Copyright 2014 Pearson Education

9-1
International Management 375
Dr. Subra Ananthram, Curtin University

Chapter Learning Goals
1. Understand the strategic importance to the firm of
the IHRM function and its various responsibilities.
2. Learn about the major staffing options for global
operations and the factors involved in those
choices.
3. To appreciate the challenges involved in staffing
operations in emerging market countries
4. Emphasize the need for managing the performance
of expatriates through careful selection, training,
and compensation.
5. Discuss the role of host country managers and the
need for their training and appropriate
compensation package.
6. Distinguish among various IHRM practices around
the world.

9-2
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Opening Profile: Staffing Company
Operations in Emerging Markets
B
R
I
C

Have
outpaced the
supply of mid
and upper-
level
management
B
R
I
C

Need for up
to 75000
business
leaders, but
30005000
may be
available
B
R
I
C

Many are
simply not at
the skill level
required by
foreign
companies
9-3
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BRIC Countries
http://www.youtube.com/watch?v=fOdcQ3emyzM
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9-4
B
r
a
z
i
l

Deficit at
upper-level
management
R
u
s
s
i
a

Deficit at all
management
levels
I
n
d
i
a

Deficit
starting at the
middle level.
Also, dealing
with the
brain drain
C
h
i
n
a

Severe deficit
at all levels of
management

Opening Profile: BRICThe Shortage of
Mid/Upper-Level Managers
- Education and training
- Retention
- Migration
Opening Profile: What Attracts the
Potential Recruits in Emerging
Markets?
9-5
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Bran
d
A global name brand known for its
excellence
Purpos
e
A company that is breaking into new
markets, with new models and strategy
Opportunity
A company that provides a fast-track
training and career path
Culture
An organizational culture of openness and
transparency
IHRM Functions
Recruitment and
selection
Training and
development
Compensation
and
performance
management
Management of
expatriates
9-6
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Major
determinant of
success or
failure in IB

Other FOP can
be easily
duplicated
Strategy, structure
Staffing for Global Operations
Ethnocentric Approach Polycentric Approach
Copyright 2014 Pearson Education
9-7
Used at
internationalization
stage of strategic
expansion, with
centralized
structure
Parent-country
nationals (PCNs)
Often used with
multinational
strategy
Host-country
nationals (HCNs)
Staffing for Global Operations
Global Staffing
Approach
Regiocentric Approach
Copyright 2014 Pearson Education
9-8
Third country
nationals (TCNs)
Transpatriates
Inpatriates:
managers with
global experience
who are transferred
to the organizations
headquarters
country
Can produce a mix
of PCNs, HCNs,
and TCNs
Strategic Mode, Organizational
Variables, and Staffing Orientation
Aspect of
enterprise
Ethnocentric Polycentric Regiocentric Global
Strategic
orientation
International Multidomestic Regional Transnational
Perpetuation
Expatriates
used for key
positions
Locals used
for key
positions
locally
Regional
people used
regionally
Best people
used
anywhere
Evaluation
and control
Home
standards
applied
Determined
locally
Determined
regionally
Globally
integrated
Rewards
High at home;
low in
subsidiaries
Wide variation
Based on
contribution to
regional
objectives
Based on
contribution to
local and
worldwide
objectives
9-10
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Copyright 2014 Pearson Education
9-10
MNC Staffing
Most MNCs start from their own pool of
managers polycentric or regiocentric
policy:
Increasing pressure from local governments
to hire locals
The greater cost of expatriate staffing
Improvement in managerial and technical
competence
all things being equal, a local national who
speaks the language, understands the culture
and the political system, and is often a
member of the local elite should be more
effective than an expatriate alien
Copyright 2014 Pearson Education
9-11
Global Mind-set Attributes for
Successful Expatriates
Intellectual capital
(K+S+Cognition)

Psychological capital (Host)

Social capital (relationships with
Stakeholders)
Managing Expatriates: Selection
Job
factor
s
Relationa
l
dimensio
ns
Motivationa
l state
Family
situatio
n
Langua
ge
skills
9-12
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Success
categorie
s
HR manager
manage expats
-Track record
-Technical exp
Managing Expatriates: Selection
High
tolerance
for stress
Less on
domestic
experience,
gender, intl
experience
Extraversi
on
9-13
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Predicto
rs of
success
Expatriates Performance Management
Selection based on
headquarters criteria
Inadequate preparation,
training, orientation
Alienation or poor support from
headquarters

Inability to adapt to the local
culture
9-20
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Major causes of Expatriate Failure
Expatriates Performance Management
Problems with spouse
and children
Insufficient compensation
and financial support

Poor programs for career
support and repatriation
9-15
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Expatriate Training and Development
Chin
a
Eating duck tongue and pigeon
head
Braz
il
Home phones dont work
India
Pervasive poverty
Indonesia
Rent paid 23 years in advance
Japa
n
Doctors reveal little to patients
9-16
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Expatriate Training and Development
Japanese
Expatriate
Planning
Selection based on long-
term knowledge of
executives and their
families
Use of longer assignments
(e.g., 5 years)
Extensive headquarters
support
9-17
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IHRM Process to Maximize
Effectiveness of Expatriate
Assignments
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9-18
Evaluate potential
problems.
Select
expatriates.
Develop
contracts.
Assess
development and
support needs.
Evaluate
effectiveness and
problems.
Repatriate after
successful
assignment.
Integrate value-
added to firm.
Debrief expatriate
and family.
To improve IHRM
process
Cross-Cultural Training
A state of disorientation and anxiety
about not knowing how to behave in
an unfamiliar culture
The goal of training is to ease the
adjustment to the new environment
Culture
Shock
When a manager is transferred to
another part of the country, where
there are cultural differences
The shock comes from feeling like
an immigrant in ones own country
Subculture
Shock
9-19
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Honeymoon
Hostility
Gradual adj
Biculturalism
Training Techniques
Area studies
Culture assimilators
Language training
Sensitivity training
Field experiences
Host-family surrogate

9-20
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Corporate Programs to
Develop Global Managers
ABB rotates 500
managers to different
countries every 23
years.
Pepsi brings foreign
managers to the
United States for
one-year
assignments.
British Telecom uses
informal mentoring
between expatriates and
potential assignees.

9-21
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Integrating Training with
Global Orientation
Export Stage Multidomestic Stage
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9-22
Training need: low to
moderate

Content: interpersonal
skills, culture, customer
values, business
behavior

HCNs: train to
understand parent-
country products and
policies

Training need:
moderate to high

Content: interpersonal
skills, culture,
technology transfer,
business practices and
laws

HCNs: familiarize with
production and service
procedures
Integrating Training with
Global Orientation
Multinational Stage Global Stage
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9-23
Training need: high
moderate to high

Content: interpersonal
skills, two-way
technology transfer,
corporate value
transfer, strategy, stress
management, culture,
business practices

HCNs: training in
technical areas,
products and services,
corporate culture
Training need: high
Content: global
corporate operations,
corporate culture
transfer, customers,
global competitors,
strategy
HCNs: training in
proficiency in
production and
efficiency systems,
corporate culture,
business systems,
global conduct policies
Factors that Influence the Integration
of Expatriates with Local Staff
Facilitates Integration Hinders Integration
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9-24
Forming close working
relationships
Learning local language
Transferring
technical/business
knowledge
Cultural adaptability
Respect
Not using team concept
Not learning local
language
HQ mentality
Spouse/family
adjustment problems
Being autocratic
Limited time in
assignment
Compensating Expatriates
Copyright 2014 Pearson Education
9-25
DuPonts Global
Transfer Center of
Expertise creates
perceptions of equity
and goodwill.

Companies are looking
for ways to cut the costs
of expatriate
assignments.

The need to reconcile
parent- and host-
country practices adds
complexity.(US v Europ)
The balance sheet
approach

Tax equalization

Components of the
compensation package:
salary, taxes,
allowance, benefits
Dubai = taxfree, Scandinavia very high
Components of the Compensation
Package
Salary
Local
salary
buying
power vs.
home
salary
Taxes
Equalize
any
differential
effects of
taxes
Allowances
Relocation
expenses,
housing,
trips
home
Benefits
Health
insurance,
stock
options
9-26
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Copyright 2014 Pearson Education
9-27
Exhibit 9-10
Training HCNs
Facilitates indigenization

Links successful corporate culture and
local culture

Facilitates e-business adoption
9-28
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Management Focus: Success!
Starbucks Java Style in Beijing

Challenges: recruiting, motivating,
and retaining Beijing managers
Chinese recruits want training and
advancement opportunities more
than money.
9-29
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Management Focus: Success!
Starbucks Java Style in Beijing
Recruits are trained in management and
in Starbucks culture
Three months in Seattle
Make coffees in a real store
Training, and resulting trust and
participation, also serve as motivators

9-30
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Compensating HCNs
Eastern Europeans require
more cash than Americans.
Compensation in Japan is
becoming more
Westernized.
In Latin America an
employees pay and title are
associated with type of car.
9-31
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China housing allowance
Comparative Management in Focus:
Compensation
Best
Practices
Regional
Clusters
Country
Specific
Incentives not
too large, pay
based on
individual
performance,
reduce
seniority pay
Asian and
Latin countries
use more
seniority pay,
group/team
pay, and pay
for future goals
United States
uses less
incentives than
expected,
China and
Taiwan use
more
9-32
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Comparative Management in Focus:
Selection
Best
Practices
Regional
Clusters
Country
Specific
Getting along
with others and
Fit with
corporate
values
Anglo cluster
focuses on
technical skill,
work
experience;
Korea, Japan,
and Taiwan
deemphasize
work experience
Japan looks at a
persons
potential; Korea
relies on
employment
tests; Taiwan
relies on
interviews
9-33
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Copyright 2014 Pearson Education
9-34
Conclusion
Global HR management = vital component
of global strategy
Strategies = ethnocentric, polycentric,
regio-centric, and global
Many causes of ex-pat failure: inadequate
preparation, inability to adapt, lack of HQ
support for repatriation, etc.
Cultural training, language instruction,
familiarity with everyday matters training
is needed
Compensation must be carefully designed
Profile of the French manager
Materialistic, status is somewhat important
Meetings 15 mns late is OKAY!
Business lunches are important drinking wine!!!
Like grey zone (unclear)
Creative, flexible and productive
Do not like to mix personal and work life.
Authoritarian and faithful
Only written commitments taken seriously.


http://www.youtube.com/watch?v=fOdcQ3emyzM



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Video Clips
Recruiting Internationally in a Split Fee Network
http://www.youtube.com/watch?v=84KWQ-kJzn4
Julia Levy On Using Social Media To Recruit
Internationally
http://www.youtube.com/watch?v=lKBYDmr_bbk
How To Recruit International Candidates - The
Searchologist
http://www.youtube.com/watch?v=sxm7H9zFkK0
36
How to prepare for Workshop - 9

Go through the workshop activities (Topic 9)

Jot down bullet points for workshop activities:
Activity 1 Discussion questions
Activity 2 Businessville case study
Activity 3 Students to present solutions to Q 1, 2, 3
& 4 of case study titled Kellys Assignment in Japan
on pages 315-317 of the textbook. Audience to
prepare discussion points for the questions.



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