INTERNATIONAL DIMENSIONS OF HRM
This lecture demonstrates how managers can effectively utilize
HRM practices to enhance their firms'
competitive response in an era when the opportunities and
challenges facing business are international in
nature. It covers the stages of international involvement, the
challenges of expatriate job assignments, and
the ways to make those assignments more effective. It also
discusses the development of HRM policies in a
global context and the specific HR concerns of exporting firms.
A. Managing Human
Resources in an International Business
Globally, HR executives are strategic partners with line
managers and actively participate in top-level
business decisions that bring human resource perspectives to the
global management of a company.
Basically, the role of the global human resource executive is
focused on being a strategic business partner
and decision maker. Any human resource initiative must be based
on maximizing productivity to best
benefit the bottom line, and, therefore, a solid understanding
of the total global system is essential. Just as
global business enterprises evolve, so do the human resources
that support them. The global human
resources role is, and should be, a natural extension of the
positive orientation toward global human
resource management and the recognition of the strategic role
that must play.
I. The Stages of International Involvement
Firms progress through five stages (e.g., domestic operations,
export operations, subsidiaries or joint
ventures, multinational operations, and transnational
operations) as they internationalize their operations.
for a graphical
display of these stages. The
higher the stage, the more HR
practices need to be adapted to
diverse cultural, economic,
political, and legal
environments. For example,
HRM practices at Stage 5
corporations) are designed to
blend individuals from diverse
backgrounds to create a shared
corporate (rather than national)
identity and a common vision.
The evolution of global
business stages are:
abroad, either directly
or indirectly, by retaining foreign agents and distributors.
arrangement whereby an organization grants a foreign firm the right to use
intellectual properties such as patents, copyrights,
manufacturing processes, or trade names for a
specific period of time.
parent company grants another firm the right to do business in a prescribed
manner. Franchisees must follow stricter operational guidelines
than do licensees. Licensing is
usually limited to manufacturers, whereas franchising is popular
with service firms such as
restaurants and hotels.
Corporation (MNC)—A firm that is based
in one country (the parent or home
country) and produces goods or provides services in one or more
foreign countries (host
Corporation—Has corporate units that
are integrated to operate as one organization
worldwide in a number of countries.
II. Global Human Resource Management
The utilization of global human resources to achieve
organizational objectives without regard to geographic
boundaries. Those engaged in the management of global human
resources develop and work through an
integrated global human resource management system similar to
that experienced domestically.
III. Global Staffing
A global organization must have qualified individuals in
specific jobs at specific places and times in order to
accomplish its goals. This process involves obtaining such
people globally through human resource
planning, recruitment, and selection.
A. Type of staff members
An employee working in a firm who is not a citizen of the country in which the
located but is a citizen of the country in which the
organization is headquartered.
national (HCN): An employee working in
a firm who is a citizen of the country in
which the firm is located, but where the firm is operated by an
organization headquartered in another
country. Normally the bulk of employees in international offices
will be host-country nationals.
national (TCN): A citizen of one
country, working in a second country, and
employed by an organization headquartered in a third country.
B. Approaches to Global Staffing
staffing: Companies primarily hire
expatriates to staff higher-level foreign positions.
Staffing: When more host-country
nationals are used throughout the organization,
from top to bottom.
Staffing: Similar to the polycentric
approach, but regional groups of subsidiaries
reflecting the organizations strategy and structure work as a
staffing: A staffing approach that
uses a worldwide integrated business strategy.
Global training and development is needed because people, jobs,
and organizations are often quite
IV. Global Human Resource Development
a. Expatriate Development—The
development process should start as soon as the workforce is
selected, even before beginning global operations if possible.
Orientation and Training—Orientation
and training is necessary prior to
repatriation, which is the process of bringing expatriates home.
Repatriation orientation and
training is needed to prepare the employee, and the family, for
a return to the home-country culture
and to prepare the expatriate’s new subordinates and supervisor
for the return.
V. Global Compensation and Benefits
Probably the main reason that organizations relocate to other
areas of the world is because of high-wage
pressures that threaten their ability to compete on a global
basis. Basically, the compensation levels are
usually much lower globally. Variations in laws, living costs,
tax policies, and other factors all must be
considered when establishing global compensation packages.
VI. Global Safety and Health
Safety and health aspects of the job are important because
employees who work in a safe environment and
enjoy good health are more likely to be productive and yield
long-term benefits to the organization. For this
reason, progressive global managers have long advocated and
implemented adequate safety and health
programs. Basically, U.S.-based global operations are often
safer and healthier than those of the hostcountry
operations, but frequently not as safe as similar operations in
the United States.
VII. Possible Barriers To Effective Global Human Resource
Unfortunately, a global organization must cope with various
unknowns. The management of HR functions
globally is enormously complicated by the need to adapt HR
policies and practices to different host
countries. HR management must consider the potential impact of
global differences on human resources.
Differences in politics, law, culture, economics,
labor/management relations systems, and other factors
complicate the task of global human resource management.
a. Political and
Legal Factors—the nature and stability
of political and legal systems vary throughout
the globe. firms enjoy a relatively stable political and legal
system. The same is true in many of the
other developed countries, particularly in Europe. However, in
other nations, the political and legal
systems are much more unstable. Some governments are subject to
coups, dictatorial rule, and
corruption, which can substantially alter the business
environment as well as the legal environment.
Legal systems can also become unstable, with contracts suddenly
becoming unenforceable because of
Factors—Cultural differences vary from
country to country with corresponding differences
in HR practices. HR practices must be adapted to local cultural
norms, and, therefore, most HR staff
members in a foreign subsidiary should be drawn from
host-country nationals. However, just because
certain cultural norms are restrictive does not mean that an
attempt at change should not be made.
Companies must bring in a critical mass of expatriates who carry
the culture with them and always
leave one or two behind to oversee locals and ensure that they
are following corporate policies. The
key is to accommodate local cultures but maintain the critical
nature of the corporate culture.
Factors—Differences in economic
systems must also be thoroughly investigated. In a
capitalist system, the overwhelming need for efficiency favors
HR policies and practices that value
productivity and efficiency. In a socialist system, HR practices
favor the prevention of
unemployment, often at the expense of productivity and
efficiency, which is often unacceptable. The
impact of economic factors on pending global operations must be
fully understood and accounted
for prior to developing HR policies and practices. Probably one
of the greatest economic factors is
the difference in labor costs.
Labor/Management Relations Factors—The
relationship between workers, unions, and
employers varies dramatically from country to country and
obviously has an enormous impact on HR
VIII. The Challenges of Expatriate Assignments
One of the most challenging tasks for any firm operating
internationally is to manage its expatriate work
International Assignments End in Failure
The failure. expatriates is estimated to be in the 20 to 40
percent range. Six factors account for most
1. Career blockage
2. Culture shock
3. Lack of pre-departure cross-cultural training
4. Overemphasis on technical qualifications
5. Getting rid of a troublesome employee
6. Family problems
Difficulties on Return
When the expatriates return home, they may experience additional
problems, which include:
7. Lack of respect for acquired skills
8. Loss of status
9. Poor planning for return position
10. Reverse culture shock
Effectively Managing Expatriate Assignments with HRM Policies
Companies can minimize the chances of failure by putting in
place a sensible set of HRM policies and
practices that get to the root of the problems. Such policies
and practices would pertain to selection,
training, career development, and compensation. Adequate
practices in these areas can be used to avoid
The choice of an employee for an international assignment is a
critical decision. To choose the best
employee for the job, management should:
1. Emphasize cultural sensitivity as a selection criteria
2. Establish a selection board of expatriates
3. Require previous international experience
4. Explore the possibility of hiring foreign-born employees
5. Screen candidates’ spouses and families
The assumption that people everywhere respond in similar fashion
to the same images, symbols, and
slogans has hurt U.S. companies. Cross-cultural training
sensitizes candidates for international assignment
to the local culture, customs, language, tax laws, and
The expatriate’s motivation to perform well on an international
assignment will depend to a large amount
on the career development opportunities offered by the employer.
Firms can use compensation packages to enhance the effectiveness
of expatriate assignments. However,
compensation policies can create conflict if locals compare
their pay packages to the expatriate’s and
conclude that they are being treated unfairly.
Global Equal Employment Opportunity
Equal employment opportunity worldwide ranges from virtually
none to a highly sophisticated system.
Some countries have extensive EEO laws, and they are enforced
vigorously. Other countries have similar
laws that are not enforced, whereas others have no laws relating
Eight Keys to Global Human Resource Management of Expatriates
Global HR management of expatriates can be made simpler and more
manageable by following eight steps,
which are general guidelines for developing an expatriate
• The global business
plan must be completely understood to make it easier to determine how
existing human resource policies can be adapted to accomplish
• The company’s Foreign
Service policy should be a set of guidelines, not rigid rules, for relocating
employees and their families around the world while maintaining
the domestic corporate culture.
• Develop a global budget
process so the overall cost of each expatriate global assignment can be
estimated. Such costs represent enormous investments and should
be carefully considered to
determine if expatriates or host-country or third-country
nationals should be used.
• Profile the candidate
and his or her family to determine who might be an effective candidate for a
global assignment. Often an entire family, not just an employee,
must be considered in making the
• The terms and
conditions of the global assignment should be clearly stated up front.
should be given both a verbal and written presentation of the
assignment’s terms and conditions to
ensure a complete understanding of both the benefits and
responsibilities of the global assignment.
• Prepare expatriates and
their families for relocation with departure orientation and training.
Employees and their families should be given language training
and cultural training, as well as a
general orientation of everyday living and local customs.
• Develop and implement a
continual development process to take advantage of the employee’s
global experiences, including career planning, as well as
home-country development during the
global assignment period.
• Prepare returning
expatriates and their families with repatriation orientation training.
Maintaining Corporate Identity through Corporate Culture
Maintaining an effective corporate culture that reflects that of
the home country is essential for continuity
worldwide and often requires innovative insight. When a U.S.
company hires too many local people in its
foreign offices, it risks losing the unique set of values and
operating procedures that defines its corporate
Often a corporation forms an alliance with a company in the host
country. In such situations, it is essential
that the corporate cultures and management styles of the
partners blend together as quickly as possible.
Long-term success means having a corporate culture that supports
the goals of the global organization and
effectively deals with the international business environment.
As a firm becomes more and more global in
nature, it becomes more difficult to have a supportive corporate
culture. Alliances are useful for all partners
because collaboration makes it possible to share the costs and
risks of doing business, and it enables
companies to share financial resources, technology, production
facilities, marketing expertise, and of course,
human resources. However, problems may occur in international
alliances when people from different
organizations and national cultures work together. Regardless of
whether an alliance exists, it is essential
that the corporate culture focus on making a profit. Combining
an effective corporate culture that keys on
innovatively coping with the global environment and, at the same
time, being profitable is what all global
companies must strive for. Ideally, the corporate culture of
global corporations will closely parallel that of
the home country.
Companies primarily hire expatriates to staff higher-level foreign
When more host-country nationals are used throughout the organization,
from top to bottom.
Similar to the polycentric approach, but regional groups of subsidiaries
reflecting the organizations strategy and structure work as a
Geocentric Staffing A
staffing approach that uses a worldwide integrated business strategy
Expatriate An employee
working in a firm who is not a citizen of the country in
which the firm is located but is a citizen of the country in
organization is headquartered.
arrangement whereby an organization grants a foreign firm the right to
use intellectual properties such as patents, copyrights,
processes, or trade names for a specific period of time.
A firm that is based in one country (the parent
or home country) and
produces goods or provides services in one or more foreign
Global Corporation Has
corporate units that are integrated to operate as one organization
worldwide in a number of countries.