International Human
Resource Management
2012. Angers
Your lecturer:
Megyeri, Eszter
About myself:
Eszter Megyeri
HUN – CAN – NL – USA – HU
BSc Marketing & Management, Logistics & Distribution
MSc Management & Consulting, Intercultural Communication
10 years of work experience in Supply Chain Management
5 years of teaching experience in Hungary, France,
PhD : Fairness in B2B Business
Teaching, Learning, Consulting
www.eco.u-szeged.hu/karunkrol/vilaggazdasagtani/eszter-megyeri
Content
1.
Globalization
2.
Armstrong Phasing, Tayeb HR and competitiveness, Harvard Map,
3.
Differences of HRM-IHRM
4.
Culture: Perlmutter‟s EPG Model,
5.
Strategy: Bartlett Ghoshal Model for Strategic Choices
6.
Structure: Types at different stages of internationalization
7.
Staffing internationally
8.
International Assignments
9.
Recruiting and selecting staff for IA
10.
Compensation
11.
Performance Management
12.
Carrier management
13.
Training and Development
14.
Complexities, challenges, future in IHRM
Objectives for our sessions
1.
Expand your factual knowledge
2.
Structure information, complex problems
3.
Participate, discuss, practice
4.
Learn to manage and work in teams
Literature
1.
Peter J. Dowling – Marion Festing – Allen D. Engle, Sr
International Human Resource Management. 5
th
Ed., Thomson
South-Western, 2009.
2.
Dennis R. Briscoe – Randall S. Schuler – Lis Claus International
Human Resource Management. Policies and practices for
multinational enterprises. 3
rd
Ed. Routledge, 2009
3.
McFarin/Sweeney: International Management Strategic
Opportunities and Cultural Challenges
4.
Anne-Wil K HarzingJ - Joris Van Ruysseveldt:
International Human Resource Management; 2004
5.
Paula Caligiuri - Ibraiz Tarique - Rick Jacobs (2009)
Selection for international assignments. Human Resource
Management Review, Vol. 19, pp. 251–262.
Schedule
February 28th
3:30 p.m.-6:30 p.m.
Salle XXX (3h)
February 29th
10:00 a.m. - 12:30 p.m Salle XXX (2.5h)
February 29th
2:00 p.m.-4:00 p.m
Salle XXX (2h)
March 1st
10:00 a.m. - 12:30p.m Salle XXX (2.5h)
March 1st
2:00 p.m.-4:00 p.m
Salle XXX (2h)
March 2nd
8:00 a.m.-10:00 a.m. Salle XXX (2h)
What is expected from you from
Tuesday to Friday ?
Work with and in your team
Examine the case study and apply learning during
the exercises on the case
Email me team work ppt or doc for each exercises
before the deadline
megyerie@yahoo.com
Present Exercise1 and one other assigned Exercise
out of 2-5
Make a Case report in doc summarizing all findings
except if you are selected to present Exercise 6
Teams / Team Members
Team members
Team
1
PLUCINSKI
Wojciech BENING
Rieke
CARO
Inès
CRETON
Jessica
2
RATAJCZAK
Lukasz
VAGAPOVA
Liana
CASSIN
Agnès DESLANDES
Morgane
3
RATAJCZYK
Dawid
VOYTOVSKAYA Viktoria CAUDRELIER Renaud EL ACHKAR
Bouchra
4
KISZENIA
Anna
LI
Qian
EL FAKHRY
Taline
GRONDIN
Diana
5
SZCZECHOWIAK
Dagna
SULKOVSKAYA Natalia
FORGEAU
Tristan GUERENDEL
Julie
6
HARRAR
Khouloud HELLEUX
Delphine LECOURT
Fiona
MAHZOUNZADEH Andréa
TRILLOT Audrey
7
MATHOUX
Sophie
OUDIN
Lucie
PARIZOT
Elise
SIX
Matthieu
8
KUMKOWSKA
Natalia
FUZESY
Frigyes
AMEGEE
Mirielle CERDA GUZMAN Gabriela VAUVY
Camille
Grading (7% PPT/DOC + 10% when presenting)
Teambuilding+Prework (5%)
ALL
Exercise 1. Collect and organize facts
ALL
Exercise 2. Determine Perlmutter's EPG,
Bartlett& Ghoshal Strategic options
(1-2)
Exercise 3. Article review. Deliver key messages. (3-4)
Exercise 4. Determining the core issues of the case
study. Level of complexity, priority, time span.(5-6)
Exercise 5. Mapping potential solution, options. (7-8)
Exercise 6. Recommendations
(ALL)*
* Best TWO: Recommendations will present and do not have to write the Paper.
Grading - Timing
Teambuilding+Prework
Feb28PM
Exercise 1. Collect and organize facts
Feb28PM
Exercise 2. Determine Perlmutter's EPG,
Bartlett& Ghoshal Strategic options
Feb29AM
Exercise 3. Article review. Deliver key messages. PM
Exercise 4. Determining the core issues of the case
study. Complexity, priority, time span. Mar1AM
Exercise 5. Mapping potential solution, options. PM
Exercise 6. Recommendations
Mar2AM*
Deadline: for all ppt/doc submission:
WED-THR :AM before 10.00 except March 2
nd
when 8.00
WED-THR : PM before 14.00
Before we start …
Comments ?
Questions?
Coordination/Share
International Environment
Perlmutter‟s Model
Bartlett&Ghoshal Strategic Options
February 28
th
PM
Team building, Prework, Exercise 1.
Growth of GDP and of imports/exports
World Economy Situation and Prospects 2010
Transitioning & Developing Economies
East Asian Developing Economies
Developed Economies
Key Indicators
(www.imf.org)
http://www.imf.org/external/pubs/ft/weo/2011/update/02/pdf/0611.pdf
Key Indicators
(www.imf.org)
http://www.imf.org/external/pubs/ft/weo/2011/update/02/pdf/0611.pdf
Session 1.
Overview of Global Trends and Challanges
Objectives and goals of internationalizations ?
Why to talk about
International Management
International Human Resource management?
Challenges in International Business
Internationally acting nations, supranations or other
regional cooperation
Increasing roles of international Global
organizations
Internationally acting companies
Globalization-localization
Objective: growth & prosperity …survival
But …
Challenges in International Business
Objective: growth & prosperity …survival
But
fiscal mismanagement
political uncertainty
corruptions
disputes over trade
new competition
increasing pressure on social responsibility of firms
threat from any time, anywhere
Challenges in International Business
Role of Technological
Sophistication –pros and cons
Challenges in International Business
Role of Technological
Sophistication –pros and cons
Communication
Information transparency
Infrastructure needs/Affordable access
... but do not eliminate business problems
… can accelerate how quickly crises hit
Challenges in International Business
International Workforce Challenges
Offshoring (activities)
Labor saving
Effective process
Call Centers
Outsourcing (functions)
IT Development, R&D function
Work force mobility and work mobility intensified
Job loss impacts – example ..
Role of Reasearch & Development
Question of Competitiveness
Challenges in International Business
International Workforce Challenges
Workforce Quality
Education
Training
Language
Computer literacy
Motivation
Quality and Quantity of Work, Work ethic ( a nap)
Workforce Diversity
Hispanic population in the US , population, language, business
International HR – key role
Team building
Exercise
In class exercise
TEAMS / TEAM MEMBERS
Team members
Team
1
PLUCINSKI
Wojciech BENING
Rieke
CARO
Inès
CRETON
Jessica
2
RATAJCZAK
Lukasz
VAGAPOVA
Liana
CASSIN
Agnès DESLANDES
Morgane
3
RATAJCZYK
Dawid
VOYTOVSKAYA Viktoria CAUDRELIER Renaud EL ACHKAR
Bouchra
4
KISZENIA
Anna
LI
Qian
EL FAKHRY
Taline
GRONDIN
Diana
5
SZCZECHOWIAK
Dagna
SULKOVSKAYA Natalia
FORGEAU
Tristan GUERENDEL
Julie
6
HARRAR
Khouloud HELLEUX
Delphine LECOURT
Fiona
MAHZOUNZADEH Andréa
TRILLOT Audrey
7
MATHOUX
Sophie
OUDIN
Lucie
PARIZOT
Elise
SIX
Matthieu
8
KUMKOWSKA
Natalia
FUZESY
Frigyes
AMEGEE
Mirielle CERDA GUZMAN Gabriela VAUVY
Camille
Find your team! Sit together!
Introduce yourself!
Create a team name & team slogan!
Summarize on a sheet !
Exercise 1.
How many of you read the case study ?
Lots of data, facts,
Individual views
What is/are the problems ? What are the solutions?
Collect the fact … but how?
Exercise : determine points of views (aspects)
which you can use to summarize the case study data
EXAMPLE: ORGANIZATION STRUCTURE
5 min: record on your sheet
Exercise 1.
Points of views (aspects) per team
1
2
3
4
5
6
7
8
Key Players of International
Business
Key players : large size organizations
International Corporations
Multinational enterprises – multinationals, multis
Large, well developed companies operating in a
variety of overseas locations
50 of the 100 largest corporations are multis
1000 largest multinationals – 80% of global industrial
production
But….
Small can act Big as well
Challenges in International Business
International Corporations
But….
Small can act Big as well
In European Economic Area + Switzerland : 16
million enterprises
Guess : what % of that is Large enterprise ?
Challenges in International Business
Corporations vs SMEs
16 million enterprises
Guess : what % of that is Large enterprise ? 1%
2/3 of the jobs are with SMEs
Asia-Pacific SMEs: 90% of enterprises, 32-48% of
employment and 60-80% of GDP
SMEs challenges of Internationalization
Shortage of working capital to finance exports.
Identifying foreign business opportunities.
Limited information to locate/analyze markets.
Inability to contact potential overseas customers.
Obtaining reliable foreign representation.
Lack of managerial time to deal with internationalization.
Inadequate quantity of and/or untrained personnel for
internationalization.
Difficulty in managing competitor‟s prices.
Lack of home government assistance/incentives.
Excessive transportation/insurance costs.
Learning in Small organizations
International Assignees and local nationals
Until quite recently: 3 types of international
employees:
PCNs
HCNs
TCNs
PCNs -> expatriates or IAs -> repatriates
Purpose of Assignments
Demand – driven
for subsidiary startups, to roll out new products, for
technology transfer, to solve problems, to perform
functional tasks
Learning – driven
Transfer of knowledge, socialization of locals into the
corporate culture and values
Key players
History of HR Management
M. Armstrong – 6 Development Phases
1.
Welfare Phase
till end of WW.I.
social support, meals, health care on as needed base, no functional separation
2.
Personnel Administration
btw WW.I. & WW.II.
functional separation, traditional admin func., hiring, labor contract, salary payment, basic training,
layoff
3.
Personnel Management – developing phase
1950s
Specialized services such as recruitment, selection, complex salary management, specialized training,
consulting, communication role with unions
4.
Personnel Management – mature phase
1960-70s
Organization development role, leadership development, human resource planning, performance
management, practical applications of motivation theories
5.
Personnel Management – entrepreneurial phase
1980s
Human Resource Management Concept, Development of company culture, loyal workforce
6.
Personnel management – post-entrepreneurial phase
1990s
Supporting change management on HR areas, managing culture change, long term, strategic focus
The competitive advantage of nations: the role of
HRM -
Monir Tayeb
The Harvard Map of HRM
Managing Human Assets by Michael Beer, Richard E. Walton, Bert A. Spector,1984
Employees as resources, but fundamentally different from other resources
Human resource policies to be influenced by two significant considerations:
Stakeholder interests, shareholders, management employees, unions, community,
and government. Human resource policies should be influenced by ALL
stakeholders.
Situational factors within or outside business environment :laws, social values,
labor market conditions, work-force characteristics, business strategies, management
philosophy. These factors may constrain the formation of HRM policies but (to
varying degrees) they may also be influenced by human resource policies.
The Harvard Map of HRM
The Harvard Map of HR
The Harvard Map or model clearly outlines four HR policy areas:
Human Resource Flows - recruitment, selection, placement, promotion,
appraisal and assessment, termination
Reward Systems - pay systems, motivation
Employee Influence - delegated levels of authority, responsibility, power
Work Systems - design of work and alignment of people
An organization‟s HRM activities include:
Staffing (recruitment, selection, placement)
Performance management
Training and development
Compensation (remuneration) and benefits
Human resource planning
Industrial relations
Expand HR in the international
context:
What are the differences between
domestic and international HR ?
Moving toward international HRM:
Recognize, that ….. (Laurent)
one‟s own HRM reflects home culture assumptions & values.
one‟s own peculiar ways are neither universally better nor
worse than others - just different and likely to exhibit
strengths and weaknesses, particularly abroad.
organization‟s foreign subsidiaries may prefer other ways to
manage people – ways that are neither intrinsically better nor
worse, but possibly more effective locally.
Headquarters willingness to acknowledge cultural differences
and steps to make them discussable and therefore usable.
Build shared genuine belief that cross-cultural learning will
result in more creative and effective ways of managing people.
Strategic HRM:
Exercise 1. – organize the data in ppt
Points of views (aspects) per team
1
2
3
4
5
6
7
8
Model Reviews
CULTURE: Howard Perlmutter‟s EPG Model
Ethnocentric
Polycentric
Geocentric
STRATEGY: Bartlett, C. A., & Ghoshal
International strategy
Multidomestic strategy
Global strategy
Transnational strategy
STRUCTURE
Howard Perlmutter‟s EPG Model
Perlmutter's, H. 1969: The Tortuous Evolution of the Multinational Corporation
Perlmutter's EPG Model
Ethnocentrism
Greek "ethnos", meaning “nation” or “people,” and English word
center or centrism
tunnel vision: particular ethnic group‟s system of beliefs and values
is morally superior to all others
natural tendency for people to act ethnocentrically
determining the managerial process at home and overseas
constant advice, and counsel from the headquarters to the
subsidiary
centralized approach
training originates at the headquarters, later local adaption
Benefits ?
Costs ?
Perlmutter's EPG Model
Ethnocentrism
Greek "ethnos", meaning “nation” or “people,” and English word
center or centrism
tunnel vision: particular ethnic group‟s system of beliefs and
values is morally superior to all others
natural tendency for people to act ethnocentrically
determining the managerial process at home and overseas
constant advice, and counsel from the headquarters to the
subsidiary
centralized approach
training originates at the headquarters, later local adaption
Benefits ? ..simple, greater communication and control
Costs ? ..inefficient planning, fewer innovation, difficult to
develop local talent, lack of flexibility and responsiveness
Perlmutter's EPG Model
Polycentrism
identifies attitudes or orientations toward
internationalization
host country orientation
different management strategies and planning procedures
with regard to international operations
local preferences and techniques to deal with the local
market conditions
Issues with of coordination and control
Local nationals occupy key positions
Benefits ?
Costs ?
Perlmutter's EPG Model
Polycentrism
identifies attitudes or orientations toward internationalization
host country orientation
different management strategies and planning procedures with regard to
international operations
local preferences and techniques to deal with the local market conditions
Issues with of coordination and control
Local nationals occupy key positions
Benefits ?
Intensity on local market, more efficient sales operation locally, initiative
for local product innovations, good local management- moral impact
Costs ?
Waste- duplications, localization of universal product, inefficient use of
home country experience. Could be a disabler of global growth due to
excessive local traditions
Perlmutter's EPG Model
Geocentrism
focuses on a more world-orientated approach
No bias to either home or host country preferences
Hiring of the person best suited to foster the companies goals and solve problems
world wide
maxing the increase of revenue supply
foster new skills and,
knowledge and transfer of advanced technology
product differentiation, diversifying functions
collaborative network between headquarters and subsidiaries
Benefits ?
Integrated global outlook
World-wide utilization of resources, best resources
Improved local country management
Greater commitment to global objectives …higher profit potential
Costs ?
High communication and travel costs, education cost
Time consuming decision making process
Can have bureaucracy in international headquarters, too wide distribution of power
Personnel problems , international executive reentry
Strategy Options for MNEs as
Interorganizational Networks
Strategy Options for MNEs as
Interorganizational Networks
Bartlett, C. A., & Ghoshal, S. 1989:
Managing across bor-ders: The transnational
solution. Boston: Harvard Business School Press.
Role of networks
Role of products
Strategy Options for MNEs as
Interorganizational Networks
Bartlett, C. A., & Ghoshal, S. 1989:
Managing across borders: The transnational solution. Boston: Harvard Business School Press.
INTERNATIONALl STRATEGY
-local needs are important
-operate on integrated basis
-transfer of knowledge &
technology cross nation
-Structure: Coordinated Federation
-Examples: pharmaceutical
industries, telecommunication,
Assembling operation, Harley, Brazil
,
Strategy options of MNEs
MULTIDOMESTIC STRATEGY
-respond quickly & effectively to
local needs & regulations
-drastically different customer needs
from country to country
-little or no pressure for centralization
-high degree of independence
-goals are developed and implemented on unit level
-Structure: Decentralized hub
-Examples: banking, beverage industry, food, laundry detergents, Mars ,
Walmart 10 foot role, Cora, Carrefour, Starbucks,
Strategy options of MNEs
GLOBAL STRATEGY
-No or little country specific needs
-Standardized products/services
-Headquarter have key integrating
& controlling role
-Central control over operations worldwide
-Structure: Centralized hub
-Examples:
Boeing
- Design center in Moscow
- Parts supply from China, Mexico
- Assembly in the USA
Strategy options of MNEs
TRANSNATIONAL STRATEGY
-gives managers responsibility and decision making freedom in specific geographical
area
-have the goal of responding to local needs
-still adapting to local products
-best of both worlds
-seek for economies of scale and location advantages
-Structure: Integrated Network
LogiTech : SValley, Switzerl, Taiwan
Strategy options of MNEs
Organization Structure
Organizational structures change due to:
Strain imposed by growth and geographical spread.
The need for improved coordination and control across
business units.
The constraints imposed by host-government regulations
on ownership and equity.
Stages of Internationalization
Export
Sales subsidiary
International Division
Global Product Division
Global Area Division
Issues related to structure
driven by strategy and culture
The extent to which key decisions are to be made at
the parent-country headquarters or at the subsidiary
units (centralization versus decentralization).
The type or form of control exerted by the parent
over the subsidiary unit.
Role of MNEs‟ culture
Exercise 2. TYPWARE (Feb 29
th
AM)
How would you describe Typware based on
Perlmutter's EPG model?
What internationalization strategy does Typware
follow now? What is their potential for the future ?
Team 1 and 2 will presents
All teams need to submit their work
Exercise 3. ARTICLE (Feb 29
th
PM)
Review distributed article about: Selection for
international assignments
Summarize key messages
Team 3 and 4 will presents
All teams need to submit their work
Workforce Planning
& Staffing Internationally
International Assignments
February 29
th
AM
Team 1 and 2 present: Exercise 2.
Global Talent Management
..among the reasons to globalize..
Staffing, acquisition and retention of global talent
Challenges
Effective policies and practices
Quality of a firm: ability to learn and perform
Work force planning and staffing
Relocation of employees
Work force planning and staffing
•
Estimate employment needs
•
Develop plans
•
Work force – labor force
•
Size of potential labor force
•
Today‟s global economy → different
languages, cultures, laws
•
Succesful organizations of the future
Data availability
Challenge for IHR: lack of data (emerging and less
developed economies)
Necessary data
Prepared by government or international agencies
(ILO, OECD)
Emerging markets: inadequate, inaccurate, politically
motivated data
Data from independent sources
Shortage and Surplus
Developed economies: aging population → labor
shortage
Emerging economies: large young labor forces →
lack the skill required by MNEs
Foothold in a developing country: company needs
to research labor costs, cultural diffenrences,
benefit, legal background, role of government
Labor Mobility
•
Emigration and immigration
–
Voluntary or forced
–
Legal or illegal
–
Planned or unplanned
–
Formal or informal
-> option for MNEs to developing their global work
forces
-> Treaties to facilitate movement of workers
Brain draining and Job exporting
Educated and skilled citizens leave for jobs with
better pay in developed countries
Alternative: job exporting from developed
economies to developing countries
Task of IHR managers
Staffing of MNEs
Staffing at local level
Management of the mobile work force
Staffing options:
Ethnocentric
Polycentric
Geocentric
Regiocentric
Terms
83
Expatriate roles:
agent of direct control
agent of socialization
language node
network builder
boundary spanner
Approaches to staffing:
inpatriates
expatriates
flexpatriates
Assignments:
short-term
extended
traditional
commuter
rotational
contractual
virtual
ethnocentric
polycentric
geocentric
regiocentric
ROI approach
Determinants of Staffing Choices
Reasons for International Assignments
Filling a position
Management development/Carrier management
Organization development
Types of IAs:
Short term
up to 3months
Extended
up to 1year
Long term
1 to 5 years
Some non-standard assignments:
Commuter: go home every one to two weeks
Rotational: commute for set period followed by
break in home country
Contractual: specific skills employees hired for 6 to 12
months on specific projects
Virtual: employee manages international responsibilities
from home country base
Long versus Short-term Assignments
Role of Expatriate
ROI indicators for calculating
international assignments
4-steps to calculate expatriate ROI
1.
Identify financial and non-financial costs and
benefits.
2.
Link the costs and benefits to the purpose of the
long-term assignment.
3.
Identify the appropriate antecedents from a
system‟s perspective.
4.
Conduct the calculation at an appropriate time
within the context of the assignment‟s purpose
Exercise 2. TYPWARE
How would you describe Typware based on
Perlmutter's EPG model?
What internationalization strategy does Typware
follow now? What is their potential for the future ?
Team 1 and 2 will presents
All teams need to submit their work
Recruiting & selecting for IA
February 29
th
AM
Team 1 and 2 present: Exercise 2.
Global manager ?
There is a universal approach to management.
People can acquire multicultural adaptability and
behaviors.
There are common characteristics shared by
successful international managers.
There are no impediments to mobility
.
Expatriate Profile
IA: factors influencing performance
Developing a pool of candidates
Firms can develop more lead time to manage the IA
selection process
Identifying candidates for open position
Transfer archetypes
Low
Al
leg
iance
to the
local
fi
rm
Free agents(41%)
Adaptation strategy:
marginalization
(deculturation)
Characteristics:
-flexibility
-adventousness
Heart at home(12%)
Separation
Characteristics:
-commitment to the
company
Perseverance
High
Going native (15%)
Assimilation
Characteristics:
-extroversion
-cultural empathy
Dual citizens (32%)
Integration
(multiculturalism)
Characteristics:
-open-mindedness
-orientation to action
Low
High
Allegiance to the parent firm
Selection
Critically important
Specific tasks and national culture
Factors of succesful selection
Viewpoint of person:
Increased pay
Career opprtunities
Company side:
Problem of selection
Selection Methods
•
Interviews
•
Formal assesment
•
Committee decision
•
Career planning
•
Self-selection
•
Internal job posting and individual bid
•
Recommendations
•
Assessment Centers
Challenges in Successful Staffing
1.
Partners
2.
Language
3.
Families
4.
Women expatriates
5.
Lifestyle
6.
Localization
7.
Career development
8.
Costs of IAs
Exercise 3. TYPWARE
Review distributed article about: Selection for
international assignments
Summarize key messages
Team 3 and 4 will presents
All teams need to submit their work
Key Success Factors for Expatriates
Self-oriented: Expresses adaptive concern for self-
preservation, self-enjoyment, mental hygiene.
Perceptual: Accurately understands why host
nationals behave the way they do.
Others-oriented: Cares about host national co-
workers and affiliates with them.
Cultural-toughness: Able to handle the degree to
which the culture of the host country is incongruent
with that of the home country.
Repatriation
At the end of the assignment
returning home,
redeployed to another country or
becomes localized in the host country
Back-home mentor or sponsor
Challenge for the IA and family members
Managing change
Mistakes and Failures
Succes or failure
Dropout, brownout, turnover upon repatriation
Definition of expatriate failure
Reason for early return
Mistakes in selecting IAs
Reasons for Early return
Family concerns
Accepted new position in the company
Completed assignment early
Cultural adjustment challenges
Security concerns
Career concerns
Lifecycle of an IA
International Compensation
Performance Management
Carrier Management
February 29
th
PM
Team 3 and 4 present: Exercise 3.
Compensation
More than just level of pay
Health care
Pension plans
Vacation
Personal time off
Recreation/health facilities
Great variations within a culture and across cultures
Meaning of Compensation
Exchange of effort and output for wages and
benefits
Western individualist cultural perspective
Achievement
Protection or safety net
Entitlement and obligation
Compensation
(Cont‟d)
Great variations across countries
Many companies look for low-cost labor
Labor not the only cost a company should consider
Companies should consider tax issues for both the
company and for the employee
Perks (benefits) part of total compensation
CEO Compensation
Relative compensation
Perks (benefits) and other compensation
Total compensation
CEO Compensation In Several Countries
Paid Vacation Days in Various Countries
Basis for Compensation
Equity principle
Bonus system and net pay
Loyalty and commitment
Philosophy toward compensation is changing in
many places
Systems becoming more similar, yet still large
differences
Compensation Practices across Cultures
Potential Sources of Costs Associated
with Expatriation
Models for Expatriate Compensation
Ad hoc approach
Individually negotiated
Models for Expatriate Compensation
Ad hoc approach
Individually negotiated
Localization
Paying the same as local nationals
Models for Expatriate Compensation
Ad hoc approach
Individually negotiated
Localization
National system:
Paying the same as local nationals
Regional system: those who make commitment to job
assignment within a particular region of the world
Global system: MNEs will have two general pay
classifications:
-
Local employees
-
International
Models for Expatriate Compensation
Ad hoc approach
Individually negotiated
Localization
Paying the same as local/regional/ local-international
Balance sheet method
Keep the expatriate “whole”
Same standard of living
Purchase Power Parity:
The degree to which an expatriate‟s
money will purchase the same items in a foreign locale.
Balance Sheet Approach Expatriate Compensation
Housing Costs in Foreign Cities
Expatriate compensation worksheet
Taxes
Technical and difficult to deal with
Large number of tax, securities, and currency
control rules
Consider marginal tax rates and tax-equalization
agreements
Balance Sheet Approach
Advantages
Goal to treat expatriate
fairly
Minimize hardship
Disadvantages
Difficult to administer
Complex to explain
Requires collecting or
buying data, and
monitoring for changes
Tax Rates Around The World
Living Expenses
Food, transportation, clothing, entertainment, etc.
Difficult to estimate due to fluctuations
Keeping lifestyle and consumption choices
Cost Estimates for Goods and
Services in Various World Cities
The Big Mac in Various Countries
Performance Management
Carrier Management
February 29
th
PM
MNEs performance management
Performance measurement in MNEs
IPM: ”the designed, implemented and evaluated intervention of
an MNE for the purpose of managing the performance of its
global work force, so that performance (at the individual, team
and organizational level) contributes to the attainment of strategic
global objectives”
Purpose
Evaluation and development
Feedback, promotion, motivation, training, optimal
performance
An example
MNE Control of Performance
Factors impacting Expatriate‟s
Performance
PERFORMANCE MANAGEMENT
Performance wheel:
setting employee performance expectations
regularly monitoring performance
providing ongoing feedback
performance appraisals / evaluations
career guidance
reward system
International context: more complex than domestic
PM of international assignees
Critical to the success of an MNE
Expatriates are very expensive
Increased autonomy – greater impact on the subsidiary‟s performance
International assignees have to be open-minded and flexible
International assignees are subjected to a more intense working
environment, but the often distant evaluators seldom understand
these difficulties
83% of MNEs don‟t use PM systems for international assignees
35% don‟t use any PM system
Categories for Evaluation
Qualifications : Training, Experience, Technical skills, Social and
language skills, Education
Targets – Directly derived from the parent company‟s objectives,
From the subsidiary‟s objectives, From local objectives,
Individually dictated
Attitude for: Flexibility, Interpersonal understanding and
communication skills, Ability to cope with the stress,
Openness to change
Job performance: Result areas, Development of local team,
Communication and decision making, Personal growth
and development, Application of expertise
Who should do the evaluation?
Most MNEs found the answer in the use of multiple reviewers
Additional reviewers may not be as directly familiar with the work of the
international assignee BUT they may be able to add neccessary perspective.
(peers, customers, clients…etc)
360° review: above, below, peer review, self-review
Most IAs have some type of direct supervision from someone in the home
country PLUS usually a direct supervisor in the host country as well
Visits from home country staff and line employees,
Direct contacts in the foreign location with local customers, suppliers, banks
and government and community officials.
Home vs. Host country raters
Home: little knowledge of local circumstances and
cultura and their impacts, achieving equivalent
results may require larger efforts
Host: asked the opinion of local management,
often they are supervisors too, they are familiar with
international assignees‟ performance, evaluations
governed by their own cultural backgrounds
How to evaluate?
Form
Each firm develop standard forms (developed for domestic
situation -> may be problematic)
Must take into account languages and cultural contexts
Frequency
Difficult to remember to the past 6-12 months
The more frequent the evaluation the better the feedback (few
weeks, after significant projects)
Also vary according to the role of the evaluator
Feedback
A timely feedback of the results of the evaluation is an
important component for an effective performance management
Guidelines for the PM
1.
PM into the expatriate‟s international assignment plan and discuss
the process prior to departure
2.
Set clear performance expectations for the IA with the home AND
host country managers
3.
Specify what successful performance in the host country entails
4.
Use soft and hard performance criteria
5.
Conduct frame-of-reference training for both the raters and the
ratee
6.
Frequent evaluations yet also more time to obtain results.
Carrier Management
February 29
th
PM
From to be an expatriate
to change to an repatriate
Shock to leave, shock to return
Any personal experiences?
Challenges of Repatriation
Values of Repatriation
Difficulties of ROI on Repatriate
Receiving feedback from the business unit concerned.
Tracking international assignments in a systematic way
No formal planning
A lack of objective measures
Too many decisions being made without realizing the
costs relating to the international assignment.
Globalization is a „must‟ -so the ROI almost doesn‟t
matter.
Repatriation can include …
…..complex process, major effort.
Potential results of an IA
IA : is not for everyone, not for any
circumstances
Al
leg
iance
to the
local
fi
rm
Free agents(41%)
Adaptation
strategy:marginalization
(deculturation)
Characteristics:
-flexibility
-adventousness
Heart at home(12%)
Separation
Characteristics:
-commitment to the
company
Perseverance
High
Going native (15%)
Assimilation
Characteristics:
-extroversion
-cultural empathy
Dual citizens (32%)
Integration
(multiculturalism)
Characteristics:
-open-mindedness
-orientation to action
Low
High
Allegiance to the parent firm
Additional IA compensation issues
1) Method of payment
Local host or home country currenc or a split pay
combination
Split pay:
Cover daily living expenses
Covering financial obligations in the home country
But! Protects against currency exchange rate fluctuations,
impact of differential inflation
2) Impact of exchange rate fluctuations
Alter the figures in the balance sheet for the IA
As exchange rates fluctuate up and down-> impact
differential (between the host and home country spendables)
3) Impact of inflation
When net inflation goes up, host country spendables increase ->
differential goes up (direct relation)
4) Social security
Bilateral social security treaties in order to eliminate double
taxation – referred to as totalization agreements
Purpose: to eliminate dual social security taxation
Territorial rule: exclusively to the coverage laws of the host
country
„Detached worker”: temporarily transferred – remains covered
by the country from which he or she has been sent.
Some countries have funds that require payment by the
international assignee into the fund. (contributions may be
recovered)
Additional IA compensation issues
Exercise 4. (March 1st AM)
Case Study Review
Determining the core issues of the case study. Level
of complexity, priority, time span.
Team 5 and 6 will presents
All teams need to submit their work
Exercise 5. (March 1st PM)
Case Study Review
Mapping potential solution, options.
Team 7 and 8 will presents
All teams need to submit their work
International Training &
Development
March 1
st
AM
Team 5 and 6 present: Exercise 4.
Exercise 4. (March 1st AM)
Case Study Review
Determining the core issues of the case study. Level
of complexity, priority, time span.
Team 5 and 6 will presents
All teams need to submit their work
Intern. Training & Development
Complexities, challenges,
and future in IHRM
March 1
st
PM
Team 7 and 8 present: Exercise 5.
Terms
15
9
cultural awareness
pre-departure training
preliminary visits
international business travelers
international ‘cadre’
training
development
language training
international English
corporate language
International Training and
Development
The Mendenhall, Dunbar and Oddou cross-
cultural training model
Role of Cultural Trainings
Exercise 5. (March 1st PM)
Case Study Review
Mapping potential solution, options.
Team 7 and 8 will presents
All teams need to submit their work
Complexities, challenges,
and future in IHRM
March 1
st
PM
Team 7 and 8 present: Exercise 5.
Test /Case Study Recos
March 2
st
AM
Exercise 6.
Exercise 6. (March 2
nd
AM)
Case Study Review
Present your recommendations
All teams need to submit their work
Best two team will present
Discuss, challenge, reason each other!
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