Global Human Resource Management
Chapter 18
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The Strategic Role of International
HRM
Staffing policy:
Selecting individuals with requisite
skills to do a particular job.
Tool for developing and
promoting corporate culture.
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Strategy, Structure and Control Systems
International Strategy
Structure
and Controls
Centralization
of operating
decision
Horizontal
differentiation
Need for
coordination
Integrating
mechanisms
Performance
Ambiguity
Need for
cultural controls
Multidomestic
Decentralized
Worldwide area
structure
Low
None
International
Global
Transnational
Core competency Some centralized Mixed centralized
centralized
and decentralized
Rest decentralized
Informal matrix
Worldwide
product division
Worldwide
Informal matrix
product division
Moderate
High
Very high
Few
Many
Very many
Low
Moderate
High
Very high
Low
Moderate
High
Very high
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Table 18.1
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Types of Staffing Policy
Ethnocentric:
All key management positions are filled by
parent-company nationals.
Polycentric:
Host-country nationals manage subsidiaries, parentcompany nationals have key positions at
headquarters.
Geocentric:
Seek best people for key jobs, regardless of
nationality.
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Comparison of Staffing Approaches
Staffing
Approach
Ethnocentric
Strategic
Appropriateness
International
Polycentric
Multidomestic
Geocentric
Global and
Transnational
Advantages
Overcomes lack of
qualified managers
host nation
Unified culture
Helps transfer core
competencies
Alleviates cultural
myopia
Inexpensive to
implement
Uses human resources
efficiently
Helps build strong
culture and informal
management network
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Disadvantages
Produces resentment
in host country
Can lead to cultural
myopia
Limits career mobility
Isolates headquarters
from foreign
subsidiaries
National immigration
policies may limit
implementation
Expensive
Table 18.2
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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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Expatriate Failure Rates
Recall Rate Percent
US Multinationals
20 - 40%
10 - 20%
< 10
European Multinationals
11 - 15%
6 - 10
<5
Japanese Multinationals
11 - 19%
6 - 10
<5
Percent of Companies
7%
69
24
3%
38
59
14%
10
76
Table 18.3
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Reason 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.
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.
European Multinationals: Inability of spouse to adjust.
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18-7
Expatriate Selection
Self-orientation:
Strengthen self-esteem, self-confidence and mental
well-being.
Others-orientation:
Enhance ability to interact with host-country nationals.
Perceptual ability:
The ability to empathize - understand why people in
host-country behave the way they do.
Cultural toughness:
How well an expatriate adjusts to a particular posting
tends to be related to the country of assignment.
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Training for Expatriate Managers
Cultural:
Seeks to foster an appreciation of the hostcountry’s culture.
Language:
Can improve expatriate’s effectiveness,
relate more easily to culture
1. Culture
and fostered a better firm image. 2. Language
Practical:
3. Practical
Ease into day-to-day life of the
host country.
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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
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20
30
40
50
60
18-10
70
Performance Appraisal
Problems:
Unintentional bias.
• Host-nation biased by cultural frame of reference.
• Home-country biased by distance and lack of
experience working abroad.
Expatriate managers believe that headquarters
unfairly evaluates and appreciates them.
• Many believe a foreign posting does not benefit
their career.
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Guidelines for Performance
Appraisal
More weight given to on-site manager’s
evaluation.
Former expatriate who served in the same
location should assist home-office manager
with the evaluation.
If foreign on-sight manager preparing
evaluation, home-office manager consulted
before evaluation is finalized.
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18-12
A Typical Balance Sheet
Figure 18.1
Income
Taxes
Home and
HostCountry
Income
Taxes
Housing
Additional
Costs Paid by
Company
Income
Taxes
Premiums
and
Incentives
Housing
Income
Taxes
Housing
Goods and
Services
Goods and
Services
Reserve
Housing
Goods and
Services
Reserve
Goods and
Services
Reserve
Reserve
HomeCountry
Salary
HostCountry
Costs
Host-Country
Costs Paid by
Company and
from Salary
Home- Country
Equivalent
Purchasing
Power
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International Labor Relations
Key issue: degree to which organized labor can
limit the choices of an international business.
Labor concerns:
Counter bargaining power with threat to move
jobs off-shore.
Keep high-skill work at home and ship lowskill work to foreign plants.
Importing employment practices and
contractual agreements from the home-country.
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Strategy of International Labor
Try to establish international labor
organizations.
Lobby legislatures to restrict multinationals.
Use United Nations to regulate
multinationals.
Efforts have not
been successful.
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Multinationals’ Approach to
Labor Relations
Decentralize: labor laws, union power and
nature of collective bargaining varies from
country to country.
Centralize:
Want to rationalize global operations.
Need to control labor costs and maximize threat
of move to lower cost country.
Before move, get new union approval for work
practices.
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