Chapter 19 ‒ Global Human Resource Management
Global Human Resource Management
Learning Objectives
• LO19-1: Summarize the strategic
role of human resource
management in international
business.
• LO19-2: Identify the pros and
cons of different approaches to
staffing policy in international
business.
• LO19-3: Explain why managers
may fail to thrive in foreign
postings.
• LO19-4: Recognize how
management development and
training programs can increase the
value of human capital in the
international business firm.
Human resource management is a key element
to the competitiveness of international firms.
HRM refers to those activities undertaken by an
organization to effectively apply its human
resources. These activities include human
resource strategy, staffing, performance
evaluation, management development,
compensation, and labor relations.
Firm success requires that HRM policies are
congruent with strategy and with formal and
informal structure and controls. Strategies like
“think globally and act locally” sound good, but
their implementation requires effective HRM
policies.
The opening case explores the evolution of
Kraft Heinz, one of the largest food and
beverage companies in the world. With 200
brands sold across 200 countries and territories,
Kraft Heinz has a very large global workforce,
one that seems to currently be going through
19
Chapter 19 ‒ Global Human Resource Management
OUTLINE OF CHAPTER 19: GLOBAL HUMAN RESOURCE
MANAGEMENT
Opening Case: Evolution of the Kraft Heinz Company
Introduction
Strategic Role of Global HRM: Managing a Global Workforce
Staffing Policy
Types of Staffing Policies
Expatriate Managers
Management Focus: AstraZeneca and Global Staffing Policy
Global Mindset
Training and Management Development
Training for Expatriate Managers
Repatriation of Expatriates
Management Focus: Monsanto’s Repatriation Program
Management Development and Strategy
Performance Appraisal
Performance Appraisal Problems
Guidelines for Performance Appraisal
Chapter 19 ‒ Global Human Resource Management
CLASSROOM DISCUSSION POINT
Try to invite a couple of managers who have had experience working in foreign markets
to be guest speakers. Ask them to discuss why they were selected for the assignment and
about the training they may have received prior to their foreign assignments. Then, ask
them about their experiences in the foreign country—what they found especially
challenging, what surprised them most, what differences they encountered between their
domestic way of doing business and the way of business in the foreign market, and so on.
Then, ask them what else their companies could have done, if anything, to make their
transition to the foreign market easier.
OPENING CASE: Evolution of the Kraft Heinz Company
Summary
The opening case explores the evolution of the Kraft Heinz Company. With more than
200 brands sold across 200 countries and territories, Kraft Heinz is one of the largest food
and beverage companies in North America and the fifth largest in the world. Kraft Heinz
traces its roots to 1869 when Heinz was founded. Now, many mergers and acquisitions
later, including a merger with Kraft in 2015, and a failed hostile takeover of Unilever in
2017, Kraft Heinz is a $26 billion conglomerate. Discussion of the case can begin with
the following questions:
QUESTION 1: Kraft Heinz’s management team is dominated with people from 3G
Capital rather than individuals from the food and beverage industry. Can they properly
manage one of the biggest food and beverage companies in the world?
ANSWER 1: Like those on Wall Street, many students will have a hard time seeing how
the current management team at Kraft Heinz can be successful. Students are likely to be
concerned not only about the lack of industry knowledge of the current team, but also the
QUESTION 2: Kraft Heinz has grown through a series of mergers and acquisitions. Can
a company that merges with another large company successfully merge corporate
cultures? Discuss.
ANSWER 2: The most recent iteration of Kraft Heinz involved the merger of two large
companies each with their own way of doing things. Students should recognize that the
Chapter 19 ‒ Global Human Resource Management
corporate cultures of the two companies were probably very different, and that merging
them will have its challenges. Under the terms of the merger, the once independent Kraft
QUESTION 3: Kraft Heinz currently sells its products in 200 countries and territories.
Discuss the human resources challenges this wide reach presents. How can Kraft Heinz
develop managers to lead the company across its many brands and markets?
ANSWER 3: Kraft Heinz is a food and beverage company. Some of its brands are sold
around the world, while others are more market specific. Students should recognize that
unlike products like laptops and cell phones, for example, food products can be very
localized. Most students, therefore, will agree that for Kraft Heinz, two areas are very
important, industry knowledge and country/market knowledge. Students may recommend
LECTURE OUTLINE
This lecture outline follows the Power Point Presentation (PPT) provided along with this
instructor’s manual. The following provides a brief overview of each Power Point slide
along with teaching tips and additional perspectives.
Slide 19-3 Introduction
Human resource management (HRM) refers to the activities an organization carries
out to utilize its human resources effectively.
The major tasks of HRM are:
• Human resource strategy
Chapter 19 ‒ Global Human Resource Management
• Staffing
o Expatriate managers
• Management development
• Performance evaluation
• Compensation policy
• Labor relations
Types of Staffing Policies
Three staffing policy choices at the international level are: ethnocentric, polycentric, and
geocentric.
1. The ethnocentric staffing policy fills key management positions with parent-
country nationals.
2. The polycentric staffing policy recruits host country nationals to manage
subsidiaries in their own country, and parent country nationals for positions at
headquarters.
3. The geocentric staffing policy seeks the best people, regardless of nationality, for
key jobs.
CONNECT
Click and Drag
Global Staffing Policies
Summary
This activity explores international human resource management and specifically the staffing
policies used by international businesses. Firms doing business internationally generally choose
from one of three staffing policies: ethnocentric, polycentric, or geocentric.
Chapter 19 ‒ Global Human Resource Management
Expatriate Managers
Expatriate failure is the premature return of an expatriate manager to his or her home
country. Expatriate failures impact the company, as do near-failures.
Four dimensions that predict expatriate success are:
• Self-orientation: expatriate’s self-esteem, self-confidence, and mental well-being
• Others-orientation: the ability to interact effectively with host-country nationals
• Perceptual ability: the ability to understand why people of other countries behave
the way they do
• Cultural toughness: the ability to adjust to the posting
CONNECT
Click and Drag
Preventing Expatriate Failure
Summary
This activity explores international human resources management and specifically how to prevent
expatriate failure. The failure of an expatriate to successfully complete a foreign assignment can
be very costly to an international business.
Global Mindset
A global mindset may be the fundamental attribute of a global manager.
Slides 19-16 – 19-20 Training and Management Development
Training focuses upon preparing the manager for a specific job.
Management development is concerned with developing the skills of the manager over
his or her career with the firm.
Chapter 19 ‒ Global Human Resource Management
Training for Expatriate Managers
Cultural training (seeks to foster an appreciation for the host country’s culture), language
training (an exclusive reliance on English diminishes an expatriate manager’s ability to
interact with host country nationals), and practical training (helps the expatriate manager
and her family ease themselves into day-to-day life in the host country), all help reduce
expatriate failure.
CONNECT
Click and Drag
Training for Expatriate Managers
Summary
This activity explores international human resource management as it pertains to expatriate
training. Training programs to help expatriates prepare for their international assignments can
have a significant effect on the success of the assignment.
Repatriation of Expatriates
HRM needs to develop good programs for re-integrating expatriates back into work life
within their home country organization once their foreign assignments are over and for
utilizing the knowledge they acquired while abroad.
The benefits from foreign assignments can be lost by firms if they are not careful in the
repatriation of the expatriates.
Management Development and Strategy
Management development is often used as a strategic tool to build a strong unifying
culture and informal management network, both of which are supportive of a
transnational and global strategy.
Chapter 19 ‒ Global Human Resource Management
Slide 19-21 – 19-22 Performance Appraisal
Evaluating expatriates can be especially complex.
Performance Appraisal Problems
Typically, both host nation managers and home office managers evaluate the
performance of expatriate managers. Both types of managers are subject to unintentional
bias.
Guidelines for Performance Appraisal
Firms need to seek ways to reduce bias in performance appraisals.
National Differences in Compensation
U.S. CEOs earn about twice the pay of non-U.S. CEOs.
Expatriate Pay
An expatriate’s compensation package is made up of:
1. Base salary
2. Foreign service premium
Slides 19-28 – 19-31 Building a Diverse Global Workforce
Building a diverse global workforce can give a company a competitive advantage.
CONNECT
Case Analysis
AstraZeneca
Chapter 19 ‒ Global Human Resource Management
19-9
Class Discussion
Living and working in a foreign country contributes to the development of managers. Discuss the
benefits that this type of experience can provide to a manager. How has AstraZeneca benefitted
from its international human resources strategy?
Slides 19-32 – 19-34 International Labor Relations
The key issue in international labor relations is the degree to which organized labor is
able to limit the choices available to an international business.
The Concerns of Organized Labor
The bargaining power of unions comes from their ability to threaten to disrupt production
by striking or protesting.
The Strategy of Organized Labor
Organized labor has responded to the increased bargaining power of multinational
corporations by:
• Setting-up their own international organizations
• Lobbying for national legislation to restrict multinationals
• Trying to achieve regulation of multinationals through international organization
such as the United Nations
However, none of those efforts has been very successful.
Chapter 19 ‒ Global Human Resource Management
CONNECT
Click and Drag
International Labor Relations
Summary
This activity explores international human resource management with a focus on labor relations.
Managing the potential conflicts between labor and management has significant implications for
the effectiveness of an international business strategy.
Activity
Students are asked to match issues related to international labor relations—whether they reflect
the perspective of the union or management.
CRITICAL THINKING AND DISCUSSION QUESTIONS
QUESTION 1: What are the main advantages and disadvantages of the ethnocentric,
polycentric, and geocentric approaches to staffing policy? When is each approach
appropriate?
ANSWER 1: An ethnocentric staffing policy is one in which key management positions
are filled by parent country nationals. The advantages of the ethnocentric approach are:
(1) overcomes lack of qualified managers in host country; (2) unified culture; and (3)
helps transfer core competencies. The disadvantages of the ethnocentric approach are: (1)
produces resentment in host country and (2) can lead to cultural myopia. An ethnocentric
approach is typically appropriate for firms utilizing an international strategy. A
polycentric staffing policy requires host country nationals to be recruited to manage
subsidiaries, while parent country nations occupy key positions at corporate headquarters.
Chapter 19 ‒ Global Human Resource Management
QUESTION 2: Research suggests that many expatriate employees encounter problems
that limit both their effectiveness in a foreign posting and their contribution to the
company when they return home. What are the main causes and consequences of these
problems, and how might a firm reduce the occurrence of such problems?
ANSWER 2: The primary causes of expatriate problems are the inability of the spouse to
adjust, inability of the employee to adjust, other family problems, personal/emotional
maturity, and an inability to cope with the larger overseas responsibilities. The
consequences of such problems include an employee may be ineffective or detrimental
overseas and/or may return prematurely before the assigned job tasks are completed. A
firm can reduce the occurrence of expatiate problems by developing an effective selection
QUESTION 3: What is the link between an international business’s strategy and its
human resource management policies, particularly with regard to the use of expatriate
employees and their pay scale?
ANSWER 3: In firms pursuing a localization strategy, a polycentric staffing approach is
most common and there are relatively few expatriates or the associated pay issues.
Expatriates are more common in firms with international strategies, and when an
ethnocentric staffing approach is utilized. In this situation the pay is often based on home
country costs and expectations, and global norms across the company.
QUESTION 4: In what ways can organized labor constrain the strategic choices of an
international business? How can an international business limit these constraints?
ANSWER 4: Organized labor can significantly constrain the choices firms make with
respect to location. International firms (or domestic ones for that matter) often choose to
Chapter 19 ‒ Global Human Resource Management
QUESTION 5: Reread the Management Focus ” McDonald’s Global Compensation
Practices.” How does McDonald’s approach help the company take into account local
differences when reviewing the performance of different country managers and awarding
bonus pay?
ANSWER 5: When McDonald’s revamped its global compensation practices it asked for
input from local managers on how the new system should work. By doing so,
McDonald’s not only identified the issues local managers felt were important, the
company also gave some ownership of the new system to local managers—ownership
that could facilitate the implementation of the new system. Under the new system,
QUESTION 6: Why is diversity good for an international business? What actions can a
company take to foster greater diversity?
ANSWER 6: A diverse global workforce goes hand in hand with competitive advantage
and superior financial performance. Having a workforce comprised of different genders,
CLOSING CASE: Global Mobility at Shell
Summary
The closing case examines how Royal Dutch Shell, a global petroleum company
employing over 80,000 people, of which about 7,000 are expatriates. Managing this
workforce is complex task. Shell wants to meet its commercial goals and also transfer
valuable knowledge across its operations. Given that the company operates in more than
Chapter 19 ‒ Global Human Resource Management
70 countries, this is not easy. The company often finds it difficult to recruit skilled
managers to work in different locations and is working to better understand employee
concerns and develop ways to respond to them. Discussion of the case can begin with the
following questions:
QUESTION 1: Royal Dutch Shell is one of the largest companies in the world and has
been for years. With sales approaching $400 billion and 82,000 employees worldwide,
including some 7,000 employees on expatriate assignments, the company is large,
complex, and powerful. Compared with retail or consumer companies, Shell is much
more narrowly focused and much more technical in orientation. How do you think this
narrower focus and technical orientation affects global human resource management at
Shell?
ANSWER 1: Managing more than 80,000 employees is likely to be a complex task
especially as some 7,000 are on expatriate assignments. However, students will probably
agree that the company’s narrow focus and technical orientation likely simplifies the task
QUESTION 2: Shell’s long-term goal is to develop local talent wherever possible,
thereby leveraging local employees’ networks, market knowledge, and language skills,
while also minimizing costs. Moving Shell employees from other countries to work with
partners and transfer expertise is often a key part of the company’s strategy. Can this be
done effectively in all world regions (e.g., Middle East and North Africa), where
potential local employees do not have the educational background in many cases? How
would you solve the education, skill, and knowledge gaps if you were a Shell C-suite
leader?
ANSWER 2: Finding employees with the appropriate educational background and
skillset has proved to be challenging for Shell especially in certain regions of the world.
Students may suggest that Shell consider a longer-term approach to the problem and
QUESTION 3: Spending significant time (e.g., three years) on an expatriate assignment
has significant family and professional implications, as can be seen in the Shell survey
Chapter 19 ‒ Global Human Resource Management
that was mentioned in the case. How would you feel if you were given an expatriate
assignment today? How would you feel about it if you were 25 years old? 35? 50?
ANSWER 3: Responses to this question will vary by student. Many will agree that
having an expatriate assignment at the start of their career when they are less likely to
have some of the issues that could make it more complex later such as a spouse, children,
or a home would be ideal. Students sharing this view may suggest that an expatriate
assignment could provide them with more opportunities and experience than they could
have in a domestic position, and they may point out that they might be more interested in
CONNECT
Geography
Summary
This activity is designed to test the student’s knowledge of geography. Questions related to
chapter material are asked, requiring students to understand the topics and the locations of the
countries involved.
Activity
Students are asked to respond to a series of questions related to the geographic location of several
countries.
Chapter 19 ‒ Global Human Resource Management
19-15
MHE INTERNATIONAL BUSINESS VIDEO LIBRARY
INCORPORATING globalEDGE™ EXERCISES
Exercise 1
The impact of strikes and lockouts on business activities can be substantial. Since your
manufacturing company is planning to expand its operations in the Asian markets, you
have to identify the countries where strikes and lockouts could introduce interruptions to
your operations. Using labor statistics from the International Labour Organization (ILO)
to develop your report, identify the three Asian countries with the highest number of
strikes and lockouts, as well as the total number of lost worker days. What types of
precautions can your company take to prevent interruptions from occurring in these
markets?
Exercise 2
You work in the human resources department at the headquarters of a multinational
corporation. Your company is about to send a number of managers overseas as
expatriates (or expats) to France and New Zealand. You need to create an executive
summary evaluating, comparing, and contrasting the possible issues expats may
encounter in these two countries. Your manager tells you that a tool called Expat
Explorer created by HSBC can assist you in your task.
Answers to Exercises
Exercise 1 Answer
Chapter 19 ‒ Global Human Resource Management
Additional Info:
ILOSTAT is a database of labor statistics, providing annual labor market statistics for
over 100 indicators and over 200 countries, areas, and territories. It includes data on labor
costs, occupational injuries, strikes and lockouts, union activity, and many other labor-
related data.
Exercise 2 Answer
Additional Info:
HSBC’s website dedicated to providing resources to expatriates (expats). The Expat
Explorer tool is under the Destinations section and allows users to compare countries
based on rankings by real expats. One of the tools under the Expat Explorer allows the
user to directly compare two countries based on a large number of criteria important for
expatriates.