HTM 260 Chapter 3

International Human Resource Strategy

1) developing an international HR management strategy 2) developing an understanding of the political and legal environment of HRM 3)developing an understanding of the cultural environment of HRM

Issue of conflict in international business

1) discrimination 2) determination of the most appropriate source of employees; host-country, home country or third country 3) complex training and development challenges 4) working conditions, compensation, and cost of living

Geert Hofstede's five dimensions of national culture

1) power distance (or status and authority differences between a superior and a subordinate) 2) individualism versus collectivism (or the extent to which persons define themselves as individuals rather than as members of groups) 3) masculinity vs femininity (assertive, competitive, success-driven values versus quality of life, relationship-oriented values in society) 4) uncertainty avoidance (or preferences for structured rather than unstructured situations) 5) time orientation (or emphasizing long-term values such as thrift and persistence versus short-term values such as fulfilling social obligations

GLOBE project cultural variations and their impact on managerial practices

1) uncertainty avoidance (hofstede) 2) power distance (hofstede) 4) assertiveness (same as masculinity vs femininity in hofstede) 5) in group collectivism: how much pride people take in the groups and organizations to which they belong 6) gender egalitarianism refers to equal opportunities for men and women in society 7) future orientation: degree to which ppl value long-term planning and investing in the future 8) performance orientation: degree to which people value and reward improvement and excellence in school, athletics and at work 9) humane orientation: degree to which people value caring, altruistic and generous behavior

selecting expatriates

1st step: define define the actual skills necessary to do the job (technical skills and cultural skills are important to have) Often use headhunters to recruit managers. Then selects managers it needs for foreign assignments (make sure him and his family adapt well to culture) Managers are prepared for reality of what they will expect overseas, don't get disillusioned (refer to page 66-68 in text)

Expatriates and corporate international strategy

Global (one strategy for all) -lowest risk of agency problems because expatriates not capable of making important decisions and have less opportunity to behave opportunistically International (one strategy adapted for local needs)- low risk of agency problems because relies heavily on headquarters expertise although the expertise is adapted to local needs transnational (high transfer with much independence)- high risk of agency problems b/c expatriates expected to acquire, leverage and transfer specialized knowledge. multidomestic (strategy developed in each country)- highest risk of agency problems b/c all decision making is decentralized

Political and legal issues

Government stability: can be thought of as either the ability of a given government to stay in power against opposing factions or as the permanence of gov policies toward business Trade incentives: incentives for international trade that are sometimes offered to attract foreign business such as tax breaks. Trade controls: -Tarrif: tax collected on goods shipped across national boundries -Quota: most popular, limit on the number or value of goods that can be traded, designed to ensure domestic competitors will be able to maintain pre-determined market share Economic communities: consist of sets of countries that agree to reduce or eliminate trade barriers among their member nations. European Union is most common (EU)

local training issues

Must understand the training and development of needs of the host countries workforce to help host-country nationals to perform their jobs most effectively. Needs of local workforce depend on several factors. 1) location of foreign market 2) training

NAFTA

North American Free trade agreement reduced trade barriers between canada, the united states and mexico.

Expatriates

are employees who are sent by a firm to work in another country; they may be either parent-country or third-country nationals

Reparition

bringing expatriate manager home. Hard on personal level (may have liked living there, have to readjust to american culture) and hard on professional level ( may have lost status within the office, old job may no longer exists and concerned about nature of new assignment) Half of reparition managers leave company within 2 years.

polycentric staffing model

calls for much heavier use of host-country nations (HCNs) from top to bottom throughout the organization. Used with the assumption that such individuals (HCN) are better equipped to deal with local market conditions. Organizations using this usually have a fully functioning HR department in each foreign subsidiary that is responsible for managing all HR issues for lower and upper level employees alike.

local compensation issues

compensation must be addressed at a local level for international businesses. US focuses on assessing an individuals performance and compensating individually. Other countries focus more on groups.

training expatriates

enhancing specific-job related skills and abilities and most often focuses on operating employees and technical specialist. -language training -history of country -daily living conditions of that country -social manners of that country

compensating expatriates

hardship premium or foreign service premium: additional financial incentive offered to individuals to entice them to accept a "less than attractive" international assignment, special benefits given as well. pay children's private school tuition if needed, medical benefits, travel allowance for trips home to parent-country.

local recruiting and selection issues

host country nationals are usually cheaper to employ than parent or third country nationals. (Read page 64 of txt)

licensing

involves one company granting its permission to another company in a foreign country to manufacture or market its products in its local market

direct foreign investment

occurs when a firm headquartered in one country builds or purchases operating facilities or subsidiaries in a foreign country

ethnocentric staffing model

primarily uses parent-country nationals to staff high level foreign positions. Based on assumption that home-office perspectives and issues should take precedence over local perspectives and issues and that parent-country nationals will be more effective in representing the views of home office in the foreign operation. primarily concerned with selecting and training managers for foreign assignments, developing appropriate compensation packages for those managers, and handling adjustment issues for local employees hired to fill lower-level positions in the firm

exporting

process of making a product in the firms domestic marketplace and then selling it in another country. Can involve goods and services

geocentric staffing model

puts parent country, host country, and third-country nationals all in the same category with the firm attempting to always hire the best person available for a position. Adopted by fully internationalized firms such as Nestle.

culture

set of values that helps an organizations members understand what it stands for, how it does things and what is considers important. Significant issues arise when different companies have vastly different cultures and it is hard to communicate (Canada and India)

joint venture (strategic alliance)

two or more firms cooperate in the ownership or management of an operation on an equity basis