Management Chapter 3 The Global Environment Usually Promote The Hiring Locals Thus International Business

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Chapter 3: The Global Environment

usually promote the hiring of locals. Thus, an international business must develop and

implement a plan for recruiting and selecting its employees in a host-country market. This

plan must include assessments of the firm’s HR needs, primary sources of labor in that

B. Local Training Issues

HR managers must also understand the training and development needs of the host country’s

workforce to help HCNs perform their jobs most effectively. These needs of a local workforce

depend on several factors. One, of course, is the location of the foreign market. In highly

C. Local Compensation Issues

Compensation must also be addressed at a local level for international businesses. Some

countries, such as the United States, focus compensation on assessing an individual’s

performance and then compensating that individual accordingly. In other countries, however,

V. Managing International Transfers and Assignments

Another extremely important part of international HRM is the effective management of

expatriate employees. Expatriates are employees who are sent by a firm to work in another

country; they may be either PCNs or TCNs.

A. Expatriates and Corporate International Strategy

To a large extent, how a firm deals with expatriates should depend on the strategy the firm is

Chapter 3: The Global Environment

pursuing in terms of its international operations. Consider how expatriates help multinational

corporations (MNCs) compete by playing a role in the knowledge-transfer process. This

process involves the acquisition of knowledge as well as the diffusion of knowledge

B. Selecting Expatriates

Recruiting and selecting employees for an international business requires that the HR

manager address two sets of questions. The first step, then, is to define the actual skills

necessary to do the job. Different types of assignments typically require different types of

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.

C. Assessing Success or Failure

The real question, then, is exactly how a firm should determine the failure—or the success—

of an expatriate assignment. It seems reasonable that a firm’s international strategy should

help determine what it means for an assignment to be successful since this strategy is related

to the reasons why an expatriate is sent abroad. Thus, the goals for an expatriate assignment

Chapter 3: The Global Environment

should be driving the definition of success. In any case, a number of factors seem to

contribute to the success or failure of any international assignment. It is critical that

organizations prepare managers completely for what they might expect when they move

overseas.

D. 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

within the organization.

Training for expatriate managers may be as “simple” as language training (which is not

especially simple if it involves a completely unfamiliar language such as Japanese or Arabic

for the English speaker) or it can be rather involved. In addition, it is common to have some

E. Compensating Expatriates

When managers are on short-term assignments 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 period, however, compensation is

usually adjusted to allow the manager to maintain her or his home-country standard of living.

Occasionally, organizations might have to provide an additional salary inducement simply to

convince people to accept a foreign assignment. Many employees may be relatively interested

in accepting assignments to countries such as England, France, Italy, or Japan, but it may be

more difficult to entice people to accept a position in Haiti, Pakistan, or Vietnam. Thus,

Chapter 3: The Global Environment

organizations sometimes find it necessary to provide what is called a hardship premium or a

foreign service premium. This premium (called an uplift by the firm) was sometimes more

than the individual employee’s base salary.

F. 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

than simply packing belongings and putting the manager and his or her family on a plane. A

great deal of adjustment is often required (more or less depending on how long the assignment

was) on both the personal and professional levels.

The repatriation process could be even more difficult on a professional level. The expatriate

manager has been out of sight for a while and may have lost some status within the

organization. It is critical to stay in touch with expatriates so that they can maintain their

social and network ties within the company. If a returning expatriate fails to remain with the

company, the company loses a presumably valuable employee who has now gained

Chapter 3: The Global Environment

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: Training for Global Assignments

Case Summary

One of the biggest HR challenges facing global businesses today is how to most effectively train

for their new assignment. Forty-five Chevron employees from Angola then spent 11 months in

Alberta learning new technical skills.

Schlumberger, the world’s largest energy services businesses, uses a different approach. All

Schlumberger employees are trained locally. Meanwhile, Schlumberger’s biggest competitor,

Halliburton, uses a hybrid model for employee training. Like Schlumberger, Halliburton uses

Chapter 3: The Global Environment

Case Questions

1. Why do you think there is so much variation in how companies handle global training and

development for their employees?

2. What kinds of additional training might be used for managers taking on a new overseas

assignment?

Students’ answers will vary. Training for expatriate managers may be as “simple” as

language training (which is not especially simple for the English speaker if it involves

completely unfamiliar languages such as Japanese or Arabic), or it can be rather involved.

3. Assume that you have been on an overseas assignment for two years but are now preparing

to return home. What might you do to prepare for this transition?

4. What are the basic HRM issues to be addressed by an international business?

The basic HRM issues to be addressed by an international business are listed below.

• Customization of hiring, firing, training, and compensation programs on a country-

specific basis for the business to adapt to the differences in each country’s culture, its

5. What are the basic domestic issues in international HRM for the firm in its home country?

The basic domestic issues in international HRM for the firm in its home country include

local recruitment and selection issues, local training issues, and local compensation issues.

• An international business must develop and implement a plan for recruiting and

selecting host-country employees, including an assessment of human resource needs,

6. What are the HRM implications of each strategy for international business?

For firms following an exporting strategy, no meaningful differences in human resource

responsibilities exist beyond hiring and managing an additional set of employees involved

7. What do you see as the basic similarities and differences in the HR function between

domestic and international businesses?

Students’ answers will vary, but a good answer should contain the following points. The

basic human resource management functions in domestic and international businesses are

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

in the international environment. An understanding of a host country’s cultural

9. When a basic incongruence exists in the ethical context of HRM between the environment

in a foreign country and the one found in a firm’s home country, which do you think should

take precedence?

Students’ answers will vary. Beliefs about what is ethical are context specific; what one

country’s inhabitants may deem ethical behavior may be viewed as completely unethical in

another country. It is difficult to determine which ethical context should take precedence.

10. Would you be interested in an international assignment as part of your employer’s

management development strategy? What do you think would be the greatest challenges

you faced if you went? How would you know whether or not the assignment was

successful?

Students’ answers will vary according to their individual preferences. Factors that may

affect an individual’s decision to accept an overseas assignment may include the degree of

openness to experience, the degree of flexibility and/or adaptability, language ability,

Chapter 3: The Global Environment

physical and emotional health, the degree of independence and self-reliance, experience

and education levels, and family status. Challenges include the culture of the country in

question, the standard of living, the time period of the assignment, and communicating

with locals. If the individual is married, then challenges may include employment for the

spouse and education options for children, if any. The success of an assignment can be

determined by various factors. One factor is the ability of the individual and his or her

spouse and family to adjust to a new location.

Additional Resource

Making Global Labor Fair

The video shows a TED talk by Auret van Heerden: