Cullen 4e PPT - CH11

Chapter 11
International Human Resource

Management
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Learning Objectives
• Know the basic functions of human resource

management
• Define international human resource management
• Understand the difference between international and
domestic human resource management
• Know the types of workers used by multinationals
Copyright© 2007 South-Western/Thomson Learning All rights reserved

Learning Objectives
• Know how and when to use expatriate managers

• Know the skills necessary for a successful expatriate
assignment
• Understand how expatriate managers are
compensated and evaluated
• Appreciate the issues regarding expatriate
assignments of women managers

Learning Objectives
• Know what to do to make the expatriate assignment

easier for their female expatriates
• Understand e.HR systems and how they can be useful
in IHRM
• Understand the relationship between choice of a
multinational strategy and international human
resource management

Human Resource Management
and Functions
• Human resource management (HRM): deals with the

entire relationship of the employee with the
organization
• Recruitment: process of identifying and attracting
qualified people to apply for vacant positions
• Selection: process of filling vacant positions in the
organization

Basic HRM Functions
• Training and development: giving employees the

knowledge, skills, and abilities to perform successfully
• Performance appraisal: system to measure and assess
employees’ work performance

Basic HRM Functions
• Compensation: organization’s entire reward package,

including financial rewards, benefits, and job security
• Labor relations: ongoing relationship between an
employer and those employees represented by labor
organizations

International Human Resource
Management (IHRM)
• All HRM functions, adapted to the international setting

• Two added complexities compared to domestic HRM
- Must choose a mixture of international employees
- Must decide the extent of adaptation to local
conditions

Types of Employees in
Multinational Organizations
• Expatriate: employee from a different country

• Home country nationals: expatriate employees from
the parent firm’s home country
• Third country nationals: expatriate workers who come
from neither the host nor home country

Types of Employees in
Multinational Organizations
• Host country nationals: local workers who come from

the host country where the unit is located
• Inpatriate: employees from foreign countries who work
in the country where the parent company is located
• Flexpatriates: employees who are sent on frequent but
short-term international assignments

The Expatriate or the Host
Country Manager
• Multinationals must decide whether to use expatriates

or home country nationals
• Need to look at some questions
- Given the firm’s strategy, what is the preference for
the position?

The Expatriate or the Host
Country Manager
• Using expatriate managers

- Do parent country managers have the appropriate
skills?
- Are they willing to take expatriate assignments?
- Do any laws affect the assignment of expatriate
managers?
• Using host country managers
- Do they have the expertise for the position?
- Can we recruit them from outside the company?
Is the Expatriate Worth It?
• Decisions must take into account costs of such

assignments
- High cost
- High failure rate

Exhibit 11.1: Paying for the
Expatriate Manager: Indices of
Cost of Living Abroad

Reasons for U.S. Expatriate
Failure
• Individual
- Personality of the manager
- Lack of technical proficiency
- No motivation for assignment
• Family
- Spouse or family members fail to adapt
- Family members or spouse do not want to be there

Reasons for U.S. Expatriate
Failure (cont.)
• Cultural
- Manager fails to adapt
- Manager fails to develop relationship with key people

Reasons for U.S. Expatriates
Failure (cont.)
• Organizational
- Excessively difficult responsibilities
- Failure to provide cultural training
- Company fails to pick the right person
- Company fails to provide the technical support
- Excess of difficult responsibilities of international
assignment
- Failure of company to consider gender equity
Strategic Role of Expatriate
Assignments
• Helps managers acquire international skills

• Helps coordinate and control operations dispersed
activities
• Communication of local needs/strategic information to
headquarters
• In-depth knowledge of local markets
• Provide important network knowledge

International Cadre
• International cadre (or Globals): Separate group of

expatriate managers who specialize in a career of
international assignments
- Have permanent international assignments
- Move from international assignments to international
assignments
- Recruited from any country
- Sent to worldwide locations to develop cross-cultural
skills
Flexpatriates
• The frequent flyers who travel on short notice for

shorter time durations while maintaining their family
and personal lives at the home-country location
• Key functions
- Sent to explore markets
- Consider problem areas in the foreign subsidiary
- Manage projects
- Help with transfer of technology
Flexpatriates
• Advantages
- Do not experience many of the family and personal
difficulties and stress associated with expatriate
assignments
- Much less expensive than expatriate – no relocation
or repatriation costs

Flexpatriate
• Disadvantages
- Taxation issues can become complicated if the
assignment exceeds six months – he company may
end up paying the tax
- Does not fully integrate into the local work
environment and does not learn low to adapt locally
- May be resented for neglecting the host-country
culture

Key Success Factors for
Expatriate Assignments
• Technical and managerial skills

• Personality traits
• Relational abilities
• Family situation
• International motivation
• Stress tolerance
• Language ability
• Emotional intelligence
Exhibit 11.2: Expatriate
Success Factors and
Selection Methods

Priority of Success Factors
• Assignment length
- Technical and professionals skills are key for short
assignments
• Cultural similarity
• Required interaction with local people
• Job complexity and responsibility

Exhibit 11.3: Selecting Expatriates:
Priorities for Success Factors by
Assignment Characteristics

Training and Development
• Cross-cultural training: increases the relational abilities

of future expatriates and their spouses and families
• Training rigor: extent of effort by both trainees and
trainers required to prepare the trainees for expatriate
positions

Training and Development
(cont.)
• Low rigor training

- Short time period
- Lectures and videos on local cultures
- Briefings on company operations
• High rigor training
- Last over a month
- Experiential learning
- Extensive language training
- Includes interactions with host country nationals
Exhibit 11.4: Training Rigor:
Techniques and Objectives

Exhibit 11.5: How the Rigor of Training
Relates to the Basic Expatriate
Assignment Conditions

Expatriate Performance
Appraisal
• Conducting reliable performance appraisal for the

expatriate is very challenging
• Challenges
• Fit of international operation in multinational strategy
• Unreliable date
• Complex and volatile environments
• Time difference and distance separation
• Local cultural situation
Steps to Improve the Expatriate
Performance Appraisal
1. Fit the evaluation criteria to strategy

2. Fine-tune the evaluation criteria
3. Use multiple sources of evaluation with varying periods
of evaluation

Exhibit 11.6: Evaluation Sources,
Criteria, and Time Periods for
Expatriate Performance Appraisals

Expatriate Compensation
• Compensation packages tend to include many

common factors includes:
- Local market cost of living
- Housing
- Taxes
- Benefits

Exhibit 11.7: Average Rent of Two-
Bedroom, Unfurnished Apartments in
Selected European Cities

The Balance-Sheet Approach
• Provides a compensation package that equates

purchasing power
• Allowances for cost of living, housing, food, recreation,
personal care, clothing, education, home furnishing,
transportation, and medical care

Exhibit 11.8: Balance Sheet
Approach To Expatriate
Compensation

Additional Allowances and
Perquisites
• Foreign service premiums

• Hardship allowance
• Relocation allowances
• Home-leave allowances

Expatriate Manager
Compensation: Other
Approaches
• Headquarters-based compensation: paying home
country wages regardless of location
• Host-based compensation system: adjusting wages to
local lifestyles and costs of living
• Global pay systems: worldwide job evaluations,
performance appraisal methods, and salary scales are
used

Repatriation Problem
• Difficulties faced coming back home

• Three basic cultural problems—“reverse culture
shocks”
- Adapt to new work environment and culture of home
- Expatriates must relearn own national and
organization culture
- Need to adapt to basic living environment

Strategies for Successful
Repatriation
• Provide a strategic purpose for the repatriation

• Establish a team to aid the expatriate
• Provide parent country information sources
• Provide training and preparation for the return
• Provide a home-leave policy to encourage expatriates
to make regular visits to the home office
• Provide support for the expatriate and family on return

International Assignments for
Women: Two Myths
• Myth 1: Women do not wish to take international

assignments.
• Myth 2: Women will fail in international assignments
because of the foreign culture’s prejudices against
local women.
• Successful women expatriates
- Foreign not female—emphasize nationality not
gender

Women: Advantages
• More visible
• Strong in relational skills
• Wider range of interaction options

Women: Disadvantages
• Face the glass ceiling

- Isolation and loneliness
- Constant proving of themselves, working harder than
male
• Need to balance work and family responsibilities
• Need to worry about accompanying spouse

More Women in the Future?
• Women expatriate managers are expected to grow

• Acute shortage of high-quality managers
• Increasing number of women provide role models

What Can Companies Do To
Ensure Female Expatriate
Success?
• Provide mentors
• Provide opportunities for interpersonal networks as a
form of organizational support
• Remove sources of barriers
• Provide support to cope with dual-career issues

Multinationals and Electronic
Human Resource Management
• Electronic human resources (e.HR): automation of

various aspects of the human resources system of a
company

Strategic Benefits of e.HR
Systems
• Reduce HR and administrative system cost

• Improve HR services to employees
• Employees take control of their own data
• Repository of the wealth of knowledge and skills of
expatriates
• Employee tracking for career management and other
HR purposes

Proper Steps to e.HR
Implementation
• Develop business case to justify using e.HR or

upgrade to e.HR
• Make the system customer-focused
• Be proactive
• Organize collected data in ways that is useful to the
organization

Multinational Strategy and
IHRM
• IHRM orientation: company’s basic tactics and

philosophy for coordinating IHRM activities for
managerial and technical workers

Exhibit 11.9: IHRM Orientation and
IHRM Practices for Managers and
Technical Workers

Technical Workers

Technical Workers

Multinational Strategy and
IHRM
• Ethnocentric IHRM: all aspects of HRM for managers

and technical workers tend to follow the parent
organization’s home-country HRM practices

Benefits of Ethnocentric IHRM
• Little need to recruit qualified host country nationals for

higher management
• Greater control and loyalty of home country nationals
• Key decisions centralized

Costs of Ethnocentric IHRM
• May limit career development for host country

nationals
• Host country nationals may never identify with the
home company
• Expatriate managers are often poorly trained for
international assignments and make mistakes
• Expatriates may have limited career development

Regiocentric and Polycentric
IHRM
• Regiocentric IHRM: region-wide HRM policies are

adopted
• Polycentric IHRM: firm treats each country-level
organization separately for HRM purposes
• Greater responsiveness to host country differences

Benefits of Polycentric and
Regiocentric HRM Policies
• Reduces costs for training of expatriate managers from

headquarters
• No investment in language training
• Fewer problems with adjustments to local cultures
• Less expensive

Costs of Polycentric and
Regiocentric IHRM Policies
• Coordination problems with headquarters

- based on cultural, language, and loyalty differences
• Limited career-path opportunities for host country and
regional managers
• Limited international experience for home country
managers

Global IHRM Orientations
• Recruiting and selecting worldwide

• Assigning the best managers to international
assignments regardless of nationality

Global IHRM Orientations
• Benefits
- Bigger talent pool
- Develops international expertise
- Helps build transnational organizational cultures
• Costs
- Importing managerial and technical employees not
always possible
- Added expense
IHRM Orientation and
Multinational Strategy
• Early stages of internationalization—ethnocentric

IHRM
• Multilocal strategies—ethnocentric or regiocentric
• Regional strategy—regiocentric, polycentric or global

Exhibit 11.10: IHRM
Orientations and Multinational
Strategies

Conclusion
• When basic HRM practices are applied to a company’s

international operations, they become International
HRM
• Chapter focused on HRM practices as applied to the
expatriate employees
• Expatriates present special challenges for
multinationals
• It is important for multinationals to find ways to properly
manage expatriates to benefit from their experiences

Cullen 4e PPT - CH11

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Chapter 11

International Human Resource

Copyright© 2007 Thomson Learning All rights reserved

• Know the basic functions of human resource

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Know how and when to use expatriate managers

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Know what to do to make the expatriate assignment

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Human resource management (HRM): deals with the

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Training and development: giving employees the

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Compensation: organization’s entire reward package,

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• All HRM functions, adapted to the international setting

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Expatriate: employee from a different country

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Host country nationals: local workers who come from

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Multinationals must decide whether to use expatriates

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Using expatriate managers

• Decisions must take into account costs of such

Copyright© 2007 South-Western/Thomson Learning All rights reserved

Copyright© 2007 South-Western/Thomson Learning All rights reserved

Copyright© 2007 South-Western/Thomson Learning All rights reserved

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Helps managers acquire international skills

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• International cadre (or Globals): Separate group of

• The frequent flyers who travel on short notice for

Copyright© 2007 South-Western/Thomson Learning All rights reserved

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Technical and managerial skills

Copyright© 2007 South-Western/Thomson Learning All rights reserved

Copyright© 2007 South-Western/Thomson Learning All rights reserved

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Cross-cultural training: increases the relational abilities

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Low rigor training

Copyright© 2007 South-Western/Thomson Learning All rights reserved

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Conducting reliable performance appraisal for the

1. Fit the evaluation criteria to strategy

Copyright© 2007 South-Western/Thomson Learning All rights reserved

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Compensation packages tend to include many

Copyright© 2007 South-Western/Thomson Learning All rights reserved

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Provides a compensation package that equates

Copyright© 2007 South-Western/Thomson Learning All rights reserved

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Foreign service premiums

Copyright© 2007 South-Western/Thomson Learning All rights reserved

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Difficulties faced coming back home

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Provide a strategic purpose for the repatriation

Copyright© 2007 South-Western/Thomson Learning All rights reserved

• Myth 1: Women do not wish to take international

Copyright© 2007 South-Western/Thomson Learning All rights reserved