Hiring and Managing
Employees
Human Resource Management
(HRM)
Refers to the activities an
organization carries out to use its
human resources effectively
Four major tasks of HRM
- Staffing policy
- Management training and development
- Performance appraisal
- Compensation policy
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International Human Resource
Management
Strategic role: HRM policies should be
congruent with the firm’s strategy and
its formal and informal structure and
controls
Task complicated by profound
differences between countries in labor
markets, culture, legal, and economic
systems
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International H.R.M.
Expatriates
Citizens of one country who are living
and working in another country
Recruitment and selection
Often modified
Training and development
Compensation
Labor relations
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Factors Making International HR
Difficult
Different labor markets
- Mix of available workers
- Mix of labor costs
International worker mobility problems
National management styles and
practices
National orientations
Strategy and control
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International Managerial Terms
Locals – citizens of the countries in
which they are working
Expatriates – non-citizen
- Home-country national
- Third-country national
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Ethnocentric Staffing
Individuals from home country manage operations abroad
Advantages
+ Tight control over subsidiaries
+ Locally qualified people not always available
+ Re-create local operations in home-office image
+ Interests of home office may be better protected
– Relocations are expensive
Disadvantages
– Create “foreign” image for the business
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Polycentric Staffing
Individuals from host country manage operations abroad
Advantages
+ Responsibility on those knowing local business
+ Avoid expensive relocations from home nation
Disadvantages – Potentially lose control of subsidiary
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Geocentric Staffing
Best-qualified individuals, regardless of nationality,
manage operations abroad
Advantages
+ Develop global managers who can adjust
easily to any business environment
Disadvantages – These individuals command high salaries
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Filling Foreign Managerial Positions
Typically more difficult to fill than domestic
positions because:
- People don’t like to move
- There are legal impediments to using expatriates
- Many are apprehensive about language issues
- Many assignments are open-ended
- Perception that assignment abroad will negatively
-
affect family lifestyle
Living is more expensive abroad
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Reasons to Use Expatriates
Lack of locally qualified candidates
Broaden the companies understanding
of the overall corporate system
Gain professional/foreign experience
Can control operations according to
headquarters’ preferences
Need to transfer technology abroad
Gain valuable educational experience
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Human Resource Planning
Forecasting human resource needs and supply
Phase 1
Take inventory of
current human
resources
Phase 2
Estimate firm’s
future human
resource needs
Phase 3
Develop plan to
recruit and select
people for vacant
and anticipated
new positions
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Recruiting Human Resources
Process of identifying and attracting a qualified
pool of applicants for vacant positions
• Current employees
• Recent college graduates
• Local managerial talent
• Nonmanagerial workers
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Selecting Human Resources
Process of screening and hiring the best-qualified applicants
with the greatest performance potential
 Ability to bridge cultural
differences is key
 Expatriates must adapt
to new ways of life
 Cultural sensitivity raises
odds for success
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Selecting the Proper Expatriate
Technical competence
Adaptiveness
- Those needed for self-maintenance
- Those related to development of satisfactory
relationships
• Flexibility
• Tolerance
- Cognitive skills
Local acceptance
Most common reason for failure is inability of
the expatriate’s family to adjust
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Allegiance of Expatriate Managers
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The Expatriate Problem
Expatriate failure: premature return of the
expatriate manager to his/her home country
• Cost of failure is high: estimate = 3X the
expatriate’s annual salary plus the cost of
relocation (impacted by currency exchange
rates and assignment location)
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Reasons for Expatriate
Failure
US multinationals
- Inability of spouse to adjust
- Manager’s inability to adjust
- Other family problems
- Manager’s personal or
emotional immaturity
- Inability to cope with larger
overseas responsibilities
European multinationals
Inability of spouse to
adjust
Japanese Firms
- Inability to cope with
larger overseas
responsibilities
- Difficulties with the
new environment
- Personal or emotional
problems
- Lack of technical
competence
- Inability of spouse to
adjust
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Culture Shock
Psychological process affecting people living abroad
that is characterized by homesickness, irritability,
confusion, aggravation and depression
Stage I:
Thrilling experience
Stage II:
Downward slide
Stage III:
Recovery begins
Stage IV:
Embrace local culture
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Training and Management
Development
Training: Obtaining skills for a particular
foreign posting
- Cultural training: Seeks to foster an
appreciation of the host country’s culture
- Language training: Can improve expatriate’s
effectiveness, aids in relating more easily to
foreign culture, and fosters a better firm image
- Practical training: Ease into day-to-day life of
the host country
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Cultural Training Methods
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Compiling a Cultural Profile
Background
Notes
CultureGrams
Country
Studies Area
Handbooks
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Employee Compensation
Managerial employees
Cost-of-living
effects
Nonmanagerial workers
Greater cross-border
investment
Bonus and
tax incentives
Cultural and
social factors
Greater labor mobility
in some markets
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Components of Expatriate Pay
Base Salary
- Same range as a similar position in the home country
Foreign service premium
- Extra pay for work outside country of origin
Allowances
- Hardship, housing, cost-of-living, and education
allowances
Taxation
- Firm pays expatriate’s income tax in the host country
Benefits
- Level of medical and pension benefits identical
overseas
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Repatriation of Expatriates
A critical issue in the training and
development of expatriate managers is
preparing them for reentry into their home
country
Repatriation should be seen as the final link
in an integrated, circular process that
selects, trains, sends, and brings home
expatriate managers
Research shows that there is a problem with
the repatriation process
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Reverse Culture Shock
Psychological process
of readapting to one’s
home culture 
• Once-natural thoughts and
feelings now strange
• Can be more unsettling than
culture shock
• Many companies reabsorb
expatriates poorly
Methods of
reducing its effects 
• Home-culture reorientation
programs
• Career-counseling sessions
• Career-development program
before posting abroad
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Repatriation of Expatriates
Didn’t know what position they
hold upon return.
Firm vague about return, role
and career progression.
Took lower level job.
Leave firm within
one year.
Leave firm within
three years
10
20
30
40
percent
50
60
70
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Labor-Management Relations
Positive or negative condition of relations between
a company’s management and its workers
• Rooted in local culture
• Often affected by
political movements
• Directly influences
workers’ lives
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Importance of Labor Unions
Can affect
selection
of a location
Can affect company
performance
in a market
Popularity of
emerging markets
in Asia
Union power
declining across
much of Europe
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International Labor Movements
International activities of unions are making progress in
improving treatment of workers and reducing child labor
But generating support
can be difficult because:
• Events in distant lands
difficult to comprehend
• Workers in different
nations often compete
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