IBEO DRS, 12 Chapter 20 Human Resource Management CHAPTER 20 Human Resource Management Multiple Choice Questions STUDY QUESTION

1: What does HRM mean within the context of an international company? 1. A factor that makes management of international human resources different from management at the domestic level is _____. a. the complications posed by putting the right person into the right job in the right place at the right time for the right salary (definition, page 706) b. the challenge posed by managers in other countries that aim to achieve global objectives for the company no matter the costs imposed on national objectives c. the greater similarity among foreign subsidiaries than among domestic subsidiaries in terms of dependence on headquarters for resources d. the complications posed by dealing with competing agendas from different labor unions in different countries 2. HRM refers to the range of activities that a company, whether solely domestic or thoroughly global, _____. a. direct its strategy b. staff its organization (definition, page 706) c. improve its responsiveness d. integrate various business function 3. _____ refers to the activities that an organization carries out to put the right person into the right job in the right place at the right time for the right salary. a. Work force analysis b. Staff development c. Human resource management (definition, page 706) d. Leadership planning 4. Generally, HRM is more difficult for international companies for all of the following reasons except: Labor markets are dramatically different in the mix of workers, costs, and productivity a. Dual career and family obligations make it tough to convince executives to leave the home office to join a foreign subsidiary b. Leadership styles and management practices vary significantly from country to country and as a result it is hard to find effective top management from the individual country where the subsidiary is located ( page 707 c. Complications arise due to enduring political, cultural, legal, and economic differences between countries 105

DRS, IBEO 12 Chapter 20 Human Resource Management STUDY QUESTION 2: What are some of the strategic implications of HRM? 5. Anecdotes suggest and research confirms a _____ relationship between HRM processes, management productivity, and strategic performance in the international company _____. a. trivial b. unpredictable c. simple d. powerful (interpretation, page 708) Firms pursuing __________ strategies, likely will organize there human resource management function to host to international assignments, those executives who have the skills required to perform particular jobs as well as "fit" the prevailing culture of the firm. a. international and global b. multidomestic and transnational c. transnational and global d. multidomestic and international 6. The Human Capital Index, based on a comprehensive global study of more than 2,000 companies, found that superior human capital practices was _____ correlated with a firm's financial returns as well as a(n)_____ indicator of increased shareholder value _____. a. negatively; lagging b. positively; leading (interpretation, page 708) c. insignificantly; timely d. weakly; accurate 7. There is growing consensus that human resource managers must hire, develop, reward, and retain people whose performance explicitly improves the _____. a. productivity of the firm's core competencies (interpretation, page 709) b. fits between company practice and industry standards c. the firm's engagement of political authorities d. firm's responsiveness to customer expectations STUDY QUESTION 3: What are types and characteristics of expatriates? 106 DRS, IBEO 12 Chapter 20 Human Resource Management 8. Natives of the country where an overseas subsidiary is located are _____. a. b. c. d. expatriates host country nationals (definition, page 710) third country nationals home country nationals 9. Home country nationals are _____. a. used a great deal abroad by polycentric companies b. citizens of the countries in which they are working c. citizens of the country where the company is headquartered (definition, page 710) d. noncitizens of the countries in which they are working 10. An example of a third country national is a _____.

a. dual citizen (Canadian and U.S. citizenship) working for a Mexican company in Mexico b. Canadian citizen working for a U.S. company in Canada c. U.S. citizen working for a U.S. company in Canada d. Canadian citizen working for a U.S. company in Mexico (definition, page 710) 1. Jeanette Thompson, a native Texan, is being sent by her company, Samsung of South Korea, of Switzerland, to head up a new facility in Hong Kong. Jeanette would be considered a(n) a. expatriate b. host-country citizen. c. third-country national. d. local executive STUDY QUESTION 4: What is the goal of a company's staffing policy? 11. The task of HRM _____ defining the staffing polices that will guide how the company will fill international jobs with those individuals who have the skills needed to perform a particular job in ways that support the company's strategy. a. begins by (interpretation, page 710) b. concludes with c. never worries abouts d. deemphasizes the primacy of 12. The emergent challenges of globalization put greater pressure on HRM to _____. a. recruit people whose values conform to the specific type of strategy the company is following b. find people whose professional values are congruent with the leadership ideals of the company (interpretation, page 710) c. staff people who command needed skills and competencies d. develop people with the necessary competencies 107 DRS, IBEO 12 Chapter 20 Human Resource Management 13. The emergent challenges of globalization put greater pressure on HRM to find expatriates who are more likely to _____. a. surround themselves with large support staff b. spend less time on the job than other managers c. be a generalist rather than a specialist (definition, page 710) d. be politically sensible and economically prudent 14. Many executives believe that _____ is the key to the success of a career in international business. a. administrative talent b. cultural sensitivity c. technical competence d. personal leadership (definition, page 710) STUDY QUESTION 5: What is the relationship between a company's staffing policy and its interpretative framework? 15. The _____ component of HRM is concerned with selecting the right employees for particular jobs. a. training policy b. compensation policy c. leadership development d. staffing policy (definition, page 710) 16. The strategic values and leadership ideals of a company translate into the

assumptions and generalizations that define its _____. a. way of doing things b. standard operating procedures c. interpretative framework (interpretation, page 710) d. company objectives 17. General Electric's transnational strategy hinged on how well the company could "globalize the intellect of the company." This goal, in turn, has required that General Electric staff its worldwide operations with people who command the technical competencies required for performing the jobs but who also _____. a. command the skills to achieve short term objectives b. share the values that support the company's chosen strategy (interpretation, page 710) c. have values that fit the standards in specific parts of the works d. realize that "Value don't get you there. Objectives do." 18. The three types of interpretative frameworks in international businesses are _____. a. ethnocentric, polycentric, and geocentric (definition, page 710) 108 DRS, IBEO 12 Chapter 20 Human Resource Management b. ethnocentric, intercentric, and monocentric c. monocentric, neocentric, and polycentric d. intracentric, geocentric, and neocentric STUDY QUESTION 6: What is the relationship between a company's staffing policy and an ethnocentric interpretative framework? 19. The company with a(n) _____ interpretative framework believes that successful business practices at home need not change when transferred to foreign markets. a. ethnocentric (definition, page 711) b. polycentric c. geocentric d. intercentric 20. A(n) _____ interpretative framework sees tinkering with a prized formula just to go overseas as unreasonably risky to protecting and leveraging the company's core competency. a. polycentric b. ethnocentric (definition, page 711) c. geocentric d. monocentric 21. A(n) _____ staffing policy set assumes that the practices and procedures that work at headquarters will work in foreign operations; as such, key management positions are filled by parent company nationals. a. polycentric b. intercentric c. ethnocentric (definition, page 711) d. geocentric 22. Which one of the following is not a drawback of the ethnocentric mindet? a) b) c) d) .

can inspire belief that the home market is intrinsically better at everything can result in cultural arrogance can lead to a loss of national identity Answer: C (table 14-2 p. 331) may blind people to innovations in other countries STUDY QUESTION 7: What is the relationship between a company's staffing policy and a polycentric interpretative framework? 23. A(n) _____ manager champions the ways of foreign markets as comparable, if not more enlightened, than the practices of his or her parent company and home nation. 109 DRS, IBEO 12 Chapter 20 Human Resource Management a. b. c. d. ethnocentric geocentric intercentric polycentric (definition, page 712) 24. The company with a(n) _____ interpretative framework accepts the importance of adapting to differences, real or imaginary, between the home and host country; as such, key management positions are filled by host country nationals. a. ethnocentric b. geocentric c. polycentric (interpretation, page 712) d. intercentric 25. A polycentric staffing policy requires _____ to manage local subsidiaries, while _____ occupy key executive positions at corporate headquarters. a. parent country nationals; contract employees from an international employment firm b. host country nationals; parent country nationals (interpretation, page 712) c. parent country nationals; host country nationals d. contract employees from an international employment firm; host country nationals 26. Advantages of adopting a polycentric approach include that it _____. a. capitalizes on the availability of qualified local managers (definition, page 712) b. helps transfer core competencies from the home nation to local subsidiaries c. increases the international career mobility for local managers d. offsets tendencies for the company to overly adapt to the local market STUDY QUESTION 8: What is the relationship between a company's staffing policy and a geocentric interpretative framework? 27. A _____ staffing policy seeks the best people for key jobs throughout the organization, regardless of nationality. a. geocentric (definition, page 714) b. intercentric c. polycentric d. ethnocentric 28. Which of the following interpretative frameworks does not automatically presume

that a particular nation provides a universal solution to every problem or a perfect explanation for every action? a. ethnocentric b. geocentric (definition, page 714) c. polycentric 110 DRS, IBEO 12 Chapter 20 Human Resource Management d. intercentric 29. Which type of management bases its operations on an informed knowledge of home and host country needs, capabilities, and constraints? a. intercentric management b. polycentric management c. geocentric management (definition, page 714) d. ethnocentric management 30. The advantages of the geocentric outlook to staffing include that it _____. a. b. c. d. helps people see the full scale of the special virtues of a particular country gives people a predominant and persistent point of perspective removes most behavioral barriers to fully adapting to the chosen local market leverages an individual's or company's unique competencies to build a strong management network (interpretation, page 714) 31. Microsoft implements a recruiting policy that seeks the best people for key jobs throughout their organization, regardless of the individual's nationality. This is an example of what type of executive perspective? a. Geocentric Approach (714 b. Ethnocentric Approach c. Adaptive Approach d. Polycentric Approach STUDY QUESTION 9: What is the relationship between a company's staffing policy and its chosen strategy? 32. A(n) _____ strategy is well matched with an ethnocentric staffing policy? a. b. c. d. multidomestic transnational intercentric global (interpretation, page 715) 33. A(n) _____ strategy is well matched with a polycentric staffing policy. a. transnational b. international c. multidomestic (interpretation, page 715) d. global 34. A(n) _____ strategy is well matched with a geocentric staffing policy. a. multidomestic b. transnational (interpretation, page 715) c. intercentric 111 DRS, IBEO 12 Chapter 20 Human Resource Management d. international 35. Firms with global strategies as opposed to multidomestic strategies are more likely to

use _____. a. expatriate managers (interpretation, page 715) b. host country nationals in top management positions abroad c. local managers d. home country nationals in corporate positions STUDY QUESTION 10: What conditions shape how a company selects a potential expatriate? 36. Historically, the most important criterion in selecting individuals for transfer is _____. a. cognitive skills for understanding what is happening in the host society b. the technical knowledge of the tasks to be done (definition, page 716) c. skills necessary for stress reduction and self-confidence d. flexibility and tolerance 37. Unless an assignment is specifically intended to train an expatriate to assume greater management responsibilities, the most important criterion in selecting individuals for transfer to a foreign post typically is _____. a. flexibility and tolerance b. cognitive skills for understanding what is happening in the host society c. technical knowledge of the tasks to be done (interpretation, page 716) d. skills necessary for stress reduction and self-confidence 38. The most common reason executives are reluctant to accept the offer of an expatriate assignment is because _____. a. they usually earn lower salaries abroad than at home b. they would have to become citizens of the foreign country c. they believe that locals should fill local positions d. of a perceived negative effect on family lifestyle (definition, page 717) 39. There are certain skills that MNE's commonly evaluate a possible expatriate to figure out whether or not he/she would be successful abroad. These following characteristics are all part of the evaluative criteria except: a. Adaptive skills for self maintenance, such as personal resourcefulness b. Adaptive skills that show wariness of new ideas, jobs, and places c. Adaptive skills that show the ability to develop satisfactory relationships with host nationals, such as flexibility and tolerance d. Adaptive skills that are indicated by skills and sensitivities that help one to interpret the immediate environment in ways that reject stereotypes and preconceptions 112 DRS, IBEO 12 Chapter 20 Human Resource Management Answer: B Page 717-718 STUDY QUESTION 11: What are the leading reasons for expatriate failure? 40. Expatriate failure, defined in broad terms, refers to the _____. a. b. c. d.

manager's planned return home due to adequate job performance managers' miscues, which give competitors a market advantage the unintentional dilution of the company's core competency the failure of the MNEs' selection policies to find individuals who will succeed abroad (definition, page 718) 41. Perhaps the greatest cost of expatriate failure is _____. a. direct economic costs of time and money spent in selection b. the wasted effort of preliminary visits to the location before the executive moves c. the personal implications of professional failure to the executive's current self-confidence and future leadership potential (interpretation, page 718) d. the expatriate's lost productivity as things gradually fall apart 42. Research shows that a foreign assignment usually creates the greatest degree of stress in terms of _____. a. the family's adjustment to their new environment (interpretation, page 718) b. the expatriate maintaining career mobility c. meeting the company's performance expectations d. the financial hardship of moving to a new home 43. The disorientation and stress associated with being in a foreign environment is termed _____. a. uncertainty dislocation b. melancholy c. culture shock (interpretation, page 718) d. cultural transition STUDY QUESTION 12: What are common predeparture methods that companies use to prepare expatriates prior to their international assignment? 44. The most common predeparture training for an expatriate is _____. a. b. c. d. an informational briefing (definition, page 719) role playing in-depth cultural seminars language training 45. Practical predeparture training for the expatriate _____. a. is to foster an appreciation for the host country's culture b. aims to gradually familiarize the expatriate and family with the routines of life in the host country (interpretation, page 719) 113 DRS, IBEO 12 Chapter 20 Human Resource Management c. is profiles of political structures, job design, and compensation norms in the new market d. is ways to bypass the challenges of culture shock 46. Traditionally, companies designed a predeparture training program to either transfer specific and specialized knowledge about the foreign environments or _____. a. provide unique advice on how to get past hostility of host nationals b. invest in

ongoing executive mentor programs c. develop interpersonal awareness and adaptability in the context of intensive cultural sensitivity training (interpretation, page 720) d. do little to no training prior to their departure in the belief that a strong manager would figure it out 47. Reasons for English becoming the international language of business include all of the following except _____. a. a high portion of global business is conducted among English-speaking countries b. English has become the world's major second language c. many managers do see language skills as important to their international career success d. agreement by the United Nations Center on Transnational Corporations to make English the legal language for MNE contracts abroad (interpretation, page 721) STUDY QUESTION 13: What methods might a company use to compensate an expatriate? 48. The _____ of compensation bases an expatriate's compensation on the prevailing pay scales in the locale of the foreign assignment. a. headquarters-based method b. home-based method c. culturally-based method d. host-based method (definition, page 722) 49. The _____ sets the expatriate's salary in terms of the salary of a comparable job in the city where the MNE has its headquarters. a. host-based method b. home-based method c. headquarters-based method (definition, page 722) d. culturally-based method 50. Cost-of-living adjustments in foreign assignment _____. a. usually involve a compensation reduction because of lower costs abroad b. are due to the difficulty of duplicating a particular way of living abroad (definition, page 724) 114 DRS, IBEO 12 Chapter 20 Human Resource Management c. are usually eliminated over time d. increase the longer the individual is overseas 51. The _____ approach to expatriate compensation equalizes purchasing power across countries so employees can enjoy the same living standard in their foreign posting that they enjoyed at home. a. balance sheet (definition, page 722) b. equalization c. merit d. differential STUDY QUESTION 14: What are the logistical, professional, and personal challenges of expatriate repatriation and retention?

52. Historically, most international businesses have been more concerned with _____ than _____. a. selection; repatriation (interpretation, page 727) b. development; selection c. compensation; training d. leadership; training 53. Which of the following is not an area in which repatriation strain is evident? a. b. c. d. a. b. c. d. change in personal finances readjustment to the home country corporate structure (definition, page 728) change in technical competence readjustment to life at home readjustment to the host country corporate culture personal finances readjustment to the home country corporate culture (definition, page 728) readjustment to life at home 54. Problems with repatriation arise in any of the following general areas except _____. 55. Problems often faced in repatriating an executive from foreign assignments to his or her home nation is that _____. a. there may not a good replacement in the foreign facility b. the firm must increase compensation substantially c. different departments compete excessively to hire repatriated the manager d. the returning expatriate has less social status and autonomy than when abroad (interpretation, page 728) 56. All of the following are examples of a local except _____. 115 DRS, IBEO 12 Chapter 20 Human Resource Management STUDY QUESTION 15: How do MNEs in general and HRM in specific deal with international labor relations? 57. An MNE facing a possible strike in one country is in a better position if _____. a. it has no excess capacity and has geographic diversification b. it has excess capacity and is not geographically diversified c. it has excess capacity in another country in which it produces the exact same product (interpretation, page 731) d. the union spans the entire industry and the MNE produces similar products elsewhere 58. A possible advantage of an MNE in dealing with labor is its _____. a. b. c. d. a. b. c. d. a. b. c. d. multidomestic product policies value activity switching (definition, page 731) rationalized production partnership arrangements with other companies information exchange (interpretation, page 733) lobbying governments simultaneous strikes voting blocs at the International Labour Organization a decreasing percent of young

people enter the work force an increasing percent of jobs go to blue-collar workers decreasing job loss due to offshoring to emerging markets a continuing overall decline in union membershipage (definition, page 735) 59. The most common form of cooperation among unions in different countries is _____. 60. The work force composition in industrial countries has seen _____. True/False Questions STUDY QUESTION 1: What does HRM mean within the context of an international company? 61. Essentially, the task of HRM is the putting the right person into the right job in the right place at the right time for the right salary. True (definition, page 706) 62. The various activities of HRM, like discrete activities in the company's value chain, perform best when managers link them to the conditions in the markets in which the firm operates. False (interpretation, page 706) STUDY QUESTION 2: What are some of the strategic implications of HRM? 63. There is a strong yet inconsistent relationship between the strategic performance of an 116 DRS, IBEO 12 Chapter 20 Human Resource Management MNE and the decision it has made in managing its human resources. False (interpretation, page 708) 64. Companies have found that superior human resources are instrumental to improving its ability to create and sustain competitive advantage. True (definition, page 708) STUDY QUESTION 3: What are types and characteristics of expatriates? 65. Expatriates are locals from the country of the foreign subsidiary. True (definition, page 710) 66. An example of an expatriate would be a Canadian manager working for a Canadian firm in China. True (interpretation, page 710) STUDY QUESTION 4: What is the goal of a company's staffing policy? 67. Growing pressures to quickly improve performance push companies to recruit people whose values and outlooks fit the needs of the chosen strategy. False (interpretation, page 710) 68. Although personal leadership, business skills, and technical competence are important, many executives see cultural sensitivity as vital to the success of a career in international business. False (interpretation, page 710) STUDY

QUESTION 5: What is the relationship between a company's staffing policy and its interpretative framework? 69. Staffing policy is concerned with the selection of employees for particular jobs who command the technical skills required by the company's current strategy to create value. False (interpretation, page 710) 70. The ethnocentric and polycentric staffing policies, unlike the geocentric staffing policy, rely on extensive use of expatriate managers. False (interpretation, page 710) STUDY QUESTION 6: What is the relationship between a company's staffing policy and an ethnocentric interpretative framework? 71. The MNE that aims to control the transfer of its unique core competencies overseas usually prefers an ethnocentric staffing policy. True (definition, page 711) 72. Unlike the geocentric and polycentric mindsets, the ethnocentric mindset is not tied to a particular home or host nation. False (definition, page 711) STUDY QUESTION 7: What is the relationship between a company's staffing policy and a polycentric interpretative framework? 73. An executive with a polycentric staffing policy presumes that successful business practices at home need not change when transferred to foreign markets. False (definition, page 712) 74. A key disadvantage of a polycentric staffing policy is that it limits the career mobility 117 DRS, IBEO 12 Chapter 20 Human Resource Management of subsidiary executives. True (definition, page 712) STUDY QUESTION 8: What is the relationship between a company's staffing policy and a geocentric interpretative framework? 75. A geocentric staffing policy seeks the best qualified people for key jobs throughout the organization, irrespective of their nationality. True (definition, page 713) 76. A geocentric staffing policy is one in which all key management positions throughout the company's global operations are filled by host country nationals. False (definition, page 713) STUDY QUESTION 9: What is the relationship between a company's staffing policy and its chosen strategy? 77. An ethnocentric staffing policy is well matched with a multidomestic strategy. False

(definition, page 715) 78. A polycentric staffing policy well matched with a transnational strategy. False (definition, page 715) STUDY QUESTION 10: What conditions shape how a company selects a potential expatriate? 79. Historically, companies searching their ranks for potential expatriates looked first for individuals with the necessary language proficiency and, once acceptable, then evaluated their technical competence. False (interpretation, page 716) 80. Executives asked to accept an expatriate assignment most commonly decline the offer because they believe it will adversely affect their family's way of life. True (definition, page 719) STUDY QUESTION 11: What are the leading reasons for expatriate failure? 81. Expatriate failure that indicates there is a breakdown in how a company's selection policies identify and prepare individuals to staff its foreign operations. True (definition, page 718) 82. Failure rates for overseas postings fall typically between 30 and 50 percent, and usually reduce performance, sidetrack careers, and corrode morale. False (definition, page 719) STUDY QUESTION 12: What are common predeparture methods that companies use to prepare expatriates prior to their international assignment? 83. Upon selection of an executive for an expatriate posting, the most common predeparture training involves a range of instructive profiles of major aspects of the host country. True (definition, page 719) 84. Practical predeparture training for the expatriate is often geared toward developing his or her sensitivities to overcome culture fright. False (definition, page 719) 118 DRS, IBEO 12 Chapter 20 Human Resource Management STUDY QUESTION 13: What methods might a company use to compensate an expatriate? 85. The headquarters-based compensation method bases the expatriate's compensation on the salary of a comparable job in the city where the MNE has its headquarters. True (definition, page 723) 86. A hardship allowance nullifies the risk that an expatriate will suffer a decline in his/her standard of living due to the exorbitant expense of a particular city. False (definition, page 724) STUDY QUESTION 14: What are the logistical, professional, and personal challenges of expatriate repatriation and retention?

87. Historically, companies have not been particularly concerned with the challenge of repatriation in managing their international human resources. True (definition, page 727) 88. Studies of repatriated employees regularly report that most knew what their company position would be when they returned home but were uncertain about their likely new workplace practices. False (interpretation, page 728) STUDY QUESTION 15: How do MNEs in general and HRM in specific deal with international labor relations? 89. Union membership, although struggling in many wealthier countries, is growing in emerging markets. False (interpretation, page 729) 90. Critics of the labor practices of MNEs often note their aggressive use of value activity switching to exploit the rights of workers. True (definition, page 730) Essay Questions 91. Compare the differences among the ethnocentric, polycentric, and geocentric outlooks. Answer a. Ethnocentric mindset--Ethnocentrism is the belief that the values, practices, and behaviors of one's home country are intrinsically superior to those in other nations. An executive with an ethnocentric mindset believes that successful business practices at home need not change when transferred to foreign markets. Instead, he assumes that if his business design has already proven successful at home, then it will work anywhere in the world. b. Polycentric mindset--A polycentric outlook accepts the importance of adapting to differences, real or imaginary, between the home and host country. A polycentric manager champions the ways of foreign markets as comparable, if not more enlightened, than the practices of his or her parent company and home 119 DRS, IBEO 12 Chapter 20 Human Resource Management nation. To a lesser degree, one sees this philosophy in the notion of "When in Rome, do as the Romans do." c. Geocentric mindset--Unlike the ethnocentric and polycentric mindset, the geocentric mindset is not tied to a particular home or host nation. Geocentricism holds that all nations have inalienable traits that are neither superior nor inferior, but simply there. A geocentric manager provides a universal solution to every problem or perfect explanation for every action. (definition, page 710) 92. Discuss some of the reasons for using expatriates. Answer Although expatriate managers comprise a minority of total managers within MNEs, companies employ expatriates because of their competence to fill positions,

their need to gain foreign experience, and their ability to control operations according to headquarters' preferences. Companies use expatriate managers when they cannot find qualified local candidates. MNEs use home country expatriates to control foreign operations because they are used to doing things the headquarters way. (interpretation, page 710) 93. Discuss the reasons for staffing with locals. Answer The most common reason managers reject a foreign assignment is their perception that the assignment will have a negative effect on their family's lifestyle because of unacceptable living conditions, inadequate educational opportunities for their children, and the inability to be near aging parents. There are also legal impediments to staffing with expatriates, such as licensing requirements that prevent companies from using expatriate accountants and lawyers. The greater the need for local adaptations, the more advantageous it is for companies to use local managers, as they presumably understand local conditions better than expatriates would. When the host country feels animosity toward foreign-controlled operations, local managers may be perceived locally as "better citizens" because they presumably put local interests ahead of the company's global objectives. This local image may play a role in employee morale as well, because many subsidiary employees prefer to work for someone from their own country. Finally, a reason for staffing with locals is that they usually cost less. Companies must pay moving expenses for expatriates as well as salary adjustments for their move to foreign countries. (interpretation, page 710) 94. What individual characteristics and qualifications should a company consider when choosing managerial candidates for foreign assignments? Answer a. Technical competence--Corporate decision-makers, expatriate managers, and local managers concur that technical competence, usually indicated by past 120 DRS, IBEO 12 Chapter 20 Human Resource Management domestic or foreign job performance, is the largest determinant of success in foreign assignments. b. Adaptiveness--Although some companies rely only on technical competence to select expatriates, three types of adaptive characteristics are important for an expatriate's success when entering a new culture: the need for self-maintenance, such as being self-confident and able to reduce stress those related to the development of satisfactory relationships with host nationals, such as flexibility and tolerance cognitive skills that help one to perceive correctly what is occurring with the host society An expatriate who lacks these may be unable to

function effectively. Unfortunately, companies cannot always assess these adaptability characteristics accurately. If the expatriate cannot adapt, he or she may leave the foreign assignment, either by choice or by company decision. c. Local acceptance--Expatriates may encounter some acceptance problems regardless of who they are. Local employees may feel that the best jobs go to overpaid foreigners, especially because companies sometimes send managers abroad to reward or find a place for them, rather than for what they can contribute effectively. Expatriates may have to make unpopular decisions to meet global objectives, or local management may have had experiences with expatriates who made short-term decisions and then left before dealing with the longer-term implications. If negative stereotypes are added to these attitudes, the expatriate may find it very difficult to succeed. (interpretation, page 716) 95. Discuss the principal reasons why people decline expatriate positions. Answer a. Family--Most often, managers reject a foreign assignment given their belief that it will impair their family's lifestyle due to inferior living conditions, inadequate educational opportunities for their children, and the inability to be near aged parents. b. Career concerns--A foreign assignment may take the manager outside the corporate mainstream for advancement, thereby actually slowing his or her career trajectory. c. Legal barriers--Governments often prohibit or restrict the use of expatriates. Less dramatically, national licensing requirements prevent companies from using expatriate accountants and lawyers. d. Spouse issues--Spouses rarely get a permit to work in a comparable job abroad. If the couple is unmarried, the "significant other" may be unable to get permission to live in the foreign location. e. Travel fatigue--The fatigue of executive travel may also cause emotional anxiety, physical illness, and subpar professional performance. f. Location disapproval--The political, cultural, religious, and security characteristics of some nations inspire little or no interest. (interpretation, pages 718721) 121 DRS, IBEO 12 Chapter 20 Human Resource Management 96. List and discuss the main components of an expatriate's compensation package. Answer a. Base salary--An expatriate's base salary normally falls in the same range as the base salary for the comparable job in the home country. b. Foreign-service premium--MNEs often award expatriates foreign-service premiums for accepting a foreign assignment. Generally, most premiums range from 10 to 30 percent, after taxes, of the expatriate's base salary. c. Extraordinary allowances--Often included in an expatriate's compensation package is extra pay to cover the peculiar burdens of a foreign assignment. For example, an expatriate earns a hardship allowance when sent to a particularly difficult environment or dangerous location. d. Fringe

benefits--Firms typically provide expatriates the same level of medical and retirement benefits abroad that they received at home, rather than those customarily granted in the host country. However, most companies expand these benefits to deal with local contingencies. e. Taxation--If there is no reciprocal tax treaty between the expatriate's home country and host country, then he or she may be legally obligated to pay income tax to both governments. In such situations, the MNE ordinarily pays the expatriate's tax bill in the host country. (definition, page 722) 97. List and discuss the three common methods of implementing a balance compensation plan. Answer a. Home-based method--This method bases the expatriate's compensation on the salary of a comparable job in his or her home city. This method, by preserving equity with home country colleagues, treats the expatriate's compensation as if the person had never left home. The home-based method is the most prevalent expatriate compensation plan. b. Headquarters-based method--This method sets the expatriate's salary in terms of the salary of a comparable job in the city where the MNE has its headquarters. This plan explicitly recognizes the disruption of a foreign assignment and goes to great lengths to make sure an expatriate lives like she had in her home country. c. Host-based method--This method is sometimes called destination pricing and localization and bases an expatriate's compensation on the prevailing pay scales in the locale of the foreign assignment. Essentially, it pays an expatriate less in order to reduce tension between the expatriate and his or her colleagues in the host country. (definition, page 723) 98. What problems do managers commonly encounter when repatriated from foreign assignments? How can companies deal with these problems? Answer 122 DRS, IBEO 12 Chapter 20 Human Resource Management Up to one-third of returning expatriates leave their companies within one year of repatriation. Problems with repatriation arise in three general areas: personal finances, readjustment to home country corporate structure, and readjustment to life at home. Companies give expatriates many financial benefits to encourage them to accept a foreign assignment. Returning expatriates often find that many of their peers were promoted above them while they were abroad, that they now have less autonomy in the job, and that they now have less in common with their friends than before the foreign assignment(s). Some human resource practices for smoothing reentry include providing expatriates with ample advance notice of when they will

return, maximum information about their new jobs, placement in jobs that will build on their foreign experiences, housing assistance, and a reorientation program, as well as requiring frequent visits to headquarters and using a formal headquarters mentor to look after their interests while they are abroad. (interpretation, page 727) 99. Explain the different attitudes held by workers in different nations about unions, collective bargaining, and expectations. Answer The amount of compensation that companies pay depends on workers' contributions to the business, supply of and demand for particular skills in the area, cost of living, government legislation, and collective-bargaining ability. Companies' methods of payment depend on customs, feelings of security, taxes, and governmental requirements. Both the amount and method of payment are affected by a country's culture. MNEs usually pay slightly better than their local counterparts in lower-wage countries, although they still pay less than what they do in higher-wage countries. They pay more because of their management philosophies and structures. An MNE's typical management philosophy, particularly in contrast to that of a local, family-run company, is often to attract high-level workers by offering relatively higher wages. In addition, its product and process technologies may allow it to compensate employees more than local companies do. Further, when a company first comes into a country, experienced workers may demand higher compensation because they have doubts about whether the new operation will succeed. (interpretation, pages 729736) 100. How have labor groups sought to counter the advantages the MNEs might have over labor? Answer a. Information sharing--The most common international cooperation among unions is exchanging information, which helps them refute company claims as well as cite precedents from other countries on bargaining issues. b. Assistance to foreign bargaining units--Labor groups in one country may support their counterparts in other countries by refusing to work overtime to supply a market normally served by striking workers' production, sending financial aid to workers in other countries, and disrupting work in their own countries. 123 DRS, IBEO 12 Chapter 20 Human Resource Management c. Simultaneous actions--There have been a few examples of simultaneous negotiations and strikes. But labor's cooperation across borders is a problem because of national differences in union structures and what workers want. (interpretation, page 732) 124