Chapter 9: Staffing,
Training, and Compensation
for Global Operations
PowerPoint by
Hettie A. Richardson
Louisiana State University
© 2008 Pearson Prentice Hall
9-1
Opening Profile: Training the
“Toyota Way”
 Making problems visible
 Toyota Institute
 Too much growth to maintain the Toyota
Way?
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9-2
International Human Resource
Management (IHRM)
 Functions
Recruitment and selection
Training and development
Compensation and performance
management
Management of expatriates
 Again, fit is crucial
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9-3
Staffing for Global Operations
 Ethnocentric staffing approach
Used at internationalization stage of
strategic expansion, with centralized
structure
Parent-country nationals (PCNs)
 Polycentric staffing approach
Often used with multinational strategy
Host-country nationals (HCNs)
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9-4
Staffing for Global Operations
 Global staffing approach
Third country nationals (TCNs)
Transpatriates
 Regiocentric staffing approach
Can produce a mix of PCNs, HCNs, and
TCNs
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9-5
Strategic Mode, Organizational
Variables, and Staffing Policy
Aspect of
Enterprise
Strategic
Orientation
Ethnocentric
International
Expatriates
Perpetuation used for key
positions
Evaluation
and control
Rewards
Home
standards
applied
High at home;
low in
subsidiaries
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Polycentric
Multidomestic
Regiocentric
Regional
Global
Transnational
Locals used for Regional
key positions
people used
locally
regionally
Best people
used
anywhere
Determined
locally
Determined
regionally
Globally
integrated
Wide variation
Based on
contribution to
regional
objectives
Based on
contribution to
local and
worldwide
objectives
9-6
Expatriate Selection
 Five categories of success: job factors,
relational dimensions, motivational state,
family situation, and language skills
 Predictors of expatriate success: Stress
tolerance and extraversion
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9-7
Expatriate Performance
Management
 Selection based on headquarters criteria
 Inadequate preparation, training, orientation
 Alienation or poor support from headquarters
 Inability to adapt to the local culture
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9-8
Expatriate Performance
Management
 Problems with spouse and children
 Insufficient compensation and financial
support
 Poor programs for career support and
repatriation
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9-9
Expatriate Training and
Development
 China: Eating duck tongue and pigeon head
 Brazil: Home phones don’t work
 India: Pervasive poverty
 Indonesia: Rent paid 2-3 years in advance
 Japan: Doctors reveal little to patients
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9-10
Expatriate Training and
Development
 Japanese expatriate planning:
Selection based on long-term knowledge of
executives and their families
Use of longer assignments (e.g., 5 years)
Extensive headquarter support
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9-11
Cross-cultural Training
Culture shock
Honeymoon
Irritation and hostility
Gradual adjustment
Biculturalism
Subculture shock
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9-12
Training Techniques
 Area studies
 Sensitivity training
 Culture assimilators
 Field experiences
 Language training
 Host-family
surrogate
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9-13
Corporate Programs to Develop
Global Managers
 ABB rotates 500 managers to different
countries every 2-3 years
 Pepsi brings foreign managers to the US for
one-year assignments
 British Telecom uses informal mentoring
between expatriates and potential assignees
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9-14
Management Focus: Citibank
Gives Advice on Career Planning
 Two-thirds of Citibank’s management team
have international experience
 Options include expatriate assignment, shortterm assignments, jobs with cross-border
interactions, and global task forces
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9-15
Integrating Training with Global
Orientation: Export Stage
 Training need: Low to moderate
 Content: Interpersonal skills, culture,
customer values, business behavior
 HCNs: Train to understand parent-country
products and policies
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9-16
Integrating Training with Global
Orientation: Multidomestic Stage
Training need: Moderate to high
Content: Interpersonal skills, culture,
technology transfer, business practices
and laws
HCNs: Familiarize with production and
service procedures
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9-17
Integrating Training with Global
Orientation: Multinational Stage
 Training need: High moderate to high
 Content: interpersonal skills, two-way
technology transfer, corporate value transfer,
strategy, stress management, culture,
business practices
 HCNs: Training in technical areas, products
and services, corporate culture
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9-18
Integrating Training with Global
Orientation
 Training Need: High
 Content: Global corporate operations,
corporate culture transfer, customers, global
competitors, strategy
 HCNs: Training in proficiency in production
and efficiency systems, corporate culture,
business systems, global conduct policies
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9-19
Factors Helping Integration of
Expatriates and Local Staff
 Forming close working relationships
 Learning local language
 Transferring technical/business knowledge
 Integrating into local life
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9-20
Factors Hindering Integration of
Expatriates and Local Staff
 Not using team concept
 Not learning local language
 Arrogance
 Spouse/family adjustment problems
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9-21
Compensating Expatriates
 DuPont’s Global Transfer Center of Expertise
creates perceptions of equity and goodwill
 Companies are looking for ways to cut the
costs of expatriate assignments
 The need to reconcile parent- and hostcountry practices adds complexity
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9-22
Compensating Expatriates
 The balance sheet approach
 Tax equalization
 Components of the compensation package:
Salary, taxes, allowance, benefits
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9-23
Training HCNs
 Facilitates indigenization
 Links successful corporate culture and local
culture
 Facilitates e-business adoption
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9-24
Training Priorities for E-Business
Development
 Addressing security and privacy concerns
 Developing a business plan
 Developing an e-business strategy
 Understanding electronic payment methods
 Financing e-business initiatives
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9-25
Management Focus: Success!
Starbucks in Beijing
 Challenges recruiting, motivating, and
retaining Beijing managers
 Chinese recruits want training and
advancement opportunities more than money
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9-26
Management Focus: Success!
Starbucks in Beijing
 Recruits are trained in management and in
Starbucks’ culture
Three months in Seattle
Make coffees in a real store
 Training, and resulting trust and
participation, also serve as motivators
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9-27
Compensating HCNs
 Eastern Europeans require more cash than
Americans
 Compensation in Japan is becoming more
Westernized
 Chinese workers resist pay for performance
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9-28
Comparative Management in
Focus: Compensation
“Best Practices”
Regional
Clusters
Country
Specific
Incentives not
too large, pay
based on
individual
performance,
reduce seniority
pay
Asian and Latin
countries use
more seniority
pay, group/team
pay, and pay for
future goals
US uses less
incentives than
expected,
China and
Taiwan use
more
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9-29
Comparative Management in
Focus: Selection
Regional
“Best Practices”
Clusters
Anglo cluster
focuses on
“Getting along
technical skill,
with others” and
work experience;
“Fit with
Korea, Japan,
corporate
and Taiwan
values”
focus on work
experience
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Country
Specific
Japan looks at
a person’s
potential; Korea
relies on
employment
tests; Taiwan
relies on
interviews
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Comparative Management in
Focus: Performance Appraisal
Regional
“Best Practices”
Clusters
Expression used
Could be better little in Asian
in all countries; countries; in
emphasis on
Latin America
development
the
and
administrative
documentation purpose is
important
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Country
Specific
In Taiwan the
administrative
purpose is
important
9-31
Comparative Management in
Focus: T&D
Regional
“Best Practices”
Clusters
Softer practices
Used to
used in Anglo
improve
cluster but more
technical skills
use is desired;
and,
Latin cluster
increasingly,
desires more use
team building
of all practices
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Country
Specific
In Mexico, T&D
is a reward; US
is outsourcing
more; Korea
uses team
building
extensively
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Comparative Management in
Focus: Relation to Strategy
“Best Practices”
Regional
Clusters
Country
Specific
T&D and
performance
appraisal most
closely linked to
organizational
capability
Low cost and
differentiation
strategies linked
to HRM in Asian
cluster
No linkages
between
organizational
capability and
HRM in Mexico
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9-33