CHAPTER 15
INTERNATIONAL HUMAN RESOURCES
MANAGEMENT
CHAPTER OUTLINE
15.1 Analyzing Your International Environment
15.1a Political Factors
15.1c Sociocultural Factors
15.1e Analyzing Your International Operations
15.2 Managing Your International Operations
15.2a Recruiting Internationally
15.2c Training and Development
15.3 Compensation
15.3a Compensation of Host-Country Employees
15.3b Compensation of Host-Country Managers
15.3d Performance Appraisal
15.4 Analyzing the International Labor Environment
15.4a Collective Bargaining in Other Countries
15.4c Labor Participation in Management
LEARNING OUTCOMES
After studying this chapter, students should be able to:
1. Explain the political, economic, sociocultural, and technological factors in different
countries that HR managers need to consider.
3. Explain how domestic and international HRM differ. Discuss the recruitment, selection,
4. Explain how labor relations differ around the world.
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GENERATING INTEREST
Using Fortune’s most recent Global 500 list, ask students to jot down their answers to the
following questions:
• What are the three largest companies on the planet (based on sales revenues)?
• Of the top ten international companies, how many would you guess have their
corporate headquarters in the United States?
DEALING WITH TROUBLE SPOTS
Some students might find the terms used in the “Managing Your International
Operations” section confusing. Therefore, it would be helpful to initiate a class discussion
where each term is defined. Additionally, ask students to provide examples for each of
these terms.
LECTURE OUTLINE
Discussion Starter #1: Student protestors put pressure on the University of Southern California to
stop using sweatshop labor in the manufacturing of USC school apparel. Many companies, such as
Nike and Apple, have received bad press for using sweatshop labor—paying overseas workers very
little for items that sell for hundreds of dollars. Does this sway your opinion of these companies?
Why or why not?
ANSWER: Students’ answers will vary. Many students will say that these companies have an ethical
15.1 Analyzing Your International Environment
A political, economic, sociological, and technological (PEST) analysis acts as an audit of
a company’s environmental influences to help it determine its strategy and HR response.
As an HR manager, PEST analysis can help in several ways:
• Spot business or personal opportunities and threats.
Chapter 15: International Human Resources Management 3
Teaching Tip: Use Figure 15.1 to discuss PEST analysis.
15.1a Political Factors
15.1b Economic Factors
15.1c Sociocultural Factors
Sociocultural factors are external factors including method and style of
15.1d Technological Factors
Technological factors are external factors pertaining to the technological
infrastructure and investments, information systems, manufacturing equipment,
and consumer access to technology. Advances in technology have pushed for
more service-based jobs, and information systems and technology platforms have
EOC Discussion Question #1: In recent years, we have observed an increase in foreign
production throughout the world. What PEST factors would you consider to be most relevant to
H&M’s HR managers when trying to figure out if they should open up a plant in Vietnam to
make clothes?
15.1e Analyzing Your International Operations
Four basic types of organizations differ in the degree in which international
activities are separated to respond to local regions and integrated to achieve global
efficiencies:
• The international corporation is a domestic firm that uses its existing
capabilities to move into overseas markets.
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• A multidomestic corporation (MDC) is a firm with independent
Teaching Tip: Use Figure 15.2 to discuss types of organizations. Ask students which type has the most
global efficiency and local responsiveness.
In this chapter, any company that conducts business outside its own country is referred to as an
international business.
Video Highlight #1: Section 15.1: Analyzing Your International Environment
VIDEO: PEST Analysis (7:54)
Discussion Starter #2: What major HR issues must be addressed as an organization moves from an
international form to a multinational, global, and transnational form?
ANSWER: Some of the major HR issues that must be addressed are as follows:
EOC Discussion Question #2: What major HR issues must be addressed as an organization
moves from an international form to a multinational, global, and transnational form?
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Staffing Transnational Teams
Transnational teams are teams composed of members of multiple nationalities
working on projects that span multiple countries. These teams are especially
useful for performing tasks that the firm as a whole is not yet structured to
accomplish. The fundamental task in forming a transnational team is assembling
the right group of people who can work together effectively to accomplish the
team’s goals. Cross-cultural training can benefit transnational teams.
Video Highlight #2: Section 15.2a: Recruiting Internationally
VIDEO: Tech’s Beloved H–1B Visa Is Flawed. Here’s Why. (1:16)
15.2b Selecting Employees Internationally
To begin hiring employees in a new country, a firm’s international HR managers
should get to know the local market and hiring customs:
• Get to know the universities, technical schools, and primary schools in the
area.
• Develop networks in the business and government communities.
• Understand the employees of the firm’s competitors.
Selecting Global Managers
A global manager is a manager equipped to run an international business. Six
skill categories can be identified:
• The ability to seize strategic opportunities
• The ability to manage highly decentralized organizations
The cultural environment is the communications, religion, values and
ideologies, education, and social structure of a country. Core skills are skills
Chapter 15: International Human Resources Management 7
Several sequential steps are involved in selecting individuals for an international
assignment.
• Step 1: Begin with self-selection.
Teaching Tip: Use Figure 15.4 to discuss expatriate selection criteria. Ask students if these skills can
be improved in some way.
Failure rate is the percentage of expatriates who do not perform satisfactorily.
The major causes of failure include poor cultural fit, lack of expatriate support
from headquarters, and a spouse’s ability to adjust to new surroundings.
Teaching Tip: Use Figures 15.5 and 15.6 to discuss causes of expatriate assignment failure and factors
they need to adjust to if they want to succeed. Ask students which of these factors the expatriate can
control.
15.2c Training and Development
15.2d Content of Training Programs
Lack of training is one of the principal causes of failure among employees
Teaching Tip: Use Figure 15.7 for an overview of what an employee needs to study before going on
an international assignment.
Five essential elements of training and development programs prepare employees
for working internationally: (1) language training, (2) cultural training, (3)
assessing and tracking career development, (4) managing personal and family life,
and (5) repatriation.
Language Training
Students who plan careers in international business should start instruction in one
or more foreign languages as soon as possible. English is almost universally
accepted as the primary language for international business.
Cultural Training
Cross-cultural studies reveal that nations tend to cluster along certain cultural
dimensions such as their work goals, values, needs, and attitudes toward work.
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© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Studying cultural differences can help managers identify and understand work
attitudes and motivation in other cultures. One of the important dimensions of
leadership everywhere is the degree to which managers invite employee
participation in decision making.
Teaching Tip: Use Figure 15.8 to discuss country clusters that can help managers interact successfully
in other countries.
Assessing and Tracking Career Development
International assignments provide developmental and career advantages. To
maximize the career benefits of a managerial assignment, candidates should ask
two key questions before accepting the foreign post:
• Do the organization’s senior executives view the firm’s international
business as a critical part of their operation?
Managing Personal and Family Life
One of the most frequent causes of an employee’s failure to complete an
international assignment is personal and family stress. Culture shock is perpetual
stress experienced by people who settle overseas.
Repatriation
Repatriation is the process of transition for an employee home from an
EOC Discussion Question #3: a. Starbucks is opening new stores abroad every day, it seems. If
you were in charge, would you use expatriate managers or host-country nationals to staff the
new facilities? Explain your thinking. b. This chapter places considerable emphasis on the role
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3. a. Expatriates have the advantage of knowing the products, technical systems,
organizational policies, company culture, and the likes of Starbucks. Host-country
nationals, on the other hand, are more likely to understand their customers’
b. The following are the steps companies can take to increase the likelihood that the
assignments are successful experiences for spouses and families:
• Include the spouse in planning whenever it is possible
c. Students’ answers will vary based on the information obtained from interviews
with foreign students or foreign-born coworkers.
4. a. The major differences between labor-management relations in Europe and those
in the United States are as follows:
• In Europe, companies typically negotiate with the union at the national level
through an employer association.
b. Students’ answers will vary. Codetermination involves having representatives of
labor on the board of directors as required by law.
Chapter 15: International Human Resources Management 13
HRM EXPERIENCE
An American (Expatriate) in Paris
Groups of four to six students have the opportunity to do practical research about moving
to a foreign country. Depending on the time available, groups could be assigned part of
the list and present their information to the class.
NOTES FOR END-OF-CHAPTER CASE STUDIES
Case Study 1: How about a 900 Percent Raise?
1. In the age of globalization, not only are countries becoming more mobile, but so are
2. The nurses face many of the same challenges as U.S. expatriates sent abroad: language
and cultural barriers as well as differing nursing protocols. In some instances, the nurses
3. One long-term strategy the hospitals should pursue is the retention of the nurses they
develop, given their significant investment in training them. The hospitals will also need
Case Study 2: A “Turnaround” Repatriate Plan: U.S. Company Moves Indian
Workers Back Home
1. If the employees are anxious to return home, the situation is a win-win proposition for
2. As India’s tech market grows, the strategy could help i2 expand its operations (globalize)
