Global Human Resource

Management

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 Human Resource Management

It refers to the activities an organization carries out to use its

human resources effectively.

These activities include:

• Determine firm’s HR strategy

• Staffing
• Performance Evaluation
• Management Development
• Compensation
• Labour relations

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 Importance of HRM
Related to the strategy of the firm.

Influence on the character, development, quality and

productivity of firm’s HR

Helps firms to achieve strategic goal of reducing cost

of value Creation

Helps firms add value by serving

customer needs better.

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 How different is Global HRM?
• Several key factors make Global HRM different
from domestic management:

• Different labour markets

• Mobility problems: legal, economic, cultural barriers

• Different management styles

• Varied compensation practices Labour laws.

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 Key Issues

• How to staff key management posts in the Co.?

• How to develop managers, who can do business in different

countries?

• How to compensate people in different nations?

• How to evaluate the performance of managers in different

countries?

• Expatriate managers
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 Strategic Role of Global HRM
• Strategy is implemented through organizational architecture.

• Right people at right postings.

• Effective training to acquire right skill set to help perform jobs effectively.

• Behaviour, congruent with the desired organizational culture.

• Compensation must create incentives for actions inline with the strategy.

• Performance appraisal to measure the behavior, firm wants to encourage.

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 Staffing Policy
Staffing policy is concerned with the selection of
employees for particular jobs.

• Selecting individuals who have the skill to do a

particular job.

• Tool for developing and promoting the desired

corporate culture (norms & value system) of the firm.

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 Types of staffing policies
There are three types of staffing policies in IB:

ii. Ethnocentric approach

iii. Polycentric approach
iv. Geocentric approach

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 Ethnocentric approach
• All key management positions are filled by parent – country nationals.

• One’s own culture is superior

• Overlooks important cultural factors

• Host country lacks qualified professionals

• Maintain a unified corporate culture

• Create value by transferring core competencies

• Limits advancement opportunities for host country nationals

• Leads to resentment, lower productivity, and high turnover in employees.

• E.g.: Procter & Gamble, Toyota and Matushita

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 Polycentric approach
• Decentralized control

• Business Units in different countries have autonomy from home office, like a local Co.

• No standard forms or procedures

• Recruits host country nationals to manage subsidiaries, while parent country nationals
occupy key positions at corporate HQ.

• Firm is less likely to suffer from cultural myopia.

• Less expensive to implement

• Host country nationals have limited opportunities to gain experience outside their own
countries

• Gap due to language barriers, cultural differences may isolate corporate HQ from
foreign subsidiaries.

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 Geocentric approach
• It seeks the best people for key jobs, throughout the organization,
regardless of nationality.

• Hybrid of Ethno and Poly

• Based on informed knowledge of home and host countries.

• Enables firms to make best use of its HR

• Helps the firm to build a cadre of international executives, who feel at

home working in No. of countries.

• Helps building a strong unifying corporate culture and informal

management network.

• Reduces cultural myopia

• Enhance local responsiveness

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 Expatriate Managers
• Expatriates are citizens of one country, who are
working in another country.

• Impetrates is a subset of expatriates who are citizens of

a foreign country, working in the home country of their
multinational employer. (e.g., citizen of India, who
moves to U.S to work for Microsoft)

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 Expatriate selection
Four dimensions that predict success in a foreign posting:

• Self orientation – self esteem, self confidence, mental well being,

adapt their interest in food, sports, music and hobbies.

• Others orientation – ability to interact with host country’s nationals,

relationship development and willingness to communicate by learning
local language.

• Perceptual ability – to understand the particular behavior of people in

host countries, empathize.

• Cultural toughness – relationship between country of assignment and

how well an expatriate adjusts

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 Training and Management
Development
• After selection, the next step is training the manager to do
the specific job.

• MDP is a broader concept, it is intended to develop a

manager’s skills over her career in the firm, e.g., sending
managers on various foreign postings over years to build
her cross cultural sensitivity and experience.

• To enhance management and leadership skills of

executives

• MDP have a strategic purpose, and helps reinforce desired

culture of the firm by creating an informal network.

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 Types of Training
• Cultural training – understanding the culture of host
country, enhance effectiveness, familiarization trip before
formal transfer.

• Language training – manager’s ability to interact, help build

rapport and improve manager’s effectiveness.

• Practical training – adjust to day to day life in host country,

establish a routine, successful adaptation, support network
of friends

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 Performance Appraisal
• These are the systems used to evaluate the performance of managers
against some criteria, that the firm judges to be important for the
implementation of strategy and attainment of competitive advantage.

• Important elements of control system:

I. 2 groups evaluate the performance of Expatriates, - Host country

managers and home country managers.
II. Biasness by cultural frame of reference and expectations
III. Unfair evaluation
IV. Due to proximity, onsite manager should evaluate soft variables of
expatriate’s performance.
V. Consultation of home country manager to balance out.

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 Compensation
• National differences in compensation

• Payments according to global standards or country

specific standards.

• Issues in compensation practices:

1. How compensation should be adjusted to reflect

national differences in economic circumstances and
practices?
2. How should the expatriate managers be paid?

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 Expatriate Pay
• Acc. To “Balance Sheet Approach”, it equalizes purchasing
power across countries so employees can enjoy the same
living standard in their foreign posting, as the enjoyed at
home.

• It also provides financial incentives to offset qualitative

differences between assignment locations.

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 Components of a typical compensation
package
• Base Salary – in same range as base salary for similar position in home
country.
• Foreign Services Premium – extra pay to work outside country of origin.
Offered as inducements to accept foreign postings. Compensates for living in
an unfamiliar country.
• Allowances –
I. Hardship allowance – difficult location, where basic amenities like health
care schools, etc are deficient.
II. Housing allowance – to afford same quality of housing
III. Cost of living allowance – maintain std. of living
IV. Education Allowance – expatriate’s children receive same std. of education
as in home country
• Taxation
• Benefits – Medical, pension, etc.

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 Thank You…

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