International Business 10e Daniels/Radebaugh/Sullivan
International Business
Chapter Twenty One
Human Resource
Management
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Chapter Objectives
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Illustrate the importance of HR in international business
Explain unique qualifications of international managers
Evaluate issues that arise when companies transfer
managers abroad
Examine companies’ alternatives for recruitment, selection,
compensation, development, and retention of international
managers
Discuss how national labor markets can affect companies’
optimum methods of production
Describe country differences in labor policies and practices
Highlight international pressures on MNEs’ relations with
labor worldwide
Examine the effect of international operations on collective
bargaining
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Factors Making International HR
Difficult
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Different labor markets
• Mix of available workers
• Mix of labor costs
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International worker mobility
problems
National management styles and
practices
National orientations
Strategy and control
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Human Resources in International
Business
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Tiered Approach to
International Staffing
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Subsidiaries need
people who can
manage well locally
Headquarters
needs people who
can coordinate and
control worldwide
and regional
operations
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International Managerial Terms
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Locals – citizens of the countries in
which they are working
Expatriates – non-citizen
• Home-country national
• Third-country national
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Corporate Managers Abroad
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Deal at top levels in many countries
Experience the rigors of foreign
travel
Face difficulties if they have risen
entirely through domestic divisions
Usually have much broader duties
Often isolated with less access to
staff specialists
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Filling Foreign Managerial
Positions
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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
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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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Selecting the Proper Expatriate
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Technical competence
Adaptiveness
• Those needed for self-maintenance
• Those related to development of satisfactory
relationships
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Flexibility
Tolerance
• Cognitive skills
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Local acceptance
Most common reason for failure is inability
of the expatriate’s family to adjust
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Cost-of-Living Indexes
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Higher pay for assignments abroad
Increase compensation when foreign
cost is higher
Do NOT decrease compensation
when foreign cost is lower
Remove the differential when the
manager is repatriated
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Staffing With Locals
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Locals usually cost less than do
expatriates
Understand local:
• Language
• Management styles
• Labor policies and practices
• Localized operations
• May be legally required in some cases
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Pre-Employment Training
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Environment-specific information
Adaptiveness training
Training by an unaffiliated company
abroad
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Allegiance of Expatriate Managers
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Chapter Review
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Illustrate the importance of HR in international business
Explain unique qualifications of international managers
Evaluate issues that arise when companies transfer
managers abroad
Examine companies’ alternatives for recruitment, selection,
compensation, development, and retention of international
managers
Discuss how national labor markets can affect companies’
optimum methods of production
Describe country differences in labor policies and practices
Highlight international pressures on MNEs’ relations with
labor worldwide
Examine the effect of international operations on collective
bargaining
2004 Prentice Hall, Inc
21-1