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Chapter 16: Global Human Resource Management
Chapter 16:
Global Human Resource Management
Table of Contents
Chapter Summary
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Learning Objectives
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Lecture Outline
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Critical Thinking Challenges
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Case: Winning at Carlsberg
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Chapter Summary
Chapter 16 provides an overview of human resource management on a global scale. The chapter
highlights the forces that impact global trade. It describes the different approaches adopted by
organizations to broaden their operations worldwide. This section also lists the reasons for global
expansion. The next section discusses the strategies for staffing of global assignments. This is
Learning Objectives
After students read this chapter, they should be able to accomplish the following objectives:
• Define forces impacting global trade.
• Discuss three global business approaches.
• Compare three types of international staffing assignments.
Lecture Outline
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Chapter 16: Global Human Resource Management
HR Headline: Big, Bigger, Biggest
Leaders of Walmart decided that the best way to grow their international business was to acquire
the Indian e-commerce retail giant, Flipkart. India’s growing population and increasing economic
health make it a very attractive market for retail companies. Walmart acquired Flipkart for $16
billion despite an attempt by Amazon to purchase the company. Walmart will now compete with
Amazon for online sales in this growing market.
16-1. Managing in a Global Context
16-1a. Economic Interdependence
• The Organisation for Economic Cooperation and Development (OECD) is a consortium
of 30 democratic nations that aims to foster sustainable international trade and economic
development.
• A multinational enterprise (MNE), sometimes called a transnational enterprise, is an
organization that has facilities and other assets in at least one country other than its
home country.
Discussion Starter: Ask students if they anticipate the rise of a new industry in the
upcoming years.
16-1b. Global and Regional Alliances
• The leaders of nations sometimes find that the prospects for their own countries
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improve when they actively work with other nations to foster free trade and fair
commerce leading to trade agreements or alliances between countries.
• The North American Free Trade Agreement—1994 (NAFTA) is an agreement that
16-1c. Population & Demographic Trends
• A particularly important aspect of population demographics is the overall aging of the
population, with people over the age of 65 becoming a larger share of the world
HR Highlight: Driving a Revolution
Automation is a controversial approach to addressing the shortage of workers in many jobs.
However, both workers and companies can benefit from the use of robotics and other assistive
technologies. Not all automation has been successful in the automotive industry. Companies
need to carefully assess which tasks are best suited to human workers and which ones are
better done by robots. The use of automation makes the economy more efficient as
productivity and quality improve. This leads to less expensive goods and services, which in
turn creates greater demand and more work.
1. How much responsibility should an employer have for ensuring that workers displaced
by automation receive retraining? How much responsibility rests with government to
assist these displaced workers?
Students’ answers will vary. Not all automation has been successful in a given industry.
Employers and the government should be responsible for incorporating human
intervention in automation. Striking a good balance between automation and human
intervention is necessary.
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Chapter 16: Global Human Resource Management
when changing technologies will likely alter your job options?
Students’ answers will vary. Employees should put in effort and do research on the
advancements in technology in their respective industries. Based on the research, they
can pick up new skills that are relevant.
16-2. Becoming a Global Company
• Human resource management will take different forms depending on how global
operations are developed.
16-2a. Reasons for Global Expansion
• The following are primary reasons for global expansion:
o Diversifying markets and customer base
16-2b. International Orientations
• Organizations approach the international market with a particular mind-set or
orientation.
• A commonly used framework is the EPRG model that outlines the following
worldviews:
o Ethnocentric—A strong emphasis on the home-country practices, policies, and
culture.
16-2c. Global Business Approaches
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• Business leaders choose to enter the international market in different ways, from limited
investment to full investment as shown in Figure 16-4.
• Non-equity business forms include importing and exporting, licensing and franchising,
and piggybacking.
o A common first step in expanding globally is to simply buy and sell goods and
services to customers outside of the home country through importing and
exporting.
• Equity business forms include joint ventures, mergers and acquisitions, and direct
investment.
o Joint ventures are created between two or more partners who share ownership
and risk in the investment.
o A merger is two companies that combine their businesses together to create a new
business entity.
• Additional methods of global expansion are outsourcing and offshoring.
o Outsourcing is transferring the management and performance of a business
function to an external service provider.
16-2d. Managing Across Cultures
• Culture is the shared mindset of a group of people that distinguished them from others.
• One widely-used model to classify country cultures was developed by Dutch scholar,
Geert Hofstede.
o His research on more than 100,000 IBM employees in over 50 countries led to the
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Chapter 16: Global Human Resource Management
country.
o The individualism versus collectivism (IDV) is the extent to which people in a
society prefer to act as individuals or as members of a group.
HR Ethics: Worked to Death
A persistent problem in Japan is the phenomenon of health-related issues related to long work
hours. As recently as 2015, 93 worker suicides or attempted suicides were caused by
“overwork.” Over 20 percent of workers in Japan work more than 49 hours per week, with a
higher percentage of men than women putting in extra time on the job. Over the past decade,
over 750 workers’ compensation claims have been filed annually due to brain and heart failure
tied to excessive working hours. The Japanese government has undertaken a study of this
problem with the hope that some solutions can be found.
1. If a U.S.-based company was considering opening an operation in Japan, what
precautions would you recommend they take to reduce the probability of “overwork”
deaths? How might you prepare expatriates for the cultural expectations in Japan?
Students’ answers will vary. Appropriate selection of individuals for expatriate
assignment along with substantial predeparture planning and preparation are necessary
for the assignment to succeed. Experienced expatriates can provide a pool of talent that
can be used as the firm expands operations into other countries. Individuals who accept
foreign job assignments need to be able to successfully adjust to cultural differences.
2. What might the reaction of workers be if you implemented shorter work schedules? How
would you change the culture in your organization to be more ethical and humane?
16-2e. Global Human Resource Management
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• Derived from the organizational strategy and consistent with the international
orientation adopted by the company, HR practices must be designed to achieve the best
results possible in various environments.
16-3. Global Staffing Strategies
• The optimal solution while planning for staffing global operations is to combine the
16-3a. Types of Global Employees
• Global organizations can be staffed in many ways, including with expatriates, host-
country nationals, and third-country nationals.
o An expatriate (or parent-country national) is a citizen of one country who is
working in a second country and employed by an organization headquartered in
the first country.
• Figure 16-6 shows four strategic HR approaches to international staffing.
• The key competencies for successful global employees include the following:
o Cultural adjustment
o Organizational requirements
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Teaching Tip: Use Figure 16-7 to demonstrate the selection factors for global employees.
16-3b. Global Labor Markets
• Employers in the United States are tapping global labor markets when necessary and
offshoring when doing so is advantageous.
• However, in 2016 a reshoring trend began in which firms brought jobs that had been
HR Competencies & Applications: Latin American Firms Face Staffing Problems
Key Competencies: Global & Cultural Effectiveness (Behavioral Competency) and
Organization (Technical Competency)
A recent survey of large global Latin American firms headquartered in countries such as
Brazil, Mexico, and Argentina showed that many have expanded into international markets
through mergers and acquisitions. The survey results suggested that the firms faced a number
of staffing challenges that potentially hurt their ability to grow in new regions. The survey
found that mergers and acquisitions were one of the most troubling issues, and determining
how to function in different cultures was identified as one of the key difficulties. The ability to
manage international expansion is certainly an important global competency within the HR
profession.
1. How would you focus HR leaders on the development of positive strategies for
expansion? What HR issues do you think deserve the most attention?
Students’ answers will vary. Some might say that recruiting good workers and figuring
out how to manage the flow of talent deserve the most attention. Recruiting efforts,
succession plans, promotions, and other placement issues also deserve significant
attention.
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In the past, many global corporations built their variable pay plans around individual goals in a
management by objectives (MBO) format. The trend in recent years, however, has been a
move to a bottom-line results performance metric for incentive pay determination. Over 85
percent of global corporations have at least one variable pay plan, but plans are not identical
across all countries in which firms operate. Variations in incentive plans are due to cultural
differences, as well as legal requirements. Companies might work toward increasing the global
focus on corporate results to drive all operations toward the common bottom line.
1. How can a MNE design country-specific rewards that emphasize overall corporate
performance rather than local operational performance?
Students’ answers will vary. Rewards should be designed based on the key
measurements of performance that tie back to corporate performance.
2. What rewards would be most successful for intra-company transfers who relocate to
various countries of operation?
Students’ answers will vary. Key aspects that HR needs to keep in mind while designing
rewards for intra-company transfers are the location and the cultural difference.
16-4c. Compensation for International Assignments
• Regardless of how staffing is determined, compensation practices should be designed to
maximize employee commitment and productivity.
16-4d. Employee Benefits around the World
• National customs and laws play a major role in the benefits provided to workers in each
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• Paid time off benefits vary significantly and employers in most countries are required to
provide paid holidays, vacation, and sick leave.
16-5. Global Employees and Labor Relations
16-5a. Unions in the Global Arena
• Diverse legal requirements and social mores have created very different situations
16-5b. International Union Issues
• The percentage of union membership varies significantly from country to country.
o Figure 16-11 provides data on union density for different countries as of 2015.
• In many European countries, artificially high wages and generous benefits have kept the
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16-5c. Global Labor Organizations
• The International Labour Organization, based in Switzerland, coordinates the efforts of
labor unions worldwide and has issued some principles about rights at work.
16-5d. The United States and Global Differences
• Union management relations in the United States addresses some issues differently from
16-6. Global Talent Development
16-6a. Global Assignment Training
• The orientation and training that expatriates and their families receive before departure
significantly affect the success of an overseas assignment.
• A related issue is the promotion and transfer of foreign citizens to positions in the
United States.
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o Emotional
o Behavioral
Teaching Tip: Ask students to refer to Figure 16-12 and list additional training methods for
the three components of intercultural competence.
HR Competencies & Applications: Assessing Cultural Competence
Key Competencies: Global & Cultural Effectiveness, Consultation; HR Expertise:
Workplace/HR in the Global Context, Diversity & Inclusion
There are a variety of instruments, each with its own framework for elements of cultural
competence, to help managers understand their present levels of cultural competence. HR and
training professionals can select the instrument that most appropriately measures what is
important to the organization. One useful tool is the Multicultural Personality Questionnaire.
The costs of assigning an individual who is not culturally ready to deal with diverse employee
groups are significant. Training and coaching are important add-ons after an employee has
completed an assessment. Assessments are a starting point, not the end of cultural awareness.
1. How would you recommend that organization leaders select from among the various
assessment choices? What criteria would you use to evaluate each instrument?
Students’ answers will vary. The choice of assessment depends on what aspect of
cultural competence the organization is targeting. Multicultural Personality
Questionnaire measures individuals on intercultural sensitivity, intercultural
communication, intercultural relationship building, conflict management, leadership,
and tolerance of ambiguity. The International Profiler measures 10 competencies,
including openness, flexibility, perceptiveness, and cultural knowledge. Cross-Cultural
of the instrument and provision of results to each respondent. Organizations should help
employees by providing training to strengthen areas of weaknesses.
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Chapter 16: Global Human Resource Management
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
global executives.
o Global competencies should also be developed early in careers, instead of
assigning domestic-based senior executives to international positions.
Critical Thinking Challenges
1. Think of an international company that has completed a merger or acquisition with an
organization from a different country. What were the challenges to making the deal
successful? Ultimately, was the deal a success or would you consider it a failure? Why?
2. Recently, several international companies have been in the news because of corruption,
bribery, or falsifying information (e.g., Samsung, Volkswagen, and Mitsubishi Brazil).
Research one of these cases and determine how the headquarters leadership might have
prevented the problem from occurring. How might the human resource department have
helped to prevent the problem?
3. Discuss how important diversity and inclusion programs would be in companies based in
Canada and in Norway. Explain why there might be different approaches to diversity in
different countries.
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Chapter 16: Global Human Resource Management
Students’ answers will vary. They may suggest that it is important for organizational
2. Why is it important to include the cultural tenets in the company’s performance
management and compensation programs? How successful would you expect a culture
change to be if these HR practices are not updated to reflect the new culture approach?
Why?
3. What actions did Carlsberg group take to ensure buy-in from various stakeholders and
operations?