Chapter 7

Section 3: Unit 7 - Human Resources and Talent Management in an MNC

• Contents: The presentation outlines four key areas:
  • Design of international HR policy (expatriates vs. local executives)
  • Expatriation process
  • Life as an expatriate
  • Talent management in an MNC

Design of International HR Policy: Expatriates vs. Local Executives

• Difference between domestic and internationalized companies: Internationalized companies often foster talent exchange between the parent company and subsidiaries. Today, expatriate figures are mainly within executive roles.
• Strategic decision: Choosing whether to use expatriates or local executives is a strategic decision for the MNC.
• Local Executives:
  • Locally appointed executives have a key role in decision-making for the company, drawing on domestic talent.
  • MNCs with a multidomestic approach typically use local executives.
  • Advantages: Proximity to local team, cost-effectiveness, and easier integration with local culture.
  • Disadvantages: Physical and potentially cultural distance from the parent company.
• Expatriates:
  • Expatriates are often nationals from the parent company for MNCs with a global approach.
  • Advantages: Pre-existing familiarity with the MNC culture, company policies, and HQ's approach.
  • Disadvantages: High cost, potential instability in the host country, and sometimes a lack of integration with the local team.
• Third-Country Nationals (TNCs):
  • MNCs using a transnational approach may appoint executives from a different country than the parent company.
  • Advantages: Combines advantages of other models; potentially better cultural fit in the host subsidiary, leading to lower barriers for integration.
  • Disadvantages: Still viewed as "foreign", although the barriers to cultural integration may be lower than with purely parent company nationals.

Expatriation Process

• Recruitment and Selection: Focuses on technical qualifications, management, and leadership skills along with cultural sensitivity.

• Training: Includes intercultural and technical training, sometimes employing informational, affective, or immersion approaches.

• Compensation: Includes goals, objectives, compensation, cost of living, and foreign service premiums.

• Barriers/Challenges: Discusses challenges in relocation and repatriation of expatriates, often focusing on relocating them to the HQ and valuing international experience in the HQ context. Reverse cultural shock may also be an issue.

• Updated Expatriation Processes: Some companies now prioritize shorter assignments (2 months to 1 year) for specific projects, potentially lowering costs and improving career development opportunities. These may be better suited for professionals seeking career growth. The companies appreciate professionals with international management/technical experience who can move between locations.

Life as an Expatriate

• Stages of Cultural Adjustment: Includes the "honeymoon" phase (initial excitement), cultural shock (challenges adapting to daily life), and acculturation (integrating well). Expatriates may even develop a bicultural perspective.
• Expatriate Assignment Characteristics: Typically last 3-5 years and include extensive compensation packages.
• Challenges after Expatriation: Repatriation creates issues that may include challenges with relocating to headquarters, valuing and recognizing their international experience after the assignment ends, and possible reverse cultural shock.

Talent Management in an MNC

• Origins: Rooted in ancient Greek practices, notably "talentum."
• Evolution: The concept evolved in the 19th century to mean a trait of the individual, emphasizing outstanding abilities and performance.
• Definitions: Several authors such as Tansley, Turner, and Foster (2007) and Williams (2000) define talent management. Expatriate figures are sometimes used for showcasing talent among differing organizational structures.
• Global Talent Management Strategies:
  • Succession Planning: Aligning strategies with market conditions and identifying potential talent globally, not only among existing nation-based employees.
  • International Mobility: Utilizing international assignments to develop global skills.
  • Employer Branding: Creating a positive image and employer brand that attracts high-potential candidates from diverse global locations. This brand is both internally and externally.