HRM Exam 3
MNC (MNE)
a firm which owns or controls business activities in more than one foreign country Multinational company/corporation or enterprise
Practical Assistance Training
1. Being left to fend for themselves in a foreign country seen as a breach of the psychological contract with the employer. 2. Most critical in the first months of settling in. 3. Involves a wide variety of how-to's needed to live in the country. a. Finding and completing practical services: i. Banking ii. Utilities and Appliances iii. School enrollments iv. Negotiating leases v. Finding medical care vi. How to handle emergencies vii. Finding on-going language training viii. Etc. 4. There's a whole industry devoted to providing this training and other services, called international relocation services. a. Bundles training (including cultural awareness training) with other services such as travel, household moving services, finding housing, even taxation services and visa services, etc. b. Vendor provides the services needed by, and tailored to, the company, and bills the company for services provided. c. Outsourcing may be a good decision based on resource allocation strategy.
Language training
1. Different perspectives of value. 2. Companies report they perceive this as less important than cultural awareness training. Consistently ranked below that of the desirability for cultural awareness training a. Perhaps because English is considered to be the international business language. 3. Expats and families report this to be on par with cultural awareness training. a. Stated it helped significantly with (more rapid) adjustment. b. Stated it helped the expat manager interact more effectively with HCN. 4. Language acquisition is long term and companies may choose to limit their involvement.
Cultural Awareness Training
1. Goal is to build skill and awareness of other culture. a. Understand the culture b. How to act appropriately c. Develop coping skills d. To not isolate self while in-country 2. Different types, and levels of intensity, for this training. a. What is offered depends on the nature of the assignment and the needs of the expat and family. 3. 3 Approaches a. #1 - Information-Giving Approach i. Short term assignments ii. Typically involves: 1. Cultural briefings 2. Media support (lectures, movies, books/articles) 3. How to use interpreters 4. Survival-level language skills iii. Often not provided because of time constraints b. #2 - Affective Approach i. Usually done for medium range assignments (2-12 months) ii. May include all of #1, plus 1. Role playing 2. Case studies 3. Stress reduction techniques 4. Moderate language training c. #3 - Immersion Approach i. Usually done for long term assignments (more than 1 year). ii. May include all of #1 and #2, plus: 1. Simulations 2. Sensitivity training 3. Field experiences 4. Extensive language training 4. Can tailor programs from these different levels of training interventions based on need.
Security
1. Helps prepare expat and family for risks and threats. 2. This training is becoming very common for companies. a. Risks and threats include: i. Terrorism, kidnapping, coups, war ii. Political upheaval iii. Natural disasters and health disasters (pandemics) iv. Travel accidents and delays v. Evacuation plans
Preliminary visits to new country
1. Not a vacation or tourist trip. Such a visit must be relevant to the intended position that the international employee will be taking up and not simply a 'tourist' experience. 2. Permits initial awareness in a powerful manner. 3. May actually have more recruiting impact than training impact. a. Helps prospective expat and family determine if the assignment is right for them.
Why are companies attempting to develop a truly global approach to compensation?
?? a. Variations in Pay Plans i. As neither of the previous plans meet all needs, some companies: 1. are experimenting with hybrid approaches 2. are attempting to zero-base a truly global approach to compensation.
What types of pre-departure training are typical?
Cultural Awareness Training Preliminary visits to new country Language training Practical Assistance Training Security
What pre-departure training should be offered to the family members and why?
Due to increasing recognition of the interaction between expatriate performance and family adjustment, more multinationals are now extending their pre-departure training programs to include the spouse/partner and children 2/3 MNE providing language training to spouses 55% providing cross cultural training
Polycentric
Each subsidiary is a distinct national entity able to make some of their own decisions and staff its own organization. Very little movement of people between subsidiary and parent. i. Benefits: 1. People who know local culture are the ones making the decisions; little to no ramp up time in terms of culture. 2. Less expensive than expats. ii. Drawbacks: 1. Challenge to bridge the gap between subsidiary and parent company. 2. Limited sharing of ideas and little opportunity to foster an international mindset.
Know the 4 approaches to international staffing
Ethnocentric Polycentric Geocentric Regiocentric
Geocentric
Global perspective valuing diversity and unique contributions of all parties. Staffing decisions are made on ability, not nationality. Develops a class of managers with a global mentality. i. Benefits: 1. Global talent pool who are deployable as needed while being well informed of corporate expectations. 2. Supports and encourages cooperation and resource sharing across units. ii. Drawbacks: 1. Host country may have requirements about hiring nationals. 2. Expensive and resource intensive to support expats.
Be able to explain the 2 approaches of compensation?
Going Rate Approach (market Rate approach) Balance Sheet Approach
Ethnocentric
Key positions are staffed by PCNs and subsidiaries are managed by PCNs. i. Benefits: 1. High levels of control and coordination with parent company. 2. Can be used when there is a lack of skill present in the HCN population. ii. Drawbacks: 1. Limits promotional opportunities for HCNs, possibly leading to turnover. 2. Adjustment problems for PCNs and perceived pay inequities comparing PCN an HCN compensation.
4. What should a company consider including in a repatriation program, including: a. What topics to train and counsel on? b. What should be the timing of the training/delivery of program components? c. How can mentors be utilized? d. What strategies can they utilize to protect their investment in the expat?
Mentor will alleviate the 'out-of-sight, out-of-mind' feeling Mentor also ensure that the expatriate is not forgotten when important decisions are made regarding positions and promotions Mentors provide contact and support from the home organization that also facilitated re-entry and reduced the 'out-of-sight, out-of-mind' syndrome. Are responsible with assisting expatriates -Simply by giving participating repatriates a sense that they are not an under-utilized resource and the MNE recognizes they can make a valuable contribution to the expatriation process. Insure equity of treatment
How do issues of employee benefits and taxation become complicated in expat situations?
Multinationals need to match their compensation policies with their staffing policies and general HR philosophy a. For example, an MNE has an ethnocentric staffing policy, its compensation policy should be one of keeping the expatriate whole (that is, maintaining relativity to PCN colleagues plus compensating for the costs of international service). IF however, the staffing policy follows a geocentric approach (that is, staffing a position with the 'best person', regardless of nationality), there may be no clear 'home' for the TCN, and the multinational will need to consider establishing a system of international base pay for key managers, regardless of nationality, that is paid in a major reserve currency such as USD or Euro
Mark Chan case
Pro - Family happy Con - lower pay Expat mentor watches out for you and could have helped find a position for him back home Mark's value and expat assignment - by offering him a higher position and/or a promotion, making him feel wanted and a part of the senior management team; they could have also created a position for him How to improve the expat program to ease the reentry of expats? - Is to save him a position when he comes home - Spousal program to help the wife reintegrate into the society and help her cope - Before Mike left they could have been upfront of the reality of a position opening up for him or tell him that they would make a position specifically for him - Give him an opportunity to come home every 3 months or something to feel a part of the company and to have a chance to be home
What is the process of repatriation?
Repatriation is returning to your home country; coping with your re-entry shock a. It is important for the company to get involved when the expat returns because you are one of them, different from your home country & get a pay cut when you return b. 20-40% of repatriates leave within the first year of reentry (bad return on investment) c. Only 30% of companies have formal repatriation programs i. Many companies don't even track this expat failure d. Why should companies care? i. Loss of human and intellectual capital, and market knowledge. 1. Not utilized 2. Talent goes to the competition. ii. Return on investment - you put money into it, need to get something back iii. Powerful message sent to others considering expat assignments. If others see that you don't care about the expat when they return then no one is going to want to go on another assignment iv. Employee (and family) well being
What are the stages, relative time frames and progression through the U-shaped curve?
The U-Shaped Adjustment Curve i. Hypothesis by Norwegian sociologist Sverre Lysgaard, 1955. ii. Describes the stages of cross-cultural adjustment. iii. While not empirically supported by subsequent research, it serves as a guide to help people understand the adjustment process that occurs in expat situations. Stage 1 - Initial excitement, positive outlook, discovery of new culture, "rose-colored glasses", [find out about opportunity and excitement] 1. The Honeymoon Stage usually lasting a few days to several weeks. Stage 2 - Period of disillusionment, culture shock, frustration, confusion, second guessing, homesickness [reality bites, big drop in excitement] 1. The Crisis Stage often hits at the 4-6-month point. Stage 3 - Begin adapting, figuring things out determining compromises and finding how to work more effectively in the new cultures (work and living), feeling more "in control". 1. The Recovery Stage Stage 4 - Integration with the host culture, able to function without much effort, perhaps adopting a "dual identity, experiencing satisfaction. [I really like it and I'm never leaving] 1. The Adjustment Stage
Regiocentric
The most recent development. Managers work in a variety of countries within a definable geographic region, but don't cross over to other regions. May be supported by regional HR. i. Benefits: 1. Streamlines some of the adjustment and cultural sensitivity issues. 2. Encourages some cross generation of ideas within similar environments. ii. Drawbacks: 1. Can create "federalism" (v. globalism or provincialism). 2. May not foster the promotional opportunities beyond a regional level.
TCNs
Third Country Nationals employees who are citizens of, or are from, a country other than the parent or host country, working in the host country
What is involved in expat adjustments? What factors impact expat adjustment?
a. Adjustment refers to the process of how expats: i. Become comfortable and acculturated to the host country's context. ii. Work through psychological discomfort and culture shock. 1. Negative reactions to a new and uncertain environment. [I was never impatient but now I am, and everything starts to frustrate you causing a decrease in well-being] 2. Behaviors (own and others) that don't make sense. 3. Causes stress, anxiety, discomfort, or decreased well-being. b. Factors that affect expat adjustment: i. Personal factors 1. Learning orientation 2. Self-efficacy [the belief that you can do it on your own] ii. Job and organizational factors 1. Support from co-workers/supervisor 2. Available resources and their international mind-set iii. Non-work factors 1. Spouse adjustment 2. Family adjustment iv. Host country features 1. Assignment and assignment length 2. Cultural "distance"
Analyze and give examples of expat roles
a. At home, a professional or a manager; ABROAD still a professional or manager but so much more b. Agent of direct control: ensuring corporate standards and processes are used by the branch/subsidiary but this may be viewed as bureaucratic or domineering by the branch or subsidiary c. Agent of socialization: assist in the transfer of shared company values, beliefs, and norms but these may be at odds with the host country culture d. Network builder: foster interpersonal linkages that can be used for informal control and communication purposes, but this benefit is highly person-dependent and may not be transferrable to the larger organization [some people get along with others very easily] e. Boundary spanners: act as representatives of the organization to the host country, gather information about the host country and influence key people in the host country but this is also person-specific based on level, personality and skill of the expat. f. Agents for transfer of competence and knowledge: sharing and encouraging adoption of common work practices with foreign branches/subsidiaries and effectively communicate back to the home offices when/why disconnects occur [know what I need it by 5pm means in the other countries]
What are the components of an expat compensation program?
a. Base salary: i. also establishes the base for allowances (incentives can be part of base salary) b. Performance incentives/bonuses i. Typically, a major part of executive compensation both domestically and internationally. c. Foreign service inducement and hardship premium i. Typically adds 5-40%. d. Allowances i. Numerous types. ii. Cost of living allowance iii. Housing allowance iv. Home leave allowances v. Education allowances vi. Relocation allowances vii. Spouse assistance e. Benefits i. Usually the MNC home country plans where possible (retirement, etc.) ii. May need to supplement for host country requirements or offerings (e.g. health insurance). f. Tax equalization i. Most PCNs pay income tax in both countries.
What are the benefits of expat assignments for the company and the employee?
a. Benefits for the employee: i. Expanded perspective often accelerates career ii. May be essential for successful career iii. Skill acquisition 1. Managerial skills (change, diversity, problem solving, etc.) 2. Interpersonal skills 3. Tolerance of ambiguity, uncertainty and multiple perspectives iv. Significant personal growth and self-confidence v. Improved self-image b. For the company: i. Transfer of knowledge and best practices [find out more clearly and directly because one of their own is there, find out about opportunities] ii. Reporting of what's going on in subsidiaries/branches iii. Increased control of subsidiary/branch operations iv. Career building, succession planning, prepared leadership c. For both company and employee: i. "Promise" of accelerated career trajectory ii. Opportunities
Why do companies tend to utilize consultants to design international compensation programs?
a. Compensation is very time consuming to be done for expats and you will most likely want to hire someone ???
What needs to be considered in evaluating performance of international employees? How do cultural issues studied in this course apply to evaluation of, and feedback on, employee performance?
a. Consider the situation - was the expat set up for success or failure? b. Allow time for adjustment to assignment. i. Be cognizant of differences between expat expectations and prior job requirements. c. Factor in the challenges of the assignment i. Large cultural distance? Distance can be a huge problem ii. Local strife? iii. Turn-around/growth job task? d. Review Fred Bailey because he wasn't set up for success, he didn't have enough assistance i. Need to give the expats 6-8months or a year for the person to adjust and be productive in the foreign country ii. Just because the worker is good in their home country and having such a high expectation of the worker in the foreign country can be bad because that same productivity should NOT be expected e. Typically, immediate supervisor delivers feedback and reviews i. Need to include host country representatives? May want to consider this like a local manager so explanations can be provided and guidance in the correct way f. May want to get HCNs involved in developing performance management process and appraisal tools. -important to incorporate i. Help increase effectiveness and acceptance. g. Delivering Performance Reviews and Performance Management Feedback i. How performance reviews are viewed, delivered and received differs among cultures. 1. Saving face - help preserve their self-esteem, not get embarrassed (this is done especially in Asian cultures) ii. Consider, too, cultural communication differences 1. Level of directness (in the U.S. you are very direct) 2. High context v. low context 3. MAY DISCOVER THAT YOU HAVE DIFFICULTY PROVIDING FEEDBACK TO WORKERS
What are the typical allowances included in expat compensation?
a. Cost of living allowance to compensate for more expensive countries. b. Housing allowance to ensure maintenance of home-country standard of living. i. May include provision of housing or financial support. c. Home leave allowances to provide for trips home. d. Education allowances for expat's children. i. International schools tend to be more expensive than other in-country private schools. e. Relocation allowances for incidentals such as car, storage of non-transferred household goods, temporary living expenses etc. i. Also includes things like memberships in clubs, household help, driver/car/security etc. f. Spouse assistance which may be a monetary amount to "make up" for loss of spouse income or career progression. i. Typically, $7-11K. (Yah, that about covers it) ii. Many MNCs are now attempting to help spouse find employment in the host country.
Similarities and Differences between Domestic HR and International HR?
a. Domestic/Traditional HR Activities i. HR Planning ii. Staffing (recruitment, selection, placement, etc.) iii. Performance Management iv. Training, Development, Career Management v. Total Compensation vi. Employee Relations/Labor Relations vii. Organizational Development and Change management viii. Administration (records, compliance, personnel, services) b. International HR i. All the traditional HR activities, plus... ii. MUCH more complexity iii. More administrative activities iv. Need for a broader perspective: 1. Company's international talent philosophy [expected to hire relatives instead of talent] 2. Ethics 3. Cultural differences and work customs 4. Employment laws in other countries [in countries like Cuba and Venezuela you don't fire people] 5. Mix of expat and local workforce, and resulting perceptions and attributions [the expat gets more opportunities] 6. Growth and independence of the subsidiary [have to trust that your company philosophy is going to be ok with different hires] 7. Risks
Why, and in what way, does an expat become a trainer when on an expat assignment?
a. Domestically, the manager or professional determines what training is needed. i. Typically arranges for training to happen. b. Internationally, the expat may be the trainer. i. They are (perhaps the only available) subject matter expert (SME) on: 1. Corporate systems, procedures, standards, etc. 2. Expected behaviors of HCNs ii. They may be expected to train HCNs on these. iii. This puts the expat in a trainer role as well as a leader role. 1. May need to develop trainer skills. c. Challenges for the expat as trainer i. Can't assume training programs transfer without tailoring/adjustments. ii. Need to troubleshoot the problems in the content of the training. iii. Need to adjust the context of the training for the HCN audience. iv. Need to assure PCNs the training is still applicable. d. Example: Performance Management Self Review Process - provide input to the company on how you did the process and get a chance to input your performance and remind manager of everything you did, explain why your perceptions are different from managers and fill the gap (self-bragging will not work in some Asian cultures but works in the U.S.)
What do companies look for in employees when considering making expatriate assignments? Which characteristics are desirable?
a. Expat Selection Criteria: i. Because expats are expensive and risky, choose carefully ii. Want people who: 1. Seek out foreign experiences. 2. Have intellectual curiosity and interest in foreign cultures. 3. Comfortable with differences, the unknown, being unique. 4. "International attitudes" 5. Thoughts/feelings towards people of other cultures and cross-cultural experiences. [want people who think globally]
What is Expat "failure"? What causes it? Why is avoiding failure so important to all involved?
a. Expatriate Failure: is the premature return of the expat or the termination of the assignment i. Can also mean: 1. Poor job performance on the assignment. 2. Personal dissatisfaction with the assignment on the part of the expat. 3. Behaving in ways that alienate the host country nationals. 4. Post assignment turnover. ii. Expat failure is very expensive. b. Causes of failure i. Adjustment challenges of spouse/children. ii. Inadequate preparation and training 1. Cultural, language, day-to-day living activities iii. Inability to adapt to local culture 1. Cross-cultural sensitivity 2. Flexibility/openness 3. Emotional resilience 4. Personal autonomy iv. Alienation or lack of support from home office v. Insufficient compensation vi. Lack of social network [Failure in Expatriate - someone terminating their assignment early because they were not successful in the job, did not fully adjust (primarily when someone is in an expatriate OR when they return and cannot adjust back to their home country and end up quitting) part of the pg. 189]
Be able to explain types of expat assignments
a. Expatriate assignments i. Extended (up to 1 year) ii. Long term ("traditional) - usually 1-5 years b. Non-standard assignments i. Commuter - go home every 1-2 weeks ii. Rotational - commute for a set period then take a break from expat with an assignment in home country. iii. Contractual - typically 6-12 months on specific projects. iv. Virtual - works from home country. c. Which type used depends on company, country, and most importantly, the job. - Short term: up to 3 months. These are usually for troubleshooting, project supervision, or a stopgap measure until a more permanent arrangement is found - Extended: up to 1 year. These may involve similar activities as that for short-term assignments. - Long-term: varies from 1 to 5 years, involving a clearly defined role in the receiving operation (a senior management role in a subsidiary). The long-term assignment has also been referred to as a traditional expatriate assignment.
What are the considerations a company needs to include in designing an expat compensation program?
a. For the company: i. Consistency with strategy and business need ii. Attract, retain, and motivate top talent iii. Facilitate relocations cost-effectively iv. Equitable b. For the Expatriate Employee: i. Keep the employee "whole" ii. Recognize and reward increased complexity of work and life iii. Financial protection iv. Cover housing, children's education, trips home, etc.
Fred Bailey case
a. Getting paid a lot more, 3x the amount b. If he is successful in Japan, he will become a partner c. Beneficial for family: pay for school, exciting, grow, more opportunities d. Associates: help the company grow in terms of money to get a client and reach, size of company e. In the end... Fred had Jenny's sister i. Has to build relationships so takes longer to adjust f. Fred needed to learn the Japanese culture and know how to interact with them g. Needed to tell his workers that it wasn't personal when he spoke to them it was about the organizational goals
Why is it important to consider both the results and the behaviors used to achieve results when assessing expat (and therefore organizational) performance? How is it more complicated for international situations?
a. Heavy reliance on goal achievement i. Provides corporate control over the expat b. The expats are examined from a distance, they see the performance goals, sells goals, and cost control objectives c. HOWEVER, hard to reach goals if the government is unstable like in Venezuela d. Yes there is more than an expat's work performance it is how well someone performs under completely different circumstances.
How does training and development "build stock" in a company's human capital? How do international assignments "build stock" in a company's human capital?
a. It "build stock" by increasing the value of the company b. Human Capital - it is what the people bring, their collective talents and potential c. Very risky assignment of the expat and what he can bring to the organization (with the hopes that the expat can bring ideas to help strengthen their position) part of a development function d. As with other HR sub-functions, international T&D and careers have similar foundations to domestic T&D and careers. i. However, much more complicated and some significant differences in what, how, when and why. e. Additionally, training on how to execute the expat assignment is desirable. i. (Training leads to development of people) ii. (When you take a look at career you look at all the development and serves the person and company)
2. What is involved in individuals' reactions to re-entry, including: a. Job related factors of career anxiety, work adjustment and new role demands?
a. Job related factors of career anxiety, work adjustment and new role demands? i. Career anxiety: this can emerge prior to the physical relocation and can affect productivity during the last few months of the international assignment as the person contemplates the re-entry process 1. No post-assignment guarantee of employment 2. A fear that the person overseas has caused a loss of visibility and isolation 3. Lack of information may increase the level of anxiety leaving the person with a decided impression that the firm has not planned adequately or that a mediocre or makeshift job awaits 4. Changes in the home workplace (like the MNE restructuring, merger, acquisition) 5. If a closure of a plant can leave the expatriate stranded or force an early, unplanned repatriation ii. Work Adjustment: has an important impact on a person's intent to stay with the organization 1. The employment relationship (clear messages sent) 2. You are forgotten when you return and you need to start all over 3. Devaluing the overseas experience iii. New Role Demands 1. A mismatch of expectations can affect the repatriate's perception of the role associated with a new position 2. Problems occur when the repatriate is attempting to function back in the home country, his or her role conception remains influenced by the experience of the foreign assignment
What are the purposes and goals of pre-departure training?
a. Most expats are chosen for an international assignment because they have the needed technical skills to do the job in the foreign country. i. Usually, the expert will benefit from pre-departure training b. Goals of pre-departure training: i. Assist expat and family in adjusting more rapidly. ii. Help expat and family cope with the unexpected in the new culture. iii. Pre-departure training is a fairly recent development (post 1980's) and still not universally done. iv. Best practice is to provide tailored training to the entire family.
What are the challenges to managing and assessing performance internationally?
a. Need to consider the what b. The how c. The when d. The who e. All have mitigating circumstances
How do expat assignments contribute to management development of both the individual manager and the company's managerial human capital?
a. Organizational Development outcomes of international assignments: i. Company increases its assets of employee knowledge, skills and abilities for future growth. ii. Company's international mind-set opens new doors. iii. Company can more effectively transfer corporate knowledge, consistency and control to subsidiaries. iv. Ultimately, financial gain. b. Individual/Personal Development: i. International assignments are actually job rotation. ii. HCN coming to parent company ("inpatriates") expand their career potential significantly. iii. Career advancement is reported as the #1 reason employees take international assignments. c. Team Development: i. Consider the "team" in this case to be the cadre of internationally experienced and successful managers. ii. The team can lend their expertise and perspectives to provide fresh approaches to challenges. iii. Contacts and networks developed in foreign countries serve to aid the entire company. iv. This team has the potential to: 1. Foster innovation, organizational learning and knowledge transfer within a wider arena than domestic-only experienced managers. 2. Break down barriers that inhibit communication and information sharing. 3. Increase diversity and appreciation for it, resulting in increased problem solving and strategic benefits. 4. Increase the global mindset of the company.
For what types of people might expat assignments not provide development?
a. People who are Dogmatic or authoritarian tendencies don't improve with expat experiences i. Most likely going to lead to failure b. May be true of other personality characteristics such as comfort with ambiguity, openness to change and new experiences, etc. c. Companies need to balance the benefits with risks of training through expat opportunities d. If they don't have the basic necessities like flexibility and expat motivation then they won't succeed
Performance Management? Performance Appraisal?
a. Performance Management: is a process that enables the MNE to evaluate and continuously improve individual, subsidiary unit and corporate performance, against clearly defined, pre-set goals and targets i. Is an overall process ii. You need to train them and make them understand what the job is all about, negotiate, execute all of the steps, evaluate the employee; end result b. Performance appraisal: is a one-time thing -The process by which a manager or consultant (1) examines and evaluates an employee's work behavior by comparing it with preset standards, (2) documents the results of the comparison, and (3) uses the results to provide feedback to the employee to show where improvements are needed and why. -Performance appraisals are employed to determine who needs what training, and who will be promoted, demoted, retained, or fired.
Hofstede cultural dimensions Power Distance
a. Power Distance - the extent to which less powerful members accept and expect that power is distributed unequally i. Large Power Distance 1. Members accept hierarchies, and their place in society 2. Members tend to not take initiative and prefer to be directed or guided 3. If manager doesn't direct and take charge, members may conclude the task isn't important 4. Unequal power and hierarchy is preferred and expected ii. Small Power Distance 1. Members strive to equalize the distribution of power and demand justification for inequalities of power 2. Power is shared and widely dispersed 3. Flatter organizations with supervisors/employees nearly equal 4. Equality and egalitarian structure is expected and preferred
Host country
location of the organization's branch or subsidiary i. Host country Nationals (HCNs) - employees who are citizens of, or are from, the host country (locals or local hires, sometimes in-country hires)
Parent/home country
location of the organization's headquarters i. Parent Country Nationals (PCNs) - employees who are citizens of, or are from, the parent country
What are the individual considerations for managing expat performance? Be sure you understand the complexities of tasks, roles and performance criteria.
a. Tasks i. Includes the "what" but needs to be considered in context. ii. Cultural demands make this more complex (e.g. power distance, communication styles, collectivism, time orientation) iii. Task performance must be evaluated in context of host country and roles required of the job holder. 1. This is especially true if the task involves resolving problems or establishing new business. iv. Considered to be more under the multinational's control than environmental factors v. Depend on the level of position and nature of task assignments vi. For an expatriate, the parent company predetermines his or her role in the foreign assignment and role expectations may be clearly communicated before departure vii. Difficulty is the role is defined in one country, but performed in another b. Roles i. These are in addition to the tasks or are the way tasks are accomplished. ii. Required for, or by, the job. iii. Evaluating role performance needs to consider: 1. Role conflict 2. Role autonomy 3. Role clarity - lack of this is a major stressor iv. Roles may be culturally influenced c. Performance Criteria i. Set by company. ii. Some cultures expect employees are involved in goal setting. iii. Need multiple criteria reflecting both parent company and host culture requirements. iv. Hard data tempered by unique requirements of assignment. v. "Good" managerial behaviors are not unilateral across cultures. d. The Performance Management Process i. Complexity of the performance management process should match job complexity. 1. Tasks 2. Roles ii. Strategic and developmental. iii. The more process clarity and transparency, the better.
What is total compensation and what are its purposes/goals? What are the basic premises of a compensation program?
a. Total compensation: a mechanism to develop and reinforce a global corporate culture, a primary source of corporate control, explicitly linking performance outcomes with associated costs, and the nexus of increasingly strident, sophisticated and public discourses on central issues of corporate governance in an international context. i. Global pay include labor pricing needs, balancing incentives, benefits and pensions etc. b. Purposes/goals of compensation program? i. To reward performance, to motivate employees; less turnover; increase retention; attract; retain and motivate your workforce c. So complex, many MNC utilize consulting firms who specialize in global compensation to design and manage expat and international compensation d. Basic premises of a compensation program: i. What you reward is what people do, and how well they do it ii. Risks requires incentives and deserves reward 1. Risk is present for both expat and employer a. Expats should be compensated for their risk b. Employers shouldn't have to pay excessively (shouldn't be too expensive and should see some value in return)
What is training and development?
a. Training: aims to improve employees' current work skills and behaviors i. Short-term ii. Specific iii. Might get training on budgeting that can helping the development in the future b. Development: aims to increase abilities in relation to some future position or job i. Is for the future
What are the organizational considerations for managing expat performance? How do these play a part in performance, performance management, and performance assessment?
a. Whole v. part - the subsidiary may need to underperform and under-receive support to help ensure the viability of the parent MNC. i. MNE is a single entity that faces global environment means that it simultaneously confronts differing national environments. ii. The good of the whole is more important than one subsidiary's short-term profitability b. Non-comparable data - how can one compare China v. Canada v. Venezuela? i. Notions of what constitutes adequate quality control checks can vary widely from one country to another, import tariffs can distort pricing schedules, or a dock strike in one country can unexpectedly delay supply of necessary components to a manufacturing plant in another country ii. Local labor laws may require close to full employment at plants that are producing at below capacity c. Volatility - political and business environments, economic changes, natural disasters, man-made disasters. i. Volatility may require that long-term goals be flexible in order to respond to potential market contingencies d. Separation by time and distance - even with technologies, still need and rely on face to face exposure to manage performance. i. Physical distances involved, time-zone differences, the frequency of contact between the corporate head-office staff and subsidiary management and the cost of the reporting system ii. Increase of video-conference facilities however they do not fully substitute for 'face-to-face' contacts between subsidiary managers and corporate staff e. Market maturity - can't assume foreign markets behave as they do at home. i. This includes labor markets. ii. Variable levels of maturity across markets: the need for relevant comparative data 1. Without the supporting infrastructure of the parent, market development in foreign subsidiaries is generally slower and more difficult to achieve than at home where there are already established brands 2. There are a number of constraints that need to be taken into account when considering foreign subsidiary performance a. Ex: a Mexican manager in Mexico will have difference comparative data/numbers than an American working in the US
Hofstede: Individualism vs. Collectivism
b. Individualism v. Collectivism - the extent to which people feel independent v. interdependent as members of the larger society. i. "I" v. "We" ii. Are decisions and choices made with consideration to the larger group, or on individual bases? iii. Do we take care of ourselves and immediate family or are we responsible to and for the larger group? iv. Do we place high value on privacy and freedom, or on maintaining group harmony? v. Individualism: everyone is supposed to take care of himself and their immediate family, right of privacy, speaking one's mind is healthy, personal opinion is expected, transgression of norms leads to guilt feeling, languages in which the word "I" is indispensable, purpose of education is learning how to learn; task prevails over relationship vi. Collectivism: people are born into extended families which protect them for loyalty, stress on belonging, harmony should always be maintained, opinions and votes predetermined by in-group, transgression of norms leads to shame feelings, "I" is avoided, purpose of education is learning how to do, relationships prevails over task
How does the MNC respond to those reactions, including: b. Return on investment? c. Knowledge transfer?
b. Return on investment? i. Company's ROI of individual expats ii. Company's ROI of expats as a group/program iii. Accomplishing the assignment objectives at the expected cost iv. Cost benefit analysis v. Hard to put a monetary value on intangibles like knowledge and skills transfer c. Knowledge transfer? i. Including sharing of ideas/practices/information, etc. ii. Involves expats both to and from the MNC headquarters or other subsidiaries. iii. Human and intellectual capital development leading to organizational success and effectiveness.
What is involved in individuals' reactions to re-entry, including: b. Social factors of family adjustment, social networks and spouse career?
b. Social factors of family adjustment, social networks and spouse career? i. Family Adjustment: 1. Each family member is experiencing his or her own readjustment problems 2. It is as if they had pressed the 'pause' button as they flew out of the country, and expected life at home to remain in the 'freeze frame'. 3. Re-entry reminds them that life is not static; have to come to terms with reality, accept the negative and positive aspects of home 4. Dull and unexciting ii. Social Networks: 1. Much less of a problem to keep up to date with events back home because of wide-spread access to the internet 2. Children can have difficulty attempting to regain acceptance into peer groups and being out-of-touch with current sport and fashion 3. The greater the re-entry process for the children, the greater the 'spill-over' effect for the repatriate iii. Spouse career 1. Partner may have not worked during the foreign assignment and has negative experiences during the job search may affect the partner's self-worth, compounding the readjustment process and even causing tension in relationships 2. Serious problems adjusting due to the inability to work in foreign country
Hofstede: Masculinity vs. Femininity
c. Masculinity v. Femininity - the extent to which traditional gender traits are present in a culture. i. Masculine cultures 1. Value advancements, assertiveness, earning, acquiring things 2. Management focuses on performance, success, competition 3. Values the "what" (i.e., outcomes) ii. Feminine Cultures 1. Value cooperation, modesty, quality of life, good relationships, friendly atmosphere, security, sympathy for the underdog 2. Management focuses on relationships, social harmony, consensus, compromise, negotiations, and helping others 3. Values the "how" (i.e., the process)
Hofstede: Uncertainty Avoidance
d. Uncertainty avoidance - deals with a society's comfort and tolerance for ambiguity and uncertainty i. How does a society deal with the fact that the future can't be known? ii. Try to control the future? iii. Just let the future happen? iv. Manifests in the degree of fixed habits, rituals and controls on behavior v. High Uncertainty Avoidance 1. Attempt to make life predictable 2. Rigid codes of beliefs and behaviors; intolerant of unorthodox behavior and ideas 3. Structured society with many social conventions 4. People tend to be expressive and show emotions that may be extreme vi. Low Uncertainty Avoidance 1. More relaxed attitudes; practice counts more than principles 2. More open, inclusive, and accepting 3. Open to change and innovation 4. Less sense of urgency
Hofstede: Long term vs. Short Term Indulgence vs. Restraint
e. Long-Term Orientation / Pragmatic (long term) v. Normative (short term) - How a culture deals with change i. Looks at a culture's acceptance of a world in-flux, and its need to prepare for the future ii. Identified after the first four dimensions iii. Less data has been collected on this dimension iv. Pragmatic (long term) cultures 1. Encourage thrift and education as a way to prepare for the future 2. Value modesty and meeting obligations v. Normative (short term) cultures 1. Encourage short term gains and quick results 2. People tend to be religious and nationalistic, and have strong convictions f. Indulgence v. Restraint - How a culture views the good things in life i. Newest of the six dimensions ii. Relatively little data collected iii. Indulgent cultures 1. Allow relatively free gratification of human drives related to enjoying life and having fun 2. Are optimistic and see life as good 3. Value freedom of speech and personal happiness iv. Restrained cultures 1. Tend to suppress gratification of needs 2. Regulate behavior by strict societal norms 3. Tend to be pessimistic and see life as hard and duty-bound
Expatriates (Expats)
employees from another country working and residing in a "foreign" country; people leaving their home country and going overseas or offshore but working with the U.S.
Inpatriates
employees from another country working in the home country of the multinational
Local Hires
employees whose home country is the "host" country; [hire from the local country in both management and both individual contributive roles; are working for a foreign company but are citizens there]
Going Rate Approach
i. Based on local markets ii. Relies on pay survey comparisons among 1. Local nationals (HCNs) 2. Expatriates of the same nationality 3. Expatriates of all nationalities iii. Compensation set based on selected survey comparisons. iv. Base pay and benefits may be supplemented by additional payments for low paying countries to help keep expat "whole". v. Advantages: 1. Equality with local nationals 2. Simplicity 3. Identification with host country 4. Equity among different nationals in the same workplace vi. Disadvantages: 1. Variation between assignments for same employee 2. Variation between expats of same nationality in different countries 3. Potential re-entry problems
Balance Sheet Approach
i. Basic objective is the maintenance of home-country living standard plus financial inducement. ii. Home-country pay, and benefits are the foundations of this approach. iii. Adjustments to home package to balance additional expenditure in host country. iv. Financial incentives (expatriate/hardship premium) added to make the package attractive. v. Most common system in usage by MNCs. vi. Advantages: 1. Equity: a. Between assignments b. Between expatriates of the same nationality 2. Facilitates expatriate re-entry 3. Easy to communicate to employees vii. Disadvantages: 1. Can result in great disparities: a. Between expatriates of different nationalities b. Between expatriates and local nationals 2. Can be quite complex to administer
How do progressive companies do for expat employees?
i. Training 1. Cross-cultural 2. Interpersonal behaviors and skills 3. Social norms 4. Communication/language ii. Compensation 1. Increased pay 2. Tax equalization 3. Allowances and stipends (i.e. school costs) 4. Cost of living adjustments and/or living expenses 5. Benefits (perhaps to equalize to in-country benefits) 6. Flights home iii. Services (depends on the company) 1. Travel arrangements, visas 2. Relocation of household goods, housing assistance or actual accommodations 3. Information about living in the host country (shopping, medical care, recreation) 4. Schooling and recreational activities 5. Language acquisition 6. Taxation assistance 7. Assistance with home in parent country 8. Special circumstances (parents, college-age children, pets, security, transportation/cars, spousal employment, etc.) iv. As illustrated, expatriate programs are very expensive and resource intensive. v. The stakes for expatriate success are equally high
How does the MNC respond to those reactions, including: a. Staff availability and career expectations?
i. Valuing the expat's experience 1. If the repatriate is promoted or given a position that obviously capitalizes on international experience, other managers interpret this as evidence that international assignments are a positive career move 2. If they do not reward, then high turnover among repatriates or seen to terminate a repatriates employment upon re-entry, then younger mangers will think it is a high-risk decision in terms of future career progression within the organization ii. Boundary less (is the highly qualified mobile professional who builds his or her career competencies and labor market value through transfers across boundaries) and protean careers (self-directed career with continuous learning) iii. "International itinerants" (professional managers who over their careers are employed for their ability, by at least 2 business organizations that are not related to each other, in at least 2 different countries, instead of selecting in-house candidates who will have to be repatriated to MNE)
