Global HRM Final

Home Country Salaries

(from developed to developing countries) -The primary base for the home country-based balance sheet approach. -Useful for short international assignments

Host country salaries

(from developing to developed) --Use of destination salaries in the host location --Address the high need of equity -Many firms prefer to follow the Headquarters (international) or home-country base to minimize complexity. -If a firm operates in few countries, they might prefer to utilize the Host- country base. -Better of home or host approach

HR Planning

(including employee forecasts, career plans for managers, and succession planning for executives)

The HR information system

(including maintaining records on employees and employee programs, such as hiring and job history, education and training and development, health insurance and other benefits, and providing HR reports)

Categories of Employee Benefits

*remember to always account for the perceived value and not only the actual cost* - core benefits - required benefits - recommended benefits - optional benefits

International Remuneration Challenges:

- Comparability - Cultural Values for Rewards - Salary-Benefit Ratios - Tax laws differ tremendously across nations - Sunshine Rules - How salaries are expressed? - Labor relations, collective bargaining, and employee representation -National laws and Regulations -Global Law of Economics -Government-provided and mandated benefits -due diligence and post-merger integration phases -Equity versus comparability

Types of Equity Compensation

- Employee stock ownership plans - Employee stock purchase plans -Stock options plans -Stock appreciation rights -phantom Stocks

What Should Be Evaluated? IA Performance Appraisal Criteria

- Individual Qualifications - Performance Targets - Attitude Toward The Assignment - Job Performance

THE IHRM DEPARTMENT

- Organizational advancement of IHRM - Involvement of the IHRM department Support services The IHRM department must have a clear agenda to help the MNE conduct business on a global scale -Partnering with management in formulating the global strategy for the firm -Developing necessary competencies among senior IHR staff to contribute as partners -Developing processes and concepts for top management as they develop the global strategy such as scanning HR issues worldwide, helping in HR-related decision making, and assisting in ensuring the learning process. -Helping in developing the structure and the management global mindset.

In the typical domestic HR department, a number of activities performed are referred to as support services. These Include:

- The HR information system - HR planning - Job analysis -Job evaluations

International Compensation and Benefits Management

- collection of valid salary data - data privacy - benchmarking best practices - IHR cost concerns - Payroll maintenance

Employee Health and Safety Around the World: Country or Regional Level Factors

- health and safety statistics - health and safety laws and standards -family-friendly policies and work-life balance

C & B Issues Specific to the United States

- taxation of US international assignees - compensation by foreign multinationals in the US - compensation and taxation of foreign nationals working in the US

Factors affecting IPM system effectiveness:

-*Relevance* to job content and situational requirements (content validity) -*Acceptability* of evaluation criteria and process to evaluators and ratees (face validity) -*Sensitivity* to cultural and international business realities (dimensional and contextual realities) -*Practicality* in ease of use of the evaluation system

Guidelines for International Performance Management in an MNE

-Achieving a "Glocalization" Strategy -Balancing standardization with localization

PERFORMANCE MEASUREMENT AND THE MNE

-An international employee PM system is a designed, implemented, and evaluated intervention of an MNE for the purpose of managing the performance of its global workforce so that performance at all levels contributes to the attainment of strategic global objectives and results in overall MNE desired performance. -Should be linked to job analysis, total rewards, training and promotions, learning and development and talent development. Focus on the Western context: --Focus on greater accountability --Usage of more objective measures and metrics --Involvement of multiple raters --Ongoing coaching and development

Headquarters Salaries

-An international standard based on headquarters -Especially useful when the assignment is long or/and with many international transfers.

IHR Information Systems

-As firms internationalize their business operations they eventually reach the point where they need to internationalize their information systems -Special Problems - Global HR information systems (HRIS) create special problems for HR -Management Considerations - There are a number of policy decisions that IHR must take to develop a global HRIS, such as developing separate (for each location or region, for example) or integrated information systems

Main Objectives of MNE's Global Compensation and Benefits Programs

-Attraction and retention of the best qualified talent to staff the MNE, in all of its locations. -Attraction and retention of employees who are qualified for international assignments. -Facilitation of transfers between the various employment locations within the MNE. -Establishment and maintenance of a consistent and reasonable relationship between the compensation of employees at home and abroad. -Maintenance of compensation that is reasonable in relation to the practices of competitors yet minimizes costs to the extent possible.

Problems with IPM Systems

-Choice of evaluator (e.g., local or parent company) -Inadequate contact between home country rater and subsidiary rater -Home-headquarters difficulties with communications -Differences in home and host country's perceptions of expected performance and actual behavior -Unclear and/or contradictory performance objectives for the foreign operations -Inadequate recording of individual and organizational performance -Home country ethnocentrism and lack of understanding of the foreign environment and culture -Indifference to foreign experience of expatriates and to the importance of the international business

Concerns for the MNE's global workforce

-Coping with health and safety practices and regulations that vary from country to country -Establishing health and safety policies on a global basis for all employees of the MNE -Dealing with the health and safety concerns of business travelers (BTs) and IAs and their families -Preventing kidnapping and/or terrorist acts against foreign operations and IAs and their families -Dealing with real and potential, natural and man-made, threats and disasters -Attaining work-life balance for workers in markets with differing levels of economic development

Culture and Performance Management

-Cultural value dimensions influence the way in which performance is evaluated (especially power distance, collectivism, harmony, face...etc.). -The PM process must be adapted to the cultural characteristics of host countries to be effective -There are signs of convergence towards accepted IPM best practices; however, cultural practice differences remain important -Culture affects performance criteria, method of appraisal, and performance feedback -A strong internal organizational culture can buffer the impact of local national culture

Negotiation/Ad hoc

-Early in its internationalization, MNEs tend to do whatever it takes to get the person relocated and pays costs whenever they arise. -When negotiating, the best negotiator wins and set the standards for future IAs. -It is always better to set a standards before sending IAs, even if they are few. -Remember, the results of the first C&B negotiation process will set the bar for future IAs.

____________ is an equity compensation plan where MNEs provide stocks in the future only when the stock price increases.

-Employee Stock -Ownership Plans -Employee Stock -Purchase plans -Stock Options Plans -Stock Appreciation Rights

Lump Sum

-Firms identify a lump sum, with no categories or allowances, and the employee decide how to spend it. -Usually, it is calculated like the balance sheet.

Determining IA Allowances and Incentives

-Foreign Premium (from 15 to 25% of base salary) Compensate the IA and family for Dislocation -Hardship Posting Premiums (ranges between 5 to 25% of base salary) --Physical Threats (Potential and actual violence, level of hostility, diseases, availability of medical facilities...etc.) --Level of Discomfort (climate, pollution, cultural; geographical and psychological isolation...etc.) --Inconvenience (local education systems, quality housing, lifestyle...etc.) -Performance incentives -Additional Allowances might be offered --Such as Housing, Settling-in, Educational, Relocation, Travel, Training, Transportation...etc.

Purposes of International Performance Management Development Goals:

-Help managers improve their performance and develop future potential -Develop commitment to the company through discussion of career opportunities and career planning with the manager -Motivate employees via recognition of their efforts -Diagnose individual and organizational problems -Identify individual training and development needs

The Performance Management Function

-High performance Organizations work hard to align job expectations with the strategic intent of the organization and rely on highly competent and engaged employees and teams to achieve their objectives. -Performance Management ensures organizational performance and identify possible gaps.

Final Tips

-Hire for international experience -Disperse people with international experience throughout the firm -Learn how to recruit and assign on a global basis -Increase the firm's international information diet -Train everyone in cross-cultural communication, etiquette, protocol, negotiation styles, and ethics -Ensure international developmental assignments -Pursue GPHR certification -Development of IHR managers—this could include: --understanding how the enterprise makes money --knowing how to measure global ROI on IHR programs --developing and using a global HR balanced scorecard (financial performance, customer satisfaction, efficiency of processes, knowledge and innovation). --developing relationships and networks throughout the global enterprise --creating a global HR learning organization

Global Systems

-Implement common global pay and benefits for all employees at each job classification. -Usually for high-levels jobs and technical occupations with international talent shortage. -Partly, this approach is utilized due to the high mobility of such occupational categories, thus C&B should be globally competitive to attract and retain employees.

Professionalization of IHRM

-Importance of the function--> IHRM will need to be recognized by top executives, strategic planners, and line managers, as critical to the success of the global enterprise HRM programs and departments must receive high-priority attention and resources to gain global competitive advantage -Development of IHRM managers Assign upwardly mobile domestic HR generalists to overseas regional staffs for two- to three-year periods (Transfer, Travel, Team) Consider assignments of one or more repatriated IAs from any function to IHR Assign several entry-level university graduates with degrees in human resources to overseas subsidiaries and regional positions (Transfer, Travel, Team) Education:--> There are limited opportunities to gain an education in IHR University and College based education Many IHR consulting firms and providers of IHR services offer short seminars or annual conferences Certification: testing and the body of knowledge--> The Society for Human Resource Management Testing procedure for certifying professional skill and knowledge in IHRM A certificate in IHR will signal that the holder has demonstrated a high level of competency in this relatively new discipline Competencies (General)--> -Cross-cultural interpersonal skills -Ability to learn about multiple cultures -Local responsiveness -Cross-national adaptation -Change and diversity management and international team skills -Coaching and development of global literacy -Ability to manage global risks and global benefits and tax regulations -Ability to identify procedures and measures for demonstrating the ROI, triple bottom-line, and balanced scorecard metrics for IHRM initiatives -Global strategic leadership for the whole organization and its many HR departments and HR managers -Implement effective recruiting and staffing to attract and retain the best talent for a global workforce -Implement formal systems to improve worldwide communications -Implement an International Human Resource Information System (IHRIS) -Foster a global mindset in all employees via training and development -Develop global leadership through design of a program of developmental cross-cultural assignments (career planning) -Position the HR function as a strategic partner in the organization's global business -Demonstrate the worth of IHR programs in terms of global bottom-line contributions and as a major source of worldwide strategic advantage -Design and implement global HR systems, such as training, compensation, performance management, employee relations, and health and safety

Challenges that confront international PM differ from the practice of domestic PM

-Include employee PM for MNE's employees (Far more complex) -Purposes of international PM systems -The impact of culture on the PM process --(meaning of PM, Employee acceptance of the review process, and various cultural dimensions). -Design choices the MNE must make to integrate the PM system into its global operations (Standardization vs. Customization). -International assignees who are on assignments to foreign locales of the MNE.

Guidelines for Performance Management of International Assignees

-Include the specifics of the PA in the IA's international assignment plan and discuss the IPM process prior to the IA's departure -Set clear performance expectations for the IA and the home and host country managers -Specify what successful IA performance in the host country entails -Use both soft and hard performance criteria -Conduct frame-of-reference training for both the raters and the ratee -Modify the frequency of evaluations to give the IA more frequent evaluations yet also more time to obtain results

WELL-BEING OF THE INTERNATIONAL WORKFORCE

-Increasing attention to employee well-being around the world Increasing numbers of employees at potential risk because of increased global trade: --More workers in more locales in "at risk" jobs ---Manufacturing, chemical, mining and affiliated activities such as transportation and construction --More offices and plants in more locations and forms ---Subsidiaries, licenses, joint ventures, alliances, subcontractors Increasing numbers of employees at potential risk because of increased global trade: --Increasing number of business travelers --More people on short- and longer-term international assignments to more countries, often with their families --Growing problems with civil unrest and global terrorism Growing Awareness of the legal "duty of care" for ensuring the safety and well-being of MNE's global workforces. At most countries, HR deals with safety and health issues, thus it is part of the IHRM function (although it is not always the case).

Orientation and Training

-Insurance for emergency medical aid and kidnapping ransom -Information about potential risks in the areas of the world involved -Pre-departure orientation and post-departure follow-up plans for: --Security for IA homes and foreign facilities --Dealing with civil emergencies and evacuation plans for IAs and families --Dealing with media and family "back home" --Lists of information sources and help in crises

Issues that apply specifically to global compensation and to global benefits:

-International compensation -headquarters scale -local scale - global scale - MNEs often create two classifications: local and international with regard to compensation -International Benefits - Working hours - holiday and vacation benefits - pension plans - healthcare - insurance - leaves - flexible benefits - equity compensation

Healthcare

-Is it provided by the private system (such as the US) or provided by the government? -Are employees expecting you to provide additional private healthcare over and above the one provided by the government?

GLOBAL HR SUPPORT SERVICES AND INFORMATION SYSTEMS (CENTRALIZE OR LOCALIZE?)

-Keeping records of employees in each country -Keeping track of long-term and short-term IA -Keeping track of IA compensation and benefits (mostly each has a unique package). -Issuing IDs -Capability of being multilingual -Foreign currency converter -Standard formatting of C&B differ among countries -Major variances in leaves, employment contracts, working hours & days, termination liabilities. -Tracking visas -Tracking family information -International job posting and accommodating job descriptions, contracts, etc. -Union contracts and countries employment terms and conditions -Data privacy laws and laws regarding the transfer of personal data

Challenges faced by IHRM

-Lack of HR talent worldwide -Increasing number of employee issues -Changing legal frameworks due to globalization -Lack of consistency in local HR infrastructures -Local demands that conflict with IHRM --Local leadership and inclusion in strategic planning --Demand for respect of local HR --Demand for IAs to be more "native" --Inclusion of locals in broader career planning --More attention from corporate --Inclusion in variable pay schemes and total rewards

International Assignee Skills and Abilities

-Manage an international business and all the complexities that it entails -Manage a workforce with cultural and sub-cultural differences -Conceptualize, and plan for, the dynamics of a complex, multinational environment -Be more open-minded about alternative methods for solving problems -Be more flexible in dealing with people and systems -Understand and manage the interdependences among the firm's domestic and foreign operations

IHR has to cope with underlying challenges:

-Managing the shift from domestic HRM to international/global HR -Enabling IHR capability development on a global basis -Ensuring effective knowledge management across national and business unit boundaries -Providing HR services cost effectively

Balance Sheet

-Mostly popular for MNEs based in the USA -A more structural approach for assigning compensations for IAs, especially when IAs increase in number. -Especially useful for more experienced employees that are expected to return home after the completion of the assignment. -At a minimum, the IA should be no worse off in terms of compensation, benefits and lifestyle for accepting an international assignment. -It addresses a set of equalizers. -In addition, you need to provide an incentive, ensuring that the assignee is motivated. -Therefore, the balance sheet might also be considered complex, hard to communicate and more intrusive into IAs personal lives.

How salaries are expressed?

-Net or Gross amount -Weekly, monthly or annually

Other Factors Affecting International Assignment Compensation

-Payment method --> where? what currency? - Exchange rate fluctuations - impact of inflations - social security, social services, and taxes --> Mandated healthcare and retirement programs at the host country Totalization Agreements: eliminates double taxation.

Cafeteria

-Provide a set of choices of benefits (usually provided for executives): such as company car, housing, insurance...etc. -There is a monetary limit in value -Only give choices to benefits that are not critical to the success of the assignment.

Purposes of International Performance Management Evaluation Goals:

-Provide feedback to employees so they will know where they stand -Develop valid data for pay, promotion, and job assignment decisions, and to provide a means of communicating these decisions -Identify high-potential employees and manage their talent for optimal performance and retention -Help management in making discharge and retention decisions, and to provide a means of warning employees about unsatisfactory performance

Opportunities for strengthening IHR

-Quality of the contribution of IHR to the new global organizational strategy -Most executives do not deny the important role that IHR can play in the global firm, but critics claim IHR is not doing an adequate job playing that role -HR is not being a true business partner

AD HOC: "GROSSING UP" THE IA'S SALARY

-Tax reimbursement -payments -International premium -Cost-of-living adjustment -Housing allowances -Automobile reimbursements (for business use) -Emergency leave -Moving expenses -Dependent education

International Benefits

-The design of a comprehensive C&B program for all worldwide employees must, of course, include these non-salary benefits. -You need to pay attention to what are the benefits provided by the government and mandated by law, in addition to how they are taxed. -Benefits make up a significant portion of the cost of payroll (40% of the cost of payroll in the US).

Holiday and Vacation Benefits

-There are wide variances among countries in holiday and vacation entitlements. -In the US, paid vacation time is left to the discretion of each company, that is true for most benefits. First year: 11 days Five years: 15 days Ten years: 17 days Thirty years: 24 days

Determining IA Compensation Adjustments:

-These are payments whose purpose is to adjust for differences (generally in a higher direction) - mandated payments that the IA has no control over. -The housing norm is an average expense for housing in the home country. --The organization is expected to pay the difference between the housing norms at the home-country and the host-country. -The home-country spendable is the normal dollar amount spent for goods and services. --The organization is expected to pay the difference between the home-country spendable and the host-country spendable. --This is indicated as Cost-of Living Adjustment (COLA) Usually, the COLA data is provided by consulting firms or previous IAs. --Efficient Purchases Index (EPI); implies that the assignee has learned to purchase better due to the increased familiarity with the location --Destination services; help the IA and family to be more efficient from the start. In addition, you need to account for currency exchange rates, locally mandated extra-payments (taxes, health insurance, social security...etc.)

Relocation and Orientation

-This area of service has traditionally been one of the most time consuming for IHR. -Increasingly, however, at least in larger MNEs, these services are being outsourced to external firms or relegated to internal, central shared-service centers that specialize in transactional service -Renting or selling their houses at their home country -Shipment of their household goods -Providing temporary living in the destination country -Purchase or rental of a house at the destination country -Taking care of the family during transition -Controlling all the relocation costs -Providing advice on taxes, personal finance. -Arranging visas and their medical requirements -Training and orientation of all aspects of the new country -Arranging schooling for children.

Designing a Global C&B Program

-Under which country's C&B programs should employees be covered—parent country, host country, or a specially designed program? -How should pension and health care coverage gaps be bridged? Can employees be covered under a single plan, particularly if they move around during those careers? -Is benefits coverage adequate for all employees? Is the benefits package equitable externally and internally? Should employees be covered under selected home and foreign programs? -How can social benefits costs be minimized? Can employees' home country social programs coverage be maintained as they change locations? Could a global program provide equitable coverage for everyone? -What are the tax effects to employers and employees of special benefit arrangements for all global employees?

Issues that may be considered when developing Expatriate Crises Management Programs.

1) Assess the risk -Usually very low, yet still IA should know about the risks and IHR should plan for their possible occurrence 2) Prepare a crisis management plan -Ex: crime, possible illness, transportation safety, natural disasters, civil unrest....etc. 3) Orientation and Training -Also, account for the local legal and medical system

Global remuneration involves two components

1) Developing an overall C&B philosophy of how an MNE pays its employees (a common set of principles on which the organization bases its reward system) -Standardization vs. Localization -Lead, lag or be at the market equivalency compared with rivals in the industry and/or geographic location. -Typically, compensations are assigned based on the job analysis and evaluation. 2) Taking consideration of the external constraints placed by the various countries in which the MNE operates (i.e., cultural and national practices, laws, and tax systems)

Companies have a choice of three different strategic options for international PM:

1) Exportative strategy 2) Adaptive strategy 3) Integrative strategy

Who should do the evaluation of the IA?

1) Home Country Managers--> -May lack knowledge local circumstances, and local culture that impact on IA performance. -May attempt to impose standardized IPM 2)Host Country Managers--> -Most familiar with the IA's performance within local situation and environmental factors -May be affected by cultural backgrounds and biases perceptions in their IA evaluations 3) 360-degrees or Multi-source Feedback:--> How about self-evaluation, customers, subordinates, peers, HR professionals, regional executives, sponsors...etc.?

The Evolution of Expatriate Compensation The problem of comparability, which has two significant components:

1) Maintaining comparability in salaries and benefits to similar employees in other firms and to peers within the firm for employees transferring from one country to another 2) Maintaining competitive and equitable salaries and benefits among various operations of the organization

Balance Sheet Approach There are two main issues to decide on:

1) What type of adjustment (differential) will MNEs need to pay to make up for the differences in home- and host-country costs of living? 2) What additional incentives and premiums will be required to motivate the employee to take on the international assignment?

International Compensation

A number of different options (for establishing a worldwide compensation system) have been used by various MNEs.

Developing a PM system in the home country and transferring it to foreign units is a(n) _________ strategy.

Adaptive *Exportative* Integrative Differenting

HRM IN AFRICA

Africa has, at least until quite recently, received less attention in the globalization of commerce, than has been the case for most of the rest of the world. However, this is beginning to change The African "region" is generally described in terms of five independent regions: North Africa, East Africa, Middle Africa, West Africa, and Southern Africa, with a total population of about 1,136 million Population is expected to increase to 2.4 billion in 2050 Median age is 19 and expected to grow to 25 in 2050.

HRM ISSUES IN AFRICA: Tribal Values

Africa is a continent of not only many countries but it is also a continent with many cultures African countries differ from each other and have diverse groups values within them The basic unit of sub-Saharan African society is the family, which includes the nuclear family and the extended family or tribe Despite urbanization most people still try to maintain their family and tribal ties

Determinants of IA Compensation Approach: What happens with the IA at the end of the assignment?

After the assignment completion, will the IA return home, redeployed to another international assignment or continue to work at the current foreign country.

Micro Regions

An area bigger than a municipality but smaller than the state in which it is located, e.g., The Assembly of European Regions and megacities

HRM ISSUES IN ASIA: Challenges Associated With Talent Flow

An important HRM issue in the Asia-Pacific region is management of the challenges associated with talent flow Most Asian Pacific countries are witnessing the emergence of knowledge intensive sectors, and the notion of talent flow is seen in this sector Countries such as Singapore and Hong Kong are concentrating on national strategies to support and enhance talent development and life-long learning

HRM ISSUES IN LATIN AMERICA AND THE CARIBBEAN: Emergence of an Informal Economy

An informal economy, defined as an economic sector that is not monitored or regulated by the government, is emerging In some countries, minimum wage is more often paid to informal labor than to workers in the regular labor market Self-employed workers can earn more money through the informal sector than in the regular labor market The informal economy has serious implications for how organizations attract and recruit employees

Insurance

Another area of benefits that can add complexity to the design of benefits programs, especially for international assignees, is insurance benefits (such as life, disability, and long-term care insurance). -For IA, Is it effective abroad? -Are additional insurances needed? -Are there null or void clauses?

Equity versus comparability.

Are comparable employees in different parts of the organization treated equitably or fairly? -The more subsidiaries and joint ventures you have, the more the complexity. -The more developed is your internationalization stage, the more it is complex to achieve consistency, given differing cultural practices, legal requirements and tax systems.

HRM IN ASIA

Asia is a large continent with a total population today of around 4 billion—and predicted to reach over 5 billion by 2050. Median age is 30 and expected to increase to 40 in 2050. Net migration is negative Regional clusters in Asia include the East Asian region, the South-central Asian region, the South-east Asian region, and the West Asian region There are substantial differences in HRM in Asia—within regions and within countries within regions One sub-region, the Asia-Pacific region, has, over the last two decades, seen enormous economic growth and development

If a MNE decides to pay its International assignees based on local standards, with no equalizers, then which of the following compensation approaches is it adopting?

Cafeteria Lump Sum **Localization** Global systems

HRM ISSUES IN NORTH AMERICA: Low Levels of Unionization

Compared to most European countries, the US has relatively low levels of unionization To maximize shareholder value in most industries and firms, trade unions have minimal influence with respect to designing HRM policies and practices During the last several years, union membership has declined considerably for a variety of reasons

HEALTH AND SAFETY LAWS AND STANDARDS

Compared to some EU countries, the US might be weaker in legislations and enforcement. The union movement has contributed to the robust H&S measures and enforcement. In the EU and Australia, unions and work councils have an active role in monitoring and enforcing safety measures. The EU has adopted a common framework for occupational H&S, thus EU members are modifying their laws to match those standards. In developing countries, undeveloped H&S safety laws and limited funds to enforce them make them gain a competitive cost advantage. In additions, unions are comparatively weak and rarely focus on H&S issues. Governments try to deregulate the labor market and are pressured to create and sustain jobs & attract FDI. More so, many developing countries compete based on labor intensive industries with comparatively less automation. Also, there is a lack of H&S specialists and training. Additionally, IHR should be concerned with the nature and quality of the medical systems, the coverage of the healthcare system, who pays for healthcare and the support available for disabilities. Moreover, IHR needs to pay attention to issues like drugs, awareness of major health issues such as AIDS and hepatitis A&B...etc., inadequate nutrition, excessive pressure on employees to perform...etc.

HEALTH AND SAFETY STATISTICS

Comparing H&S regulations and experience between countries is useful to assess problems and potential costs associated with locating operations abroad. Yet, different countries follow different reporting standards regarding what constitutes an injury and whether it must be reported. Example: reporting fatalities Developing countries report significantly higher occupational accident and fatality rates than developed ones. Statistics might be inaccurate and countries might be incomparable as developing economies have higher density of its workforce in industries that are inherently more dangerous . Such as, High: logging, mining, quarrying / Moderate: construction, transportation, utilities, agriculture / Low: trade, banking, social service. World Health Organization: half the global workforce are employed in hazardous jobs.

HEALTH AND SAFETY AND INTERNATIONAL ASSIGNEES

Concerns about kidnapping, disabling accidents, encounters with law enforcers, natural disasters, inadequate local healthcare, robbery, death while on foreign assignment, terrorist acts, civil unrest...etc. Inability to speak the local language, unfamiliarity and distrust & Incompetency of local and legal, medical and emergency services, inaccessibility of phone systems. Therefore, IAs need to be briefed and prepared before departure. They need to be trained on how to get medical care and to get evacuated.

Regional Sytems

Construct an approach and policy for each region and apply it to IAs as they move to different regions.

Some IPM Approaches

Convergence Approach Divergence Approach Cross-vergence Approach

HRM ISSUES IN AFRICA: Asia-Africa Alliances and Partnerships

Countries in Asia have shown considerable interest in Africa, most specifically India and China Trade ties between African countries present significant new opportunities. Yet much of the economic growth in Africa is coming from trade with countries and MNEs outside Africa. Chinese organizations have had the most significant investments in Africa Chinese FDI practices—More reliance on local hires, particularly in sub-Saharan investments, which have been welcomed by most locals

International Assignment Compensation

Deals with compensation and benefits of globally mobile employees—as short-term international assignees or long-term expatriates.

International/Global Remuneration

Deals with the complex Compensation & Benefits structure of the MNE in various locations/subsidiaries around the world.

Determinants of IA Compensation Approach: What is the purpose or reason for the assignment?

Demand-driven IAs usually require more compensation and benefits than learning-driven.

Specific Regions

Described by geography, economic system, institutional structure, governmental jurisdiction, or by social or cultural characteristics - Micro regions - Macro regions

Comparability

Determining peer equivalencies for jobs in the various countries and subsidiaries.

Comparative IHRM: Focus on Regionalization

Development of a global approach to managing HR within that provides global systems consistency while allowing local autonomy Achieving balance between centralized consistency and de-centralized autonomy requires continual evaluation and discussion Many firms strategically organize around specific clusters of countries or regions as one market; in order to minimize complexity.

HRM ISSUES IN AFRICA: A Growing Workforce

Economic growth in Africa is accelerating. Several African countries are witnessing significant economic growth and progress One consequence of this growth and rapid urbanization is an extremely large non-agricultural workforce in this decade and during the next several decades Challenges for the growing workforce and urbanization includes infrastructure, healthcare, education need for new skills and technology...etc. "There were 778 million mobile subscriptions in Africa at end-June 2013 and the continent's mobile-subscription count will reach one billion during 2015 and 1.2 billion by end-2018, according to forecasts by Informa Telecoms & Media"(Africa Telecoms Outlook, 2014, p. 8)

Involvement of the IHRM department

Efficient and effective operation of the department Staffing the department Linking the Department with the Business and Its Strategy Demonstrating the Contributions of the IHRM Department

Flexible Benefits

Employees are typically given choices, up to a certain dollar limit, among a series of options for their benefits. -MNEs are copying the US firms, after the relative success of such plans. -MNEs have a need to attract and retain more diversified work forces (in terms of age, marital status, family situation), thus they are looking at flex benefits as a way to attract workers with diverse benefit needs. -The increased aging of the labor force around the world is leading MNEs to look at flex-benefits as a way to provide diverse benefits to all workers with a single benefits program.

HRM IN EUROPE

Europe includes 48 countries with a population of 741 million (2014). Population growth is comparatively slow, and predicted to become negative by over the next decades. Population estimation in 2050 is 726 million. Median age is high (41) and is expected to increase by 2050 (46) Large continent with strong institutional, national, and regional differences Numerous regional clusters result in major differences in HRM practices within Europe, which can be broadly split into the North, East, West, and South. An important region within Europe is the European Union (28 countries with plans to grow to 35 or more countries). (Current population 507 millions) The European Union is an organization not a region as its 27 members stretch from Portugal to Scandinavia and it includes countries in the Balkans and along the Mediterranean sea board.

HRM ISSUES IN EUROPE: Influence of Labor Unions

European governments provide extensive oversight in governing labor unions Labor unions focus on collective bargaining and dialogue between workers and management Several union confederations belong to the European Trade Union Confederation (ETUC) Many European countries provide an additional form of employee representation known as Works Councils

Regional Salary Standard

Example: "old" and "new" EU countries, US and Canada, Latin America, Southeast Asia)

Determinants of IA Compensation Approach: What is the type of employee population being relocated abroad?

Executives, international cadre, functional, technical or managerial inexperienced or experienced...etc.

HRM ISSUES IN EUROPE: Government Regulations

Extensive government regulations guide labor markets Considerable legislative control over employment relationships such as contracts, working hours and conditions...etc. Regulations limit HRM function's ability to staff, train, and terminate employees Scope and extent of the laws and regulations differ within various countries, yet remain extensive throughout

Attitude Toward The Assignment

Flexibility Interpersonal and communication skills Ability to cope with stress (cultural shock) Openness to change

How should the evaluation of the IA be done? IA Performance Evaluation Issues

Form/Format of the Appraisal Frequency of Appraisal Provision of Feedback

The transition from collectivism to individualism in HRM policies and practices, especially in countries such as ___________________ is an important issue and has major implications for HR practices such as compensation.

France and Germany *India and China* Australia and India Canada and Mexico

Equity Compensation

Grant stock options and restricted stock to their overseas employees. -Equity compensations are being increasingly used to attract, motivate, reward and retain key employees. -They create ownership and alignment between individual and organizational objectives (especially long-term objectives). -Beware of varying accounting tax rules!!!

Government-provided and mandated benefits.

Great variance from country to country. -Such as paid time off, social welfare benefits (healthcare and retirement), various leave requirements.

FAMILY-FRIENDLY POLICIES AND WORK-LIFE BALANCE

Growing concerns in the EU and other developed countries to increase the quality of work life, decreasing working hours, governmental support for the health of families, and accommodating the needs of the complex and demanding workforce (women at workplace, single parents, aging population...etc.). EU is increasing the family-friendly legislations. More polices to support work-life balance.

____________ are HR professionals that represent central HR, implement HR practices and contribute to individual business plans at various organizational units

HR executive team *HR business partners* Shared-services operators HR functional experts

Special Capabilities: IHR Websites

HR has its own uses for technology which can greatly enhance its ability to perform its responsibilities Intranet within its own operations that can both help HR to deliver services, such as benefits information as well as knowledge transfer among various HR business centers around the world -Technology such as this also allows for ever-increasing capabilities, such as language translation software and multi-lingual programming for conducting global employee surveys and benefits management

HRM ISSUES IN NORTH AMERICA: HRM Function as a Strategic Partner

HRM function as a strategic partner that should be involved in the decision-making processes affecting the strategic direction of the organization There is increasing focus on HRM systems rather than on individual HRM policies and practices The HRM function faces pressure to show the financial impact of HRM systems HR professionals are expected to design measures to capture the impact of HRM systems on financial measures and demonstrate ROI of HR policies

HRM ISSUES IN ASIA: Shift to Free-Market Policies

HRM in Asian Pacific countries has been shaped by globalization, technology, and the communication revolution In response to these pressures and the recent economic and financial recession, most Asian Pacific countries seem to be gradually shifting to free-market policies. The burden of retirement planning and other employee benefits is moving from employers to individuals. There is privatizing of many government-owned enterprises, downsizing of organizations, and relatively greater job insecurity for workers

A multinational enterprise has decided to pay its employees based on the local standards of each of its affiliated subsidiary. This is an example of ___________ approach

Headquarters scale Local scale Global Scale Proactive scale

MNEs often create two classifications: local and international with regard to compensation.

Highest positions are paid based on an international standards (HQ) and lower positions are paid based on local standards. -In -country gaps, wide gaps between executives and employees -Gaps between executives at various countries.

Determination of IA's Base Compensation:

Home country salaries Headquarters salaries Regional salary standard Host country salaries Better of home or host approach

Tax Protection

IA pays all taxes (home and host countries) The firm compensates the IA if the taxes paid are more than what the IA would have paid home.

Localization

IAs are paid comparably to local nationals with no equalizers This approach is typical for: --Employees at early stages of their career --Learning driven IAs --IAs seeking long-term employability abroad --IAs that are sent permanently --Third Country Nationals --Returnees Localization is simple to communicate and administer. At some instances, especially for employees moving from developed to developing countries, we usually pay them the local standards plus a premium.

Laissez- Faire Approach

IAs takes care of their own taxes

The IHRM Department Contd.

Identifying key skills required by management and employees and helping in developing them. Sourcing talent from outside the organization when needed. Distributing HR responsibilities to line managers and teams. Decentralizing HR decisions and policy making as needed Outsourcing or developing in-house support services such as relocation and orientation & administrative services. 1) Shift from an administrative & operational roles to a more strategic role. 2) Shift from being reactive to being proactive in design and implementation of IHRM programs - thus the need for acquiring business knowledge to serve managers better. 3) Shift from performing HR functions to act more as internal consultants (counselors) 4) Shift from focusing on individual employees to work teams. 5) Shift from focusing only on internal problems to include external issues. 6) Demonstrating the contribution of the department on corporate bottom line results.

Macro Regions

Independent countries that share attributes such as social, economic, political, geographic, cultural, and historical characteristics

Cultural Values for Rewards

Influence how people perceive the value of various rewards available in the compensation system. Acceptability of compensation based on performance-driven versus entitlement-oriented attitudes; variable (risk, uncertainty) versus fixed (risk-adverse) pay.

If the MNE decides not to be involved in compensating differentials in the international assignee income taxation as a result of their foreign assignment, then the MNE is adopting ____________ approach.

Laissez-faire Tax Equalization Tax Protection Ad Hoc Policy

Alternative Tax Strategies

Laissez-faire Approach Taz Equalization Taz Protection Ad hoc policy

HRM IN LATIN AMERICA AND THE CARIBBEAN

Latin America and the Caribbean have a total population of 618 million Median age is 28 and is expected to increase to 41 in 2050. Negative net migration There are various regional clusters in Latin America and the Caribbean The Caribbean region includes many small island nations and territories Other regional clusters in Latin America include the Central American region, and the South American region

HRM ISSUES IN LATIN AMERICA AND THE CARIBBEAN: Labor Unions' Transitional Role

Latin American countries have interventionist and authoritarian governments that strongly regulate the labor markets Labor unions are usually organized by type of firm or industry sector Labor unions are much stronger in the public sector and have built a stronghold in government-run companies Union influence on management has been threatened by alternative movements such as the solidarismo movement (anti-union forces) - workers agree not to strike in exchange of benefits.

Determinants of IA Compensation Approach: Where is the IA leaving from and going to?

Laws, regulations, practices, environment, taxation...etc.

MNEs favor

MNEs favor hiring locally, but still at many instances MNEs need to relocate IAs on the short-term and/or long-term. Particularly, IAs are needed to establish start-ups, control foreign operations, provide talent and ensure knowledge is transferred between the headquarters and the subsidiaries.

ACQUIRE IMMUNE DEFICIENCY SYNDROME (AIDS)

Major concern in Central and Southern Africa and South and South East Asia At some countries it is affecting the productivity and growth of their economies. Thus, affecting the employees and customers of MNEs. At many countries, your potential workforce, and their families might be HIV positive, thus increasing the cost of your Healthcare plan Many countries do not allow the access of employees with HIV positive - among other diseases.

Ad Hoc Policy

Make sure that all allowances and reimbursements are tax free

Administrative Services

Many of the support services can be provided elsewhere in the firm, but they are generally delegated to IHR staff. All of them are, at least initially, are established to ease the Well-being of the Workforce process of transferring employees from one country to another -Travel arrangements -Arranging housing in foreign locales -Determine availability and operation of local transportation -Providing office services: translation, rental agreements...etc. -Currency conversion -Local bank accounts -Government relations

National laws and Regulations.

Minimum wage, overtime, compulsory bonus and other entitlements, severance payments, contract requirements, and taxation of employee income.

Tax Equalization

Most common Hold hypothetical tax from the IA income (based on home country). The firm will pay all the taxes at home and host countries

International Assignee Compensation Plans

Negotiation Localization Cafeteria Global Systems Regional Systems Lump Sum Balance Sheet

Performance Targets

Parent-company Subsidiary Local Individually dictated Personal development

The IHRM department must have a clear agenda to help the MNE conduct business on a global scale

Partnering with management in formulating the global strategy for the firm Developing necessary competencies among senior IHR staff to contribute as partners Developing processes and concepts for top management as they develop the global strategy such as scanning HR issues worldwide, helping in HR-related decision making, and assisting in ensuring the learning process. Helping in developing the structure and the management global mindset.

Remember, Compensations and Benefits are a major part of the due diligence and post-merger integration phases of mergers & acquisitions.

Pension obligations, potential severance liabilities, equity and stock options plans, vacation accruals, and unwritten reward practices...etc.

Low power cultures & high performance orientation

Performance Criteria: narrowly defined, task-related competencies and result-oriented. Mostly based on individual performance. Performance Method: Multiple assessors; Formal, systematic, objective and periodical assessments Feedback: direct, explicit, confrontational

High power cultures (Collectivist) & Low performance orientation

Performance criteria: broadly defined interpersonal competencies and process orientation, group-oriented accountability. Performance Method: Single assessor; top-down; Informal and subjective assessments Feedback: indirect; non-confrontational (saving face and connections; harmonious relationships)

Provision of Feedback

Problematic at some cultures Who is going to provide feedback? Difficulty in providing feedback from various inputs efficiently and effectively

Frequency of Appraisal

Recency effect The more frequent the better Evaluations after the completion of milestones & significant projects & tasks Is this practical?

HRM ISSUES IN EUROPE: The Flexibility-Security Nexus

Refers to the balance needed to provide increased flexibility within European labor markets necessary to global competitiveness, but which may require deregulating legislative protections for employees HR function plays an important role maintaining balance, but often strong government regulations restrict the HRM function's ability to manage this flexibility-security nexus

Support Services

Relocation and orientation Administrative services

PERFORMANCE MANAGEMENT AND INTERNATIONAL ASSIGNEES

Remember that IAs are expensive, thus we need to ensure high levels of performance. Remember that IAs frequently fail 83% of MNEs do not use PM for IAs!

Job Performance

Results area Development of local team Communication and decision making Personal growth and development Application of new expertise

Pension Plans

Retirement benefits create their own special set of complexities for MNEs. -Defined benefit plans (pays a fixed periodic benefit upon retirement) -Defined contribution plans (distributes retirement benefit based on contributions to the plan) -Government social security systems (albeit with varying retirement pay-outs) -Others have different or no retirement plans at all.

Form/Format of the Appraisal

Shall we use the same form? What about translation issues? What about the culture, context and nature of relationships?

Divergence perspective

Suggests institutional, national, and business values are deeply integrated and embedded in a society and resist change to accommodate policies and practices introduced from the outside

Convergence perspective

Suggests that over time organizational structures and business practices and values in differing countries and regions will become similar

TAXATION OF US INTERNATIONAL ASSIGNEES

The Internal Revenue code allows a general exclusion of $99,200 in 2014, amount is yearly adjusted for inflation --Physical presence test: you need to be present for at least 330 days out of 12 months period outside the US. --Bona fide test: You need to prove that you have a foreign residency status for any period that include an entire taxable year. You may apply for foreign housing exclusion (if it exceeds $15,872 in 2014 and limited to $29,760). The limit might be increased when living in listed high cost countries. You may utilize any foreign tax credit to reduce your taxable income.

HRM IN NORTH AMERICA

The North American region includes the countries of Bermuda, Canada, Greenland, Saint-Pierre-et-Miquelon, and the United States of America, with a total population of about 355 million The population is estimated to grow to 444 million in 2050. Current median age is 38, expected to increase to 41 in 2050. Some firms now include Mexico in their internal organizational definition of North America because of the NAFTA, which includes Canada, the US, and Mexico Many MNEs, for HR planning purposes, view the region of North America in terms of the US and Canada

HRM ISSUES IN NORTH AMERICA: Intrusiveness of Labor Laws

The US government is less a regulator of labor markets than in other regions Laws promote and encourage free market forces to resolve many labor issues and give management great latitude in HR decisions. Despite the non-interventionist nature of the US legal system there are strong federal and state laws that provide rights and protections to workers against unfair, unsafe, and discriminatory employment practices

The IHRM job of the future (skills necessary for IHR in the future)

The ability to educate and influence line managers on IHR policies, practices, and importance Being computer and technology-literate, to create and use global databases and social networks for delivery of IHR advice and decision-making, and world-wide IHR transactional services Being able to anticipate internal and external changes, regarding availability and qualification of HR talent around the world Exhibiting leadership for the IHR function and within the corporation, at headquarters level and the business unit level Focusing on the quality of IHR services within the enterprise Defining an IHR vision of the future and communicating that to the IHR department and to the organization Developing broad knowledge of many IHR functions Being willing to take appropriate risks in the development and implementation of innovative IHR policies and practices Demonstrating the financial impact of IHR policies and practices

Salary-Benefit Ratios.

The balance of salary versus benefits costs differs by country as a result of cultural practices, labor relations, and local laws and regulations.

The new MNE HR organization

The demands of the "new world" impact HR and IHR even more than many areas of organizational leadership The traditional HR transactions have not disappeared, but they are automated or outsourced, with domestic HR practices now multiplied in the many different countries in which the firm operates As IHRM increases its ability to better use the data it generates to show the benefits of its various programs, IHRM will become better able to get support and approval for those programs

Determinants of IA Compensation Approach: What is the anticipated duration of the assignment?

The more the duration, the more important the tax ramifications for employees.

Working Hours

The number of hours worked per year varies considerably from country to country.

IA C&B Strategy and Policy

The purpose of developing an IA policy is to ensure greater consistency and equity among international assignees and reduce barriers to global mobility. The compensation package for IAs must meet certain objectives to be effective --Provide an incentive to leave the home country for a foreign assignment --Maintain a given standard of living --Consider career and family needs --Facilitate re-entry into the home country The costs to firms often range from 2 times and 4.5 times the cost of maintaining the manager in a comparable position at home.

HRM ISSUES IN ASIA: Varied Influence of Labor Unions

The structure and influence of labor unions varies from country to country in the Asia-Pacific region The decline of the influence of labor unions is caused by several reasons Lack of effective union leadership Close alignment with political and religious parties leading to rivalries between unions and political leaders

HRM ISSUES IN ASIA: Transition from Collectivist to Individualistic Cultural Values

The transition from collectivism to individualism in HRM policies and practices is important. The HRM function plays a significant role such as in compensation, promotion and benefits. In countries such as China, a hybrid HRM system appears to be emerging with a simultaneous development of government initiated and controlled labor regulations and free market based HRM policies and practices. Several organizations in countries such as Japan are adjusting to the redesign of many of their traditional HRM practices - such as lifetime employment and promotion based on tenure. Violation of the psychological contract with potential negative effects

IHRM AND THE CONVERGENCE/DIVERGENCE DEBATE

There are HRM issues converging across regions and countries -Shift to a more performance-driven HRM function -Other HRM issues diverging, e.g., the influence of labor unions There may be more convergence in HRM polices than in practices There is the issue of divergence between and within a region with two possibilities: -More divergence between regions than within a region or less divergence between regions than within a region

HRM ISSUES IN LATIN AMERICA AND THE CARIBBEAN: Family Oriented Work Values

There is a strong collectivistic and a paternalistic attitude toward work values The role of the Latin American manager is that of a "father," and that of the organization a "family" HRM practices and policies reflect collectivism and the strong family orientation - personal ties affect career prospects, focus on internal recruitment. Group and seniority are preferred over individual performance.

HRM ISSUES IN AFRICA: Human Resource Development

There is an urgent need to improve talent management and for executives and human resource professionals to foster the creation and retention of capable African talent There are serious challenges such as literacy rates and disparity among nations (e.g., South Africa and Nigeria) There is Optimism. Public spending on education in Africa has increased over the last decade and is increasing each year, and there is much discussion among professionals, government officials, and academics about the need for talent development Major challenges in politics, trade and social structure.

HRM ISSUES IN NORTH AMERICA: Individualistic and Merit-based Labor Force

There is considerable focus on the individual's contribution to the organization's success Staffing policies and practices are significantly influenced by the employment-at-will doctrine Hiring and employee engagement and retention practices are largely influenced by emphasis on employee individual merit Most employers depend on external labor markets to acquire talent and there is intense competition for acquiring top talent Compensation is based on pay-for-performance model. Work -life balance is becoming an issue.

Leaves

This is an important area. The provision of leaves for a variety of reasons (e.g., maternity, paternity, parental, family, sabbatical, military, etc.) with or without pay.

Organizational Advancement of IHRM

To achieve desirable results MNEs must attend to human aspects of cross-border business Focusing on the complexity of developing IHRM systems to ensure performance. Developing corporate "glue" through cross-national task forces and work team & shared-services centers and centers of excellence.

Individual Qualifications

Training Experience Education Technical skills Social and language skills

Determinants of IA Compensation Approach: What is the comparison peer group for the IA? What is the overall cost of the assignment?

Try to conduct a cost and benefits analysis.

Sunshine Rules

Whether or not employees salary information is confidential or disclosed is generally dictated by local cultural practice and law.

Specific health and safety concerns for BTs and IAs

Why Health Problems Are Increasing Abroad: -Increasing poverty in developing countries -Increasing failure of health infrastructures, following in-country political or economic instability -Increased travel-related disease transfer, with increasing drug resistance -Increased accessibility of remote destinations -Increasing global competition in developing countries, leading to more BT travel and IAs -Relaxation of health entry rules to countries, resulting in reduced "need" to seek medical advice prior to travel IHR also need to deal with death incidents.

HRM ISSUES IN LATIN AMERICA AND THE CARIBBEAN: Person-Centered View of HR

Work plays an important and pivotal role, but the direction of the relationship is from work-to-life The meaning of work is to create a good quality of life Employers must provide for both social and economic needs Latin American organizations face serious macro level pressures (e.g., recession) which threaten work values of the paternalistic system

Global Law of Economics

Work, with regard to staffing, needs to be located where the quality and cost of the production of goods and services are optimized. Using the US as the index (=100), labor costs are higher in Scandinavia, Western Europe, and Australia and lower in Southern Europe, Central and Eastern Europe, Latin America and much of Asia. -Remember to consider both, labor costs and productivity ratios

Headquarters Scale

Worldwide salary levels are established at HQ with differentials for each subsidiary according to their differing costs of living. -Managerial positions are usually paid through this approach

Labor relations, collective bargaining, and employee representation

also differ greatly from country to country. Labor unions influence job security, compensation, benefits as entitlements.

Tax laws differ tremendously across nations

and affects how employees income and benefits are taxed and how organizations pay their corporate taxes and expense deductions.

Job Analysis

and the writing of job descriptions (for recruiting and training purposes and the setting of performance expectations)

Job Evaluations

and wage surveys (for the development of job classification and wage rates)

Cross-Vergence Approach

applying relatively similar appraisal concept but adapting the process to align with cultural differences.

Core Benefits

basic benefits available to all employees

MNEs should develop...

both qualitative parity and quantitative parity in terms of benefits. Qualitative parity is a commitment to offer something from each core category of benefit to every employee worldwide.

Integrative Strategy

combine local PM practices with those within the region and around the world

Exportative Strategy

develop the PM system in the home country and transfer it to foreign units. --Mostly western approach to PM that is standardized across subsidiaries. --Maybe warranted for the sake of global integration, uniformity, organizational culture cohesiveness, fairness, mobility of global employees and as a control mechanism.

Adaptive Strategy

develop unique PM and practices in each foreign unit due to differences in cultures, laws and emerging market practices.

Divergence Approach

differences in cultures is substantial and important to account for. You need to customize IPM practices.

Local Scale

employees are paid based on a local scale -Utilized for the broader employee base

Helping managers to improve their performance, develop future potential, motivating employees by recognizing their efforts and career planning are all forms of

evaluation goals developmental goals appraisal goals none of the above

Global Scale

for each position with possible affiliate differentials, thus achieving equal pay for equal work on a global basis.

Recommended Benefits

less essential, available when affordable

A(n) ___________ includes independent countries that share certain attributes such as social, economic, and cultural characteristics:

micro-region cross-border region macro-region none of these

Optional Benefits

nonessential, make available when competitors are offering it

Convergence Approach

only small differences exist among cultures and it is possible to adopt best practices.

Required Benefits

required by local law

The diversity of IHRM policies and practices across nations is often examined using which frameworks..

the convergence and divergence framework