

of those who comprise the team.

IV. Expatriate Training and Development (see slides 9–23)

A Global Relocation Trends Survey revealed that attrition rates are more than double

The demands on expatriate managers have always been as much a result of the

multiple relationships that they have to maintain as they are of the differences in the

host-country environment. Those relations include family relations, internal relations

with people in the corporation, both locally and globally, especially with

headquarters, external relations (suppliers, distributors, allies, customers, local

community, etc.), and relations with the host government. It is important to pinpoint

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The model shown in Exhibit 9-6 shows how the IHRM process (see slide 9-24) can

be used to improve the effectiveness of the expatriate assignment.

A. Cross-cultural training

The actual process of cross-cultural training should result in the expatriate

learning both the content and skills that will improve interactions by reducing

misunderstandings and inappropriate behaviors.

1. Culture shock, (see slide 9-25 & 9-26) a state of disorientation and anxiety

about not knowing how to behave in an unfamiliar culture, is caused by the

B. Training techniques

Many training techniques are available to assist overseas assignees in the

adjustment process. These techniques are classified by Tung as: (1) area studies,

that is, documentary programs about the country’s geography, economics,

sociopolitical history, and so forth; (2) culture assimilators, which expose trainees

to the kinds of situations they are likely to encounter that are critical to successful

interactions; (3) language training; (4) sensitivity training; and (5) field

experiences—exposure to people from other cultures within the trainee’s own

country.

C. Integrating Training with Global Orientation (see slides 9-29, 9-30)

It is important to remember that training programs, like staffing approaches, are

designed with the company’s strategy in mind. Exhibit 9-8 suggests levels of rigor

and types of training content appropriate for the firm’s managers, as well as those

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for host country nationals, for four globalization stages: 1) export, 2)

multidomestic, 3) multinational, and 4) global.

There is a particular need to anticipate potential problems with the interaction of

expatriates and local staff. Exhibit 9-9 (see slides 9-31 & 9-32) shows a number

of behaviors that helped expatriates integrate as well as some that were

hindrances.

V. Compensating Expatriates (see slide 9-33)

The significance of an appropriate compensation and benefits package to attract,

retain, and motivate international employees cannot be overemphasized. There must

The ability to design and maintain an appropriate package is more complex than it

would seem because of the need to consider and reconcile parent and host country

financial, legal, and customary practices.

To assure that expatriates do not lose out through their overseas assignment, the

balance sheet approach is often used to equalize the standard of living between the

host country and the home country and to add some compensation for the

inconvenience or qualitative loss.

In fairness, the MNC is obliged to make up additional costs the expatriate would

incur for taxes, housing, and goods and services. The tax differential is complex and

VI. Training Host Country Nationals (see slide 9-36)

Management in Action: Success! Starbucks’ Java Style Helps Recruit, Train, and

Retain Local Managers in Beijing (see slides 9-37 & 9-38)

Starbucks is no stranger to training leaders from around the world into the Starbucks

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style. As of June 2015, Starbucks has 22,519 both store-owned and licensed locations in

66 countries, In addition to converting a nation of tea drinkers into coffee lovers,

Starbucks had to deal with the problem of recruiting, motivating, and retaining managers

for its Beijing outlets. Starbucks sends management trainees to Seattle, Washington for

A. Training HCNs

As part of long term staffing policies for subsidiaries, the ongoing development of

HCNs will facilitate the transition to an indigenization policy. Training for HCNs

by foreign companies operating in the United States can be quite surprising for

managers operating in their own country when they have to learn new ways.

medium-sized enterprises (SMEs) to adopt such knowledge-creating capabilities.

B. Training Priorities for E-Business Development

• How to develop a business plan and an e-business strategy

• How to develop the partnerships and in-house expertise for e-business

• How to finance e-business initiatives

C. Compensating Host Country Nationals (see slide 9-39)

Firms adjust pay according to market conditions and design methods for job

grading and incentive plans. Many variables apply— including local market

factors and pay scales, government involvement in benefits, the role of unions, the

cost of living, and so on. To be competitive, MNCs can focus on providing goods

and services that are either not available at all or are extremely expensive.

In Japan, in response to a decade-long economic slump, companies are

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retirement fund decisions

Conclusion (see slide 40)

Internet Resources

Chapter Discussion Questions

9-1. What are the major alternative staffing approaches for international

operations? Explain the relative advantages of each and the conditions under

which you would choose one approach over another.

Learning Objective: 2;AACSB: Analytic skills

The ethnocentric approach of filling key managerial positions with persons from

headquarters is appropriate where the company has an inadequate supply of managers

on the local level of international operations. The ethnocentric approach is preferable

where headquarter control is important, and where a high level of technical capability

. 9-2. Why is the HRM role so much more complex, and important, in the

international context?

Learning Objective: 1;AACSB: Dynamics of the global economy

Poor IHRM management has been shown by research to be a major determinant of

success or failure in international business. Because the human resource

are only marginally successful.

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9-3. Discuss the challenges involved in staffing operations in emerging markets.

Learning Objective: 2;AACSB: Dynamics of the global economy

Emerging economies such as Brazil, Russia, India, and China have been developing

so rapidly and have so attracted increasing overseas investment that they have

outpaced the supply of suitable mid- and upper-level managers in their own markets.

9-4. Explain the common causes of expatriate failure. What are the major success

factors for expatriate assignees? Explain the role and importance of each.

Learning Objective: 3;AACSB: Multicultural and diversity understanding

Expatriate failure is most frequently linked to the following causes: selection based

on headquarters criteria rather than assignment needs; inadequate preparation and

training; alienation from headquarters; inability to adapt to local cultures; problems

9-5. What are the common training techniques for managers going overseas? How

should these vary as appropriate to the level of globalization of the firm?

Learning Objective: 3; AACSB: Multicultural and diversity understanding

Three critical areas of training include cultural training, language instruction, and

familiarity with everyday, practical matters. Tung specifies training in 1) area

9-6. Explain the balance sheet approach to international compensation packages.

Why is this approach so important? Discuss the pros and cons of aligning the

expatriate compensation package with the host-country colleagues compared to

the home-country colleagues.

Learning Objective: 4; AACSB: Analytic skills

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Although pay equity and perceived fairness may be advantages of aligning

expatriate compensation to local standards, the difficulty of finding qualified people

for foreign assignments and their happiness in the assignment may argue against

such an approach.

 9-7. Discuss the importance of a complete program for expatriate performance

management. What are the typical components for such a program?

Learning Objective: 3;AACSB: Analytic skills

Although proper selection and training are very important to a successful expatriate

Application Exercises

9-8. Make a list of the reasons you would want to accept a foreign assignment and a

list of reasons you would want to reject it. Do they depend on the location?

Compare your list with a classmate and discuss your reasons.

Learning Objective: 1;AACSB: Analytic skills

The reasons students will give for accepting or rejecting a foreign assignment will

vary. There may be personal and family reasons for not selecting any foreign

9-9. Research a company with operations in several countries and ascertain the

staffing policy used for those countries. Find out what kinds of training and

preparation are provided for expatriates and what kinds of results the

company is experiencing with expatriate training.

Learning Objective: 1;AACSB: Multicultural and diversity understanding

This exercise may be difficult for students in the fact that the material isn’t always

Experiential Exercise

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9-10. Write a letter to Ian, telling him what to expect both on the job and in

the community. Tell him about some of the cross-cultural conflicts he

may run into with his coworkers and employees and how he should

handle them.

Learning Objective: 1;AACSB: Multicultural and diversity understanding

In this situation, the adjustment of Ian’s family may be difficult. The fact that his

wife wishes to work in Brazil and they have two teenage children may produce

9-11. Set up some arrangements and support systems for the family and

design a support package for them, with a letter to each family member

telling him or her what to expect.

Learning Objective: 3;AACSB: Multicultural and diversity understanding

End-of-Chapter Case Study: Kelly’s Assignment in Japan

9-12. Explain the clashes in culture, customs, and expectations that occurred in this

situation.

Learning Objective: 4;AACSB: Multicultural and diversity understanding

Kelly received no training and knew nothing about Japan. She and her husband

had expectations that he would also be able to find a job in Japan. They moved

9-13. What stage of culture shock is Kelly’s family experiencing?

Learning Objective: 4;AACSB: Multicultural and diversity understanding

Stage two, irritation and hostility.

9-14. Turn back the clock to when Kelly was offered the position in Tokyo. What, if

anything, should have been done differently and by whom?

Learning Objective: 4;AACSB: Multicultural and diversity understanding

At a minimum, Kelly should have been offered training on the culture, history, and

business practices of the Japanese. She should have met with the HR department to

customers.

9-15. You are Kelly. What should you do now?

Learning Objective: 4;AACSB: Multicultural and diversity understanding

Learn from the mistakes she made as a new expatriate. Go back to the office and

spend time observing the employees and learning from someone experienced in

working with the Japanese, and learn how they operate in their business

Web Exercise

What are some of the pitfalls of relocating to work abroad? The obvious ones are not

knowing the language or culture, which are well documented in the text. What are some