Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
International Dimensions of
Human Resource
Management
16
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Understanding the Terms
corporation – a corporation that has become an “insider” in
any market or nation where it operates and is thus competitive with
domestic firms operating in local markets. Unlike domestic firms,
however, the global corporation has a global strategic perspective
and claims its legitimacy from its effective use of assets to serve its
far-flung customers
 Expatriate – also known as a foreign-service employee, is a
generic term applied to anyone working outside her or his home
country with a planned return to that or a third country
 Global
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Understanding the Terms
country – the expatriate’s country of residence
 Host country – the country in which the expatriate is working
 Third-country national – an expatriate who has transferred to an
additional country while working abroad
 Home
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The Framework of Cultural Understanding
 Ten
broad classifications help managers assess any culture and
examine its people systematically
Sense of self and space
 Dress and appearance
 Food and eating habits
 Communication, verbal and nonverbal
 Time and time sense
 Relationships
 Values and norms
 Beliefs and attitudes
 Work motivation and practices
 Mental processes and learning

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The Expatriate: Recruitment Strategies
 Recruitment:
Three basic models
Ethnocentrism – selection from the national group of the parent
company only
 Recruitment from within the parent company’s country and the country
where the branch is located
 Geocentrism – adoption of an international perspective with emphasis
on the unrestricted use of all nationalities

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
The Expatriate: Selection Strategies
 Selection

criteria: Seeing beyond technical qualifications
Personality
Extroversion
 Agreeableness
 Emotional stability


Skills
Technical
 Communication



Home- and host-country languages
Verbal and Nonverbal
Interpersonal relations
 Stress management

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The Expatriate: Selection Strategies

Attitudes


Motivation


Tolerant attitudes toward people who may differ significantly in race,
creed, color, values, personal habits, and customs
Eliminate those only looking to get out of their own country for a change
of scenery
Behavior
Concern for other members of a group
 Tolerance of ambiguity
 Respect for people and customs different from one’s own
 Nonjudgmental behavior

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The Expatriate: Orientation Strategies
 Three

phases to orientation
Initial Orientation
Cultural briefing – traditions, history, government, economy, living
conditions, clothing, housing requirements, health requirements, visa
applications
 Assignment briefing – length of assignment, vacations, salary and
allowances, tax consequences, repatriation policy
 Relocation requirements – shipping, packing, or storage; home sale or
rental; information about housing at the new location

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The Expatriate: Orientation Strategies
 Three

phases to orientation (continued)
Predeparture orientation
Introduction to the language
 Further reinforcement of important values, especially open-mindedness
 En route, emergency, and arrival information


Post-arrival orientation
Orientation toward the environment
 Orientation toward the work unit and fellow employees
 Orientation to the actual job

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The Expatriate: Training Strategies
 Three
areas of training provide skills to survive, cope, and succeed:
Culture
 Language
 Day-to-day matters

 Culture

shock – usually occurs 4-6 months after arrival
Symptoms – homesickness, boredom, withdrawal, a need for excessive
amounts of sleep, compulsive eating or drinking, irritability,
exaggerated cleanliness, marital stress, family tension, conflict
(involving children), hostility toward host-country nationals, loss of
ability to work effectively, physical ailments of a psychosomatic nature
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Objectives for an Effective
International Compensation Policy
 Attract
and retain employees who are qualified for overseas service
 Facilitate transfers between foreign affiliates and between homecountry and foreign locations
 Establish and maintain a consistent relationship between the
compensation of employees of all affiliates, both at home and
abroad
 Maintain compensation that is reasonable in relation to the practices
of leading competitors
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Types of Expatriate Compensation Plans
– practice of paying expatriates on the same scale as
local nationals; salary and benefits may be supplemented with onetime or temporary transition payments
 Localization

Works well under specific conditions
When the transferring employee has very limited home-country experience
 In the case of permanent, indefinite, or extremely long (e.g., 10-year)
transfers

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Types of Expatriate Compensation Plans
 “Higher-of-home-or-host”
– localizes expatriates in the hostcountry salary program, but establishes a compensation floor based
on home-country compensation so that expatriates never receive
less than they would be paid at home for a comparable position

Works well under specific conditions
Transfers within regions – notably in Latin America and in the European
Union
 Assignments of unlimited duration

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Types of Expatriate Compensation Plans

Balance-sheet approach – the most common method used in North
American, European, and, increasingly, Japanese global
organizations; its primary objective is to ensure that expatriates
neither gain nor lose financially compared with their home-country
peers

Advantages
Preserves the purchasing power of expatriates in a cost-effective manner
 Facilitates mobility among expatriates

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Components of International
Compensation Packages
 Benefits
Best-of-both-worlds benefits – the expatriate is given home-country
benefits coverage, for example pensions and medical coverage, and,
where there may be no home-country plan, in areas such as disability
insurance, the employee may join the host-country plan
 Premiums

Housing allowance
 Education allowance
 Income tax equalization allowance
 Hardship pay for living in areas with climactic extremes, political
instability, or poor living conditions
 Home leave
 School allowance

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Components of International
Compensation Packages
 Pay
Adjustments and Incentives
Incentives that work in the home country may be impractical and
detrimental in the host country
 Equity norm – the most universal reward allocation practice; rewards
are distributed to group members based on their contributions

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Special Issues in the Repatriation
of Overseas Employees
elements contribute to repatriation anxiety – personal
finances, reacclimation to the U.S. lifestyle, readjustment to the
corporate structure
 Three

Possible solutions

Planning


Prior to the assignment, the firm should define one or more of the three primary
purposes for sending a particular expatriate abroad:
 executive development
 coordination and control between headquarters and foreign operations, and
 transfer of information and technology
Careful inclusion of expatriation and repatriation moves in comprehensive
planning will help reduce uncertainty and the fear that accompanies it
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Special Issues in Repatriation
of Overseas Employees

Possible solutions (continued)

Career management




Appoint a “Career Sponsor”
 Looks out for the expatriate’s career interests while she or he is abroad and
keeps the expatriate abreast of company developments
Is sensitive to the “job shock” the expatriate may suffer when she or he returns
Is trained to counsel the returning employee (and her or his family as well)
until resettlement is deemed complete
Compensation



Use mobility premiums (e.g., 3 months’ pay) – one-time compensation for each
move—overseas, back home, or to another overseas assignment
Low-cost loans and other financial assistance for housing
Financial counseling
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.