International Human
Resources Management
Chapter 10, Part 1
Chapter Outline

International human resources
management (IHRM)




Human resources management (HRM)
Adapting HRM practices to global business
Types of employees in global organizations
 Home-country nationals
 Host-country nationals
 Third-country nationals
 Inpatriates
Legal documents: passports and visas
Chapter Outline (2)

Expatriate vs. home country managers


Criteria for making this decision
Is the expatriate worth it?
 Financial costs of expatriates
 Risk of expatriate failure
 Benefits of having managers with
international experience
 International cadre: another choice
Chapter Outline (3)

Choosing the right expatriate for the job


Key success factors
Matching the candidate and the job
Human Resources Management (HRM)
and HRM Functions



HRM: deals with the entire relationship of
the employee with the organization
Recruitment: process of identifying and
attracting qualified people to apply for
vacant positions
Selection: process of filling vacant positions
in the organization
HRM Functions (2)


Training and development: giving
employees the knowledge, skills, and
abilities to perform successfully
Performance appraisal: system to measure
and assess employees’ work performance
HRM Functions (3)


Compensation (pay and benefits):
organization’s entire reward package,
including financial rewards, benefits, and
job security
Labor relations: ongoing relationship
between an employer and those employees
represented by labor organizations
International Human Resource
Management


All HRM functions, adapted to the
international setting
Two added complexities compared to
domestic HRM


Must choose a mixture of international
employees
Must decide the extent of adaptation to local
conditions
Key Questions about
Adapting HRM Practices




How can we identify talented local
employees?
How can we attract these employees to
apply for jobs?
Can we use our home country’s training
methods with local employees?
What types of appraisal methods are
customary and legal?
Key Questions about
Adapting HRM Practices (2)



What types of rewards do local people
value?
How can we retain and develop employees
with a high potential as future managers?
Do any local laws affect staffing, pay,
benefits, and training decisions?
Types of Employees in
Multinational Companies




Home country nationals
Host country nationals
Third-country nationals
Inpatriates
Home-country Nationals



Are citizens of the country where the company is
headquartered but live and work elsewhere
Often used
 To start up operations (most common reason)
 To provide technical or managerial expertise
 To help the company maintain financial control
 In top management positions
Companies sometimes start with home-country
nationals and switch to host-country nationals as
qualified people become available.
Host-country Nationals






Citizens of the country where they live and work
They are familiar with the culture and know the
language
They are less expensive than home-country personnel
Host-country governments often prefer use of hostcountry nationals and some require it
Hiring them is good public relations
U. S. companies tend to rely heavily on host-country
nationals
Third-country Nationals

People who are citizens of neither the
home country or the host country


Example: A Mexican, employed by an American
company, working in Argentina
The employee's native country and the country
where he works are often in the same
geographic region
Advantages of Third-Country Nationals



They often require less compensation than homecountry nationals
They usually have experience with the company.
They know the company's culture, values, and
policies.
If they are from the same geographic region as the
host country and also know the company's culture,
they can often achieve objectives better than other
types of managers.
Inpatriates


Persons who work in the home country and
are citizens of a different country
Advantages of inpatriates



Help to develop global core competencies
Provide diversity and an international
perspective in the home office
Improve career opportunities for company
managers who are not from the home country –
avoids the "glass ceiling"
Passports and Visas


A passport is a document that identifies its owner
as the citizen of a particular country.
A visa is a document from a foreign government
that allows the visa owner to enter the foreign
country for a particular purpose or reason, such as
personal travel, work, or study.
 Most visas are valid for a specified period of
time. Some visas can be renewed.
 Many governments have different rules for
people from different countries.
Expatriate




Any person who lives and works outside the country of
which he or she is a citizen
Includes home-country nationals, third-country
nationals, and inpatriates
In most countries, expatriates must have work visas in
order to work.
Exception: By 2011, citizens of most EU countries will
be able to work in any EU country without a visa.
Expatriate or
Host Country Manager?

Using expatriate managers




Do they have the appropriate skills?
Are they willing to take expatriate assignments?
Do any laws affect the assignment of expatriate
managers?
Using host country managers


Do they have the expertise for the position?
Can we recruit them from outside the company?
Is the Expatriate Worth It?


Consider costs, risks, and benefits
 High financial costs
 High failure rate of expatriates
 Benefits of international experience to the
company
Expatriate failure occurs when
 An expatriate is recalled to the home country
because of poor performance OR
 An expatriate comes home early because the
manager or family cannot adjust to the foreign
country.
Reasons for U.S. Expatriate Failure


Individual
 Personality of the manager – poor interpersonal
relationships or communication
 Lack of technical proficiency
 No motivation for assignment
Family
 Spouse or family members fail to adapt
 Spouse cannot find a job
 Family members or spouse do not want to be
there
Reasons for U.S. Expatriate Failure (2)


Cultural
 Manager fails to adapt
 Manager fails to develop relationship with key
people (company, customers, suppliers,
government). Poor performance may result.
Organizational
 Excessively difficult responsibilities
 Company fails to pick the right person
 Company fails to provide technical support or
training
Reasons for Expatriate Failure
Cross-country Comparison

A study of American, European, and
Japanese managers found that:



Expatriate failure is highest among Americans,
somewhat lower among Europeans, and lowest
among Japanese.
For Americans and Europeans, family issues are
the most common cause of expatriate failure.
For Japanese managers, not having the needed
job skills is the most common cause of failure
How Companies Benefit from
Managers' International Experience






Helps managers acquire international skills
Helps coordinate and control operations dispersed
activities
Communication of local needs/strategic
information to headquarters
In-depth knowledge of local markets
These benefits can be strategically important to
the company.
Some companies now require international
experience for high-level managers.
International Cadre:
Another Choice

Separate group of expatriate managers
who specialize in a career of international
assignments




Have permanent international assignments
Move from one international assignment to
another
May be recruited from any country
Sent to worldwide locations to develop crosscultural skills
Key Success Factors
for Expatriate Assignments






Technical and managerial skills to do the
job
Personality traits
Ability to relate well to people from
different cultures
Family situation
International motivation
Language ability
Matching the Candidate
and the Job


Assignment length
 For short assignments, technical and
professional skills are usually the most
important criteria
 For longer assignments, other factors are also
important
Cultural similarity: it is easier to work in a culture
similar to your own.
Matching the Candidate
and the Job



Amount of interaction with local people – higher
levels of interaction require better skills in
developing relationships across cultures.
Job complexity and responsibility – high-level jobs
require a higher level of experience.
Cultural acceptance in the host country

Employees and business contacts in Asian countries may
feel insulted if they have to deal with older managers in
high-level positions