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Global Human

Resource
Management
Submitted by;
Aditi Verma
Alya Veronica
Anand Kumar
Anil Agarwal
Global Human Resource Management 1
Global Human Resource Management is a
process concerned broadly with recruiting
of persons, training them and putting them
to the most productive usage. It is also
concerned with maintaining of congenial
international industrial relations. It is the
essential prerequisite for the success of the
international firm owning to its
complexities.

Global Human Resource Management 2


Global Human Resource Management

• Global human resource management (GHRM) -- the


planning, selection, training, employment, and
evaluation of employees for global operations.
• GHR managers serve in an advisory or support role to
line managers by providing guidelines, searching,
training, and evaluating employees.
• How a firm recruits, trains, and places skilled
personnel in its worldwide value chains sets it apart
from competition. The combined knowledge, skills,
and experiences of employees are distinctive and
provide myriad advantages to the firm’s operations
worldwide.

Global Human Resource Management 3


Global Human Resource Management

• Four major tasks of HRM


– Staffing policy
– Management training and development
– Performance appraisal
– Compensation policy
• Strategic role: HRM policies should be
congruent with the firm’s strategy and its
formal and informal structure and controls
• Task complicated by profound differences
between countries in labor markets, culture,
legal, and economic systems
Staffing Policy

• Staffing policy
– Selecting individuals with requisite skills to do a
particular job
– Tool for developing and promoting corporate
culture
• Types of Staffing Policy
– Ethnocentric
– Polycentric
– Geocentric
Ethnocentric Policy
• Key management positions filled by parent-
country nationals
• Best suited to international businesses
• Advantages:
– Overcomes lack of qualified managers in host nation
– Unified culture
– Helps transfer core competencies
• Disadvantages:
– Produces resentment in host country
– Can lead to cultural myopia
Polycentric Policy
• Host-country nationals manage subsidiaries
• Parent company nationals hold key headquarter
positions
• Best suited to multi-domestic businesses
• Advantages:
– Alleviates cultural myopia
– Inexpensive to implement
– Helps transfer core competencies
• Disadvantages:
– Limits opportunity to gain experience of host country
nationals outside their own country
– Can create gap between home and host country operations
Geocentric Policy
• Seek best people, regardless of nationality
• Best suited to global and trans-national businesses
• Advantages:
– Enables the firm to make best use of its human resources
– Equips executives to work in a number of cultures
– Helps build strong unifying culture and informal management
network
• Disadvantages:
– National immigration policies may limit implementation
– Expensive to implement due to training and relocation
– Compensation structure can be a problem
The Expatriate Problem
• Expatriate: citizens of one country working
in another
– Expatriate failure: premature return of the
expatriate manager to his/her home country
• Cost of failure is high: estimate = 3X the expatriate’s
annual salary plus the cost of relocation (impacted by
currency exchange rates and assignment location)
• Inpatriates: expatriates who are citizens of a
foreign country working in the home country
of their multinational employer
Reasons for Expatriate Failure
• US multinationals • Japanese Firms
– Inability of spouse to adjust – Inability to cope with
– Manager’s inability to adjust larger overseas
– Other family problems responsibilities
– Manager’s personal or – Difficulties with the new
emotional immaturity
environment
– Inability to cope with larger
overseas responsibilities – Personal or emotional
problems
• European – Lack of technical
multinationals competence

• Inability of spouse – Inability of spouse to


adjust
to adjust
Four Attributes that Predict Success

Self-Orientation
Possessing high self-esteem, self-confidence and mental well-
being
Others-Orientation
Ability to develop relationships with host country nationals
Willingness to communicate
Perceptual Ability- The ability to understand why people
of other countries behave the way they do
Being nonjudgmental and flexible in management style
Cultural Toughness
Relationship between country of assignment and the
expatriate’s adjustment to it
Training and Management Development
• Training: Obtaining skills for a particular foreign
posting
– Cultural training: Seeks to foster an appreciation of the host
country’s culture
– Language training: Can improve expatriate’s effectiveness, aids
in relating more easily to foreign culture, and fosters a better
firm image
– Practical training: Ease into day-to-day life of the host country
• Development: Broader concept involving
developing manager’s skills over his or her career
with the firm
– Several foreign postings over a number of years
– Attend management education programs at regular intervals
Management Development and Strategy
• Development programs designed to increase the
overall skill levels of managers through:
– Ongoing management education
– Rotation of managers through a number of jobs
within the firm to give broad range of experiences
• Used as a strategic tool to build a strong
unifying culture and informal management
network
• Above techniques support transnational and
global strategies
Performance Appraisal
• Problems:
– Unintentional bias
• Host nation biased by cultural frame of reference
• Home country biased by distance and lack of experience
working abroad
• Expatriate managers believe that headquarters
unfairly evaluate and under-appreciate them
• In a survey of personnel managers in U.S.
multinationals, 56% stated foreign assignment
either detrimental or immaterial to one’s career
Guidelines for Performance Appraisal
• More weight should be given to on-site
manager’s evaluation as they are able to
recognize the soft variables
• Expatriate who worked in same location
should assist home-office manager with
evaluation
• If foreign on-site managers prepare an
evaluation, home-office manager should
be consulted before completion of
formal evaluation
The need for a broader
perspective

Greater involvement in the


New HR responsibilities Employees’ personal lives

Complexity of Global
Human
Resource Management

Managing the mix of


External influences of
expatriates
Nation and culture
And locals

Great Risk exposure


Differences between Domestic and Global HRM
1. New HR responsibilities. Several activities that are not necessarily
encountered in the domestic market include: international
taxation, international relocation and orientation, administrative
services for expatriates, host government relation

3. The need for a broader, international perspective in compensation


policy. At any one time, the HR manager is responsible for a mix of
PCNs, HCNs, and TCNs who are nationals of numerous countries.
Establishing a fair and comparable compensation scale, regardless
of nationality, is one of the challenges in a large MNE.

3. Greater involvement in the employees’ personal lives. The HR


professionals are concerned about welfare of the expatriates and
their families for such matters as: housing arrangements, health
care, schooling of children, safety, and security as well as proper
compensation in view of higher cost of living around the world.

Global Human Resource Management 17


Differences between Domestic and Global HRM
• Managing the mix of expatriates versus locals. Organizations must be
staffed in each national location with personnel from the home country,
the host country, or third countries. The mix of staff depends upon several
factors, including the international experience of the firm, cost-of-living in
the foreign location, and availability of qualified local staff.

3. Greater risk exposure. When employee productivity falls below acceptable


levels or an expatriate returns prematurely from an international assignment,
the consequences are even more pronounced in IB.

• Exposure to political risk and terrorism may require an increased


compensation package and security arrangements for the employee and
his/her family.

6. External influences of the government and national culture. External to the


firm is the broader context of the host country environment. Especially
notable is the influence of the government and national culture.

Global Human Resource Management 18


Employee Characteristics Which
Facilitate International Effectiveness

• Technical Competence
• Self-Reliance
• Adaptability
• Interpersonal Skills
• Leadership Ability
• Physical and emotional health
• Spouse and dependents prepared for living
Culture Shock
• A leading cause of expatriate failure is culture shock -- the
confusion and anxiety, often akin to mental depression, that
can result from living in a foreign culture for an extended
period.

• Culture shock may affect family members as well.

• As many as 1/3 of foreign assignments end prematurely due


to expatriate failure. It is particularly high among
employees assigned to culturally dissimilar countries.

• Regular exercise, relaxation techniques, or keeping a


detailed journal of experiences, will help employees deal with
culture shock. It can also be reduced through advance
preparation, training, and by developing a deep interest in
the new surroundings. 20
Challenges of Global Human Resource Management

• Recruiting, managing, and retaining human resources at a firm


with global operations are especially challenging.
• Take the global organization of Siemens, the German MNE. In
2005, Siemens had 460,800 employees in some 190 countries. It
employed 290,500 throughout Europe, 100,600 in the Americas,
58,000 in the Asia-Pacific region, and 11,900 in Africa, the Middle
East, and Russia.
• Like Siemens, firms such as Volkswagen, Hutchison Whampoa,
Nestle, IBM, Anglo American, Unilever, Wal-Mart, Deutsche Post,
McDonald’s, Matsushita, and Mittal Steel have more than 150,000
employees working outside of their home country.
• Management grapples with a wide range of challenges in hiring and
managing workers within the distinctive cultural and legal
frameworks that govern employee practices around the world.

Global Human Resource Management 21


Charting Global Careers for Employees
• Successful firms give high-potential employees adequate
opportunity to gain experience not just in their home country but at
HQ and in other countries as well.

• This broadens the pool of global talent for managerial positions and
visibly shows top management’s commitment to global strategy.

• At Unilever, employees cannot advance very far in the firm without


substantial international experience. Managers are rotated through
various jobs and locations around the world, especially early in their
careers.

• Unilever maintains a global talent pool -- a searchable database of


employees profiling their international skill set and potential for
supporting the firm’s global aspirations. HR managers search the
database for the right recruit regardless of where he/she may be
located. 22