6_International Human Resource Management

Expatriate Attrition

- 21% of expatriates leave the company during an assignment - 31% leave within one year of returning from an assignment - 24% leave between the first and second year of returning from an assignment - 24% leave after two years of returning from an assignment

Long-Term Goals (Phase 5)

- Cross-cultural adjustment - Success on the assignment

Variables effecting international employee performance

- Individual Performance, - salary & benefit, - task, - HQ Support, - Host Environment, - Cultural Adjustment

What are the major international staffing approaches?

- Parent-country-National/PCN (Ethnocentric) - Host-country-National/HCN (Polycentric) -Third-country National/TCN (Geocentric)

Current Trends in IHRM

- Retention/turnoveris still what keeps HR up at night - Values-based recognition programs give you the most bang for your buck - The sweet spot for rewards & recognition budget is 1% or more of payroll - Human workplace programs are no longer just "nice-to-haves" - More coaches, not managers

What are some of the current or emergent trends in global HRM? (1)

- The top challenges global organizations are facing today are employee engagement (64%), succession planning (56%), retention and turnover(51%). - Reward and mobility professionals are investing in peer-to-peer recognitionto address their biggest challenges in engaging employees and recognizing performance - While many companies still conduct annual reviews, there may be underlying dissatisfaction with traditional performance management approaches

International Assignee Characteristics

- job factors - relational dimensions - Motivational State - family situation - language skills

What are some of the current or emergent trends in global HRM? (3)

Changing nature of global economic landscape: India, China, CEE, East Asia Increasing Global Terrorism Changing Careers Changing Patterns of Global Staffing

Short-Term Goals (Phase 5)

Cognitive: Stress management; Awareness of the norms required to effectively interact with host-country nationals Affective: Changing the expatriates' perception about the host culture; Enhancing their self-confidence in intercultural communication Behavioral: Developing intercultural skills; Negotiating skills; Relationship-building skills

COLA

Cost of Living Adjustment/Allowance

Phase 1, The troubleshooter

Functional/Tactical: the troubleshooteris the individual who is sent to a foreign subsidiary to analyze and solve a particular operational problem

Compensation

Home-based approaches, Host-based approaches, Hybrid approaches

Phase 4: Develop & Deliver the CCT Program

Instructional Contentstructure should follow an integrated approach consisting of both general cultural orientation and specific cultural orientation (i.e. cultural training, language training) Instructional Methodscan be categorized according to learning approach (didactic vs. experimential) and the content of the training (culture-general vs. culture-specific) Sequence: of training sessions can take the form of pre-departure CCT (provided before departure), in-country CCT (provided after arrival in the new country), or sequential CCT (combination of the two)

Phase 3 Establish CCT Goals & Measures

Short-term goals specify what the expatriate should be able to accomplish on completion of the CCT program. Short-term goals can result in cognitive, affective, and behavioral changes Long-term goals, reflect the expected outcome of the expatriate assignment, such as cross-cultural adjustment and success on the assignment

Phase 1, The chief executive officer

Strategic/Executive: the chief executive officer, or subsidiary manager, who oversees and directs the entire foreign operation

Approaches to Expatriate Taxation

Tax equalization: employers withhold an amount equal to the home-country tax obligation of the international assignee, and pay all taxes in the host country Tax protection: employee pays up to the amount of taxes they would pay on remuneration in the home country Ad hoc: case-by-case approach depending on the terms of employment Laissez-faire: international assignee decides which option is best for them and "sorts it out on their own"

Phase 1: Four Types of international Assignments

Technical, Functional/Technical, Developmental/High Potential, Strategic/Executive

Phase 1, The operative

Technical: the operativeis the individual whose assignment is to perform functional job tasks in an existing operational structure, in generally lower level, supervisory positions

Third-Country Nationals (TCNs)

These employees are not from the home country or the host country. TCNs have traditionally been technical or professional employees hired for short-term employment and are often considered as international freelance employees.

functional assignments

enduring assignments with local employees that involve the two-way transfer of existing processes and practices. 55-80% of assignments

Development Assignments

focus on in-country performance and the acquisition of local or regional understanding by the assignee . 5 -10% of assignments

Strategic Assigments

high-profile activities that focus on developing a balanced global perspective. 10 -15% of assignments

Host-Country Nationals (HCNs)

is an employee who is a citizen of a country in which an organization's branch or plant is located, but the organization is headquartered in another country

Parent Country Nationals (PCN)

parent-country national (PCN) is a person working in a country other than his/her country of origin (Home/Native Country). • Such a person is also referred to as an expatriate.

Phase 2, Individual/Expatriate Level Analysis

to determine any special needs that have to be addressed in CCT for a given person

Phase 2, Assignment Level Analysis:

to determine the cross-cultural knowledge and skills required to effectively complete the given assignment

Phase 2, Organizational Level Analysis

to determine the organizational context for (CCT) Cross-cultural training

Training and Development

training, education, development

Technical Assignments

typically short-term knowledge transference activities. 5 -10% of expatriate assignments

Disadvantages of Parent Country Nationals Strategy

•Adapting to foreign environment may be difficult for manager and family, and result in less productivity •Expatriate may not have cultural sensitivity •Language barriers •Cost of visa and hiring factors

Host-based Approach Advantages (Compensation)

•Consistent treatment of assignees from different home countries •Equity with host-country peers •Simple to administer •Can be cheaper if used judiciously

Select Country Approach Advantages

•Equity of standards across the assignee population •Can promote mobility from low-salary to high-salary countries •A solution for career expats with weak home-country ties

Advantages of Parent Country Nationals Strategy

•Greater organizational control •Managers gain experience in localmarkets •Possible greater understanding and implementation of business strategy •Cultural understanding •Morale builder for employees of host country

Host-based Approach Disadvantages (Compensation)

•Harder to repatriate;no link to the home •Might not match home living standards;no RelativeBuying Powerprotection •Creates 'Good' and 'Bad' postings

Disadvantages of Host Country National

•Host-country manager may not understand business objectives as well without proper training •May create a "us" vs. "them" perception

Advantages of Host Country National

•Language barrier is eliminated •Possible better understanding of local rules and laws •Hiring costs such as visas are eliminated

Hybrid Approach Disadvantages (Compensation)

•Link to home country compensation may not be sufficient to encourage repatriation •Not appropriate for moves from high-salary to low-salary countries •Dependency on third-party data (spendable tables, hypothetical tax etc.) •Complex to administer and difficult to explain to assignees

Home-based Approach Advantages (Compensation)

•Maintains link to home country compensation structure;easier re-integration •Treats everybody from one country the same way •Home country purchasing power protected •Assignee earns no less at net level than he or she would have at home •Promotes mobility;assignee does not suffer financially regardless of assignment location

Hybrid Approach Advantages (Compensation)

•Maintains some link to home country compensation structure;easier re-integration •Equity of living standards with host-country peers •Can promote mobility from low-salary to high-salary countries •Can be cost-effective in some cases

Disadvantages of Third Country National

•Must consider traditional national hostilities •The host government and/or local business may resent hiring a third-country national •Can affect motivation of local workers

Home-based Approach Disadvantages (Compensation)

•No tie to the local national salary structure •Generates different pay levels among peers in the host location •Complex administration •Dependency on third-party data (cost of living, hypothetical tax etc.) •Complexity grows with the number of countries

Advantages of Third Country National

•The third-country national may be better equipped to bring the international perspective to the business •Costs associated with hiring such as visas may be less expensive than with home-country nationals

Select Country Approach Disadvantages

•Weak link to home country does not encourage repatriation •Potential resistance to moves from high-salary countries and repatriation from low-salary countries •No equity with host-country peers •Requires knowledge of select country salary structure and job grading system •Complex administration and difficult to explain to assignees •May not be cost-effective

What are the most common approaches to international compensation?

1. Home-based approaches 2. Host-based approaches 3. Hybrid approaches

List the 5 Phases of an international T&D program

1. Identify the Type of Global Assignment 2. Determine (CCT) Needs 3. Establish Goals and Measures 4. Develop & Deliver the CCT Program 5. Evaluate the (CCT) Program

Why is cross-cultural training important?

1. Proven effectiveness 2. Critical to successful cross-cultural interaction 3. Enhances cross-cultural adjustment 4. Hastens the development of cross-cultural competence in a foreign country 5. Increases the overall performance of the international assignee

What are some of the current or emergent trends in global HRM? (2)

1. Retention/turnoveris still what keeps HR up at night 2. Values-based recognition programs give you the most bang for your buck 3. The sweet spot for rewards & recognition budget is 1% or more of payroll 4. Human workplace programs are no longer just "nice-to-haves" 5. More coaches, not managers

What are the 3 Best Practices for successful repatriation?

1. When making international assignments, focus on knowledge creation and global leadership development. (Send people for the right reasons) 2. Assign overseas posts to people whose technical skills are matched or exceeded by their cross-cultural abilities. (Send the right people) 3. End expatriate assignments with a deliberate repatriation process (Finish the right way)

Phase 5: CCT Program Evaluation

Short-Term Goals Long-Term Goals

Phase 1, Structure Reproducer

Developmental/High Potential: the structure reproducer carries the assignment of building or reproducing in a foreign subsidiary a structure similar to that which he or she knows from another part of the company

What are the differences between domestic and international HRM?

Domestic HRM: include recruitment, planning, training, performance appraisal and compensation International HRM addresses a broader range of activitiesthan domestic HRM. Human resource managers working in an international environment must address HR issues of employees belonging to more than one nationality. International HRM requires greater involvement in the personal lifeof employees. There is heightened exposure to risks in international assignments. International HRM has to deal with more external factorsthan domestic HRM.

The Acculturation Process

Euphoria, Culture shock, Acculturation, end stage

Phase 2: Cross-cultural training needs analysis

Organizational Level Analysis, Individual/Expatriate Level Analysis, Assignment Level Analysis:

General Adaption Syndrom to explain expatriate stress

Pre-alarm, Alarm, resistance, exhaustion

Role Conception

Role Conception is more difficult for the Third-Country National, than the parent-Country National

International Salary Spine Approach

The aim of an international salary spine is to provide a solution when traditional remuneration models may not be appropriate. It is often used for attracting and retaining assignees of high value who are expected to be continuously onwardly mobile. It can also be used for 'global nomads' at a variety of job levels - that is, employees who do not have a home country role but rather undertake a series of assignments internationally. Industries which often use an international salary spine include oil and gas, construction, leisure (specifically where employees are aboard vessels), and non-profit organizations. Another instance in which this remuneration model is useful is when employees have been externally recruited from locations where the organization has no presence and therefore no pay structure to refer to. It involves paying all assignees at the same tier on the basis of an international standard, set at a higher level than the local salaries in most individual countries. This method is comparable to the select country approach, in which one country's local salary structure is referenced for all assignees - usually the country where the company is headquartered, or the prevailing home country of the assignee population. The main difference is that an international salary spine is typically calculated by taking average salaries across a range of operating countries, or regionally. An international job grading system is required to ensure that all positions can be mapped to the salary scale, ensuring consistency and equity in base salary regardless of assignees' country of origin. Having an international job grading system also facilitates repatriation, where required. If there is no link between the home country job grading system and the international one, transitioning from the international salary spine to the home country pay structure will be problematic.

Select Country Approach

The aim of the select country approach to calculating pay is to apply the same standards to the whole expatriate workforce, regardless of their nationality or home country