Questions and Answers
What are the main approaches to staffing policy within international businesses?
What are some advantages of the ethnocentric staffing policy?
Alleviates a shortage of qualified personnel, infuses subsidiaries with corporate culture, transfers special know-how.
What is expatriate failure?
The premature return of an expatriate manager to the home country due to poor performance.
U.S. firms have lower expatriate failure rates than European firms.
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The process of reintegrating the expatriate into the home country is called ___ .
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Which of the following is NOT a component of an expatriate compensation package?
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Cultural training programs can help lessen the effects of culture shock.
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Match the following staffing policies with their description:
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What are the two key compensation issues mentioned?
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What can organized labor do to international businesses?
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Study Notes
Human Resource Management
- Human resource management refers to the activities an organization carries out to utilize its human resources effectively.
- These activities include: • Determining the firm's human resource strategy • Staffing • Performance evaluation • Management development • Compensation • Labor relations
- Firms need to ensure there is a fit between their human resources practices and strategy.
Human Resource Management in International Companies
- HRM is more difficult in international companies because of: • Environmental differences • Strategic contingencies • Organizational challenges
Staffing Policy
- A firm's staffing policy is concerned with the selection of employees who have the skills required to perform a particular job.
- There are three main approaches to staffing policy within international businesses: • Ethnocentric approach • Polycentric approach • Geocentric approach
Ethnocentric Staffing Policy
- The ethnocentric approach to staffing fills key management positions with parent-country nationals.
- Advantages: • Alleviates a shortage of qualified personnel in the host country • Infuses subsidiaries with the corporate culture and helps control local decisions • Transfers special know-how or core competencies to a foreign operation
- Disadvantages: • Relocating home-country managers is expensive • Gives the business a “foreign” image
Polycentric Staffing Policy
- The polycentric approach recruits host country nationals to manage subsidiaries in their own country, and parent country nationals for positions at headquarters.
- Advantages: • Minimizes cultural myopia • Less expensive to implement than an ethnocentric policy
- Disadvantages: • A multinational company may grow to resemble a collection of national businesses • A gap can form between host country managers and parent country managers
Geocentric Staffing Policy
- The geocentric approach seeks the best people, regardless of nationality, for key jobs and manages operations abroad.
- Advantages: • Enables the firm to make the best use of its human resources • Develops global managers who can easily adjust to any business environment • Removes nationalistic barriers among managers within a subsidiary or between subsidiaries in different nations
- Disadvantages: • Can be limited by immigration laws • Costly to implement
Recruiting Human Resources
- Recruitment is the process of identifying and attracting qualified applicants for vacant positions.
- Sources of recruitment: • Current employees • Recent college graduates • Local managerial talent • Non-managerial workers
Selecting Human Resources
- Selection involves screening and hiring the best-qualified applicants with the greatest performance potential.
- Key considerations: • Ability to bridge cultural differences • Adaptability to new ways of life • Cultural sensitivity of job candidates
Expatriate Failure
- Expatriate failure is the premature return of an expatriate manager to the home country.
- Reasons for failure: • Poor performance • Cultural differences
- Costs of failure: • Between 250,000and250,000 and 250,000and1 million • High failure rates in developed and developing countries
Cultural Shock and Reverse Cultural Shock
- Cultural shock is a psychological process affecting people living abroad, characterized by homesickness, irritability, confusion, and depression.
- Reverse cultural shock is the psychological process of readapting to one's home culture.
- Companies may offer reorientation programs and career-counseling sessions to help expatriates deal with reverse cultural shock.
Managing Expatriates
- Repatriation is the process of reintegrating the expatriate into the home country upon completion of the foreign assignment.
- Challenges: • Work-related problems • Financial problems • Social problems
- The challenge is to find the right job for the returning manager.
Compensation
- Two key issues on compensation:
- How to adjust compensation to reflect differences in economic circumstances and compensation practices
- How to pay expatriate managers
National Differences in Compensation
- Substantial differences in executive compensation across countries
- Question: Should pay be equalized across countries?
- Many firms have moved toward a compensation structure based on global standards, especially in firms with a geocentric staffing policy.
How Should Expatriates Be Paid?
- Most firms use the balance sheet approach to equalize purchasing power across countries.
- Compensation package has five components:
- Base salary
- Foreign service premium
- Various allowances (hardship, housing, cost-of-living, education)
- Tax differentials
- Benefits (medical and pension)
International Labor Relations
- Question: Can organized labor limit the choices available to an international business?
- Labor unions can limit a firm's ability to pursue a transnational or global strategy
- HRM needs to foster harmony and minimize conflict between management and organized labor.
Concerns of Organized Labor
- Organized labor is concerned that:
- Multinationals can counter union bargaining power by threatening to move production to another country
- Multinationals will farm out only low-skilled jobs to foreign plants, making it easier to switch production locations
- Multinationals will import employment practices and contractual agreements from their home countries, reducing the influence of unions
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Description
This quiz covers the activities an organization carries out to utilize its human resources effectively, including determining human resource strategy, staffing, performance evaluation, and more.
