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B. Selecting Expatriates
Recruiting and selecting employees for an international business requires that the HR
manager address two sets of questions. The first step is to define the actual skills necessary to
After a pool of qualified applicants has been identified, the organization must then select the
managers that it needs for international assignments. In general, organizations look at three
sets of criteria for selecting people for international assignments: managerial competence,
language training, and adaptability to new situations. The cost of a failed expatriate
assignment is extremely high. Experts suggest that a failed expatriate assignment for a top
manager might cost the organization as much as $250,000 in addition to any salary losses.
Failure of expatriate assignments is quite high.
C. Training Expatriates
Training is instruction directed at enhancing specific job-related skills and abilities and most
often focuses on operating employees and technical specialists. Development is general
education devoted to preparing future managers for higher-level positions or new
assignments.
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exchanges.
D. Compensating Expatriates
When managers are on short-term assignment at a foreign location, their salaries are often tied
to their domestic currency and home-country living standards. Of course, these managers are
reimbursed for short-term living expenses such as the cost of hotel rooms, meals, and local
transportation. If the foreign assignment is for a longer time, however, compensation is
usually adjusted to allow the manager to maintain her or his home-country standard of living.
Many international businesses also find that they must set up a tax-equalization system for
their managers on foreign assignments. This system ensures the expatriates’ after-tax income
in the host country is comparable to what the after-tax income would have been in the
person’s home country. The other part of compensation besides salary is benefits. Special
benefits for managers on foreign assignments may include housing, education, medical
treatment, travel to the home country, and club membership. Firms also find it increasingly
necessary to provide job location assistance for the spouse of an executive being transferred
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E. Repatriation
The final step in managing the human resources of global business involves bringing the
expatriate manager home. This issue may seem quite simple, but it is much more involved
VI. International Labor Relations
Labor relations are the processes of dealing with employees who are organized into labor unions.
Labor relations are also heavily regulated by law and the actions of management toward labor
and the actions of labor toward management are heavily restricted. In many countries throughout
Closing Case: Schlumberger’s Innovative HR Strategy
Case Summary
Schlumberger is one of the world’s largest oil field services companies. The firm offers a
complete range of oil and gas services, including engineering, construction, and project
management. But while the firm has little trouble finding oil these days, attracting and keeping
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Case Questions
1. What are the advantages and disadvantages of Schlumberger’s approach to international
human resource management?
Students’ answers might vary. A major advantage to this approach is that the firm attempts
2. Under what circumstances, if any, might Schlumberger find it necessary to change its
international staffing strategy?
Students’ answers might vary. Schlumberger might change its international staffing
3. Based on the information in this case, would you like to work for Schlumberger? Why or
why not?
Students’ answers might vary. Some students may choose to work for Schlumberger as it
has no discrimination in choosing the right candidate for the right position in the right
The following items appear on the in-text Instructor Prep Cards. These notes and
suggested talking points should help instructors conduct these exercises with the students.
Discussion Questions
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1. Summarize recent growth and trends in international business.
Prior to the 1970s, the United States was the dominant force in the world economy (as a
result of World War II and its devastation in Europe and Japan). In the 1970s and 1980s,
2. What are the basic international business strategies that firms can pursue?
Firms can pursue one of several basic options: exporting, licensing, direct investment, joint
venture, or strategic alliance. Exporting is the process of making a product in the firm’s
3. What are the basic human resource management (HRM) functions in international
business?
The basic human resource functions in international business are much the same as in
domestic business, but with more complex issues underlying the design of human resource
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environments when adapting human resource activities to these environments.
4. What are the basic HRM issues to be addressed by an international business?
General human resource issues include:
• Customizing of hiring, firing, training, and compensation programs on a country-
5. What are the basic domestic issues in international HRM for the firm in its home country?
The basic domestic issues include local recruiting and selection issues, local training
issues, and local compensation issues.
• An international business must develop and implement a plan for recruiting and
6. What are the HRM implications of each strategy for international business?
For firms following an exporting strategy, no meaningful differences in human resource
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7. What do you see as the basic similarities and differences in the HR function between
domestic and international businesses?
The basic human resource management functions in domestic and international businesses
are quite similar. Human resource managers in both settings are responsible for the
recruiting, hiring, promoting, firing, compensating, and appraising of the company’s
8. Which do you think is more critical for international HRM: understanding the cultural
environment or understanding the political and legal environment?
Students’ answers will vary. In reality, understanding both the cultural environment and
the political and legal environment are critical for successful human resource management
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9. When a basic incongruence exists in the ethical context of human resource management
between the foreign-country environment and a firm’s home-country environment, which
do you think should take precedence, the foreign-country environment or the firm’s home–
country environment?
Students’ answers will vary. Beliefs about what is ethical are context specific, meaning that
what one country’s inhabitants may deem ethical behavior may be viewed as completely
context over another is probably best handled on a case-by-case basis.
10. Would you be interested in an international assignment as part of your employer’s
management development strategy? Why or why not? What factors would be most
important to you in making such a decision?
Students’ answers will vary according to the students’ individual preferences. Factors that
may affect an individual’s decision to accept an overseas assignment may include degree
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Ethical Dilemmas in HR Management
Scenario summary
Students are asked to assume that they serve as a senior human resource executive for a large
multinational firm with individual plants in Malaysia, Thailand, and Pakistan and with suppliers
in Asia. A new CEO has been hired who is an advocate for rights of foreign workers, staking his
personal reputation on the ethical and humane treatment of the company’s and suppliers’
employees.
Questions
1. What are the ethical issues in this situation?
Students’ answers will vary. Ethical issues include whether:
• Foreign employees are indeed being unfairly treated.
2. What are the arguments for and against following your CEO’s suggested approach?
Students’ answers will vary. Some examples follow.
For:
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3. What do you think most managers would do? What would you do?
Students’ answers will vary. Managers may do a variety of things, depending on their
Assignment
Purpose: The purpose of this exercise is to provide students with some critical insights into
complexities associated with international human resource management.
Step 1 (5 to 10 minutes): Instructor will divide the class into small groups of four to five
members. Students are to begin by reading and discussing the context description that follows.
Students are to assume that their group is the HRM executive team of a large electronics firm.
Step 2 (20 to 30 minutes): The group’s boss has asked them to develop a staffing plan for the
new plant. She wants to know where each type of employee should come from, when they
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Step 3 (time will vary): Groups should report the results of their groups’ deliberations to the