Chapter 6:
GLOBAL HUMAN
RESOURCE MANAGEMENT
AGENDA
1 2 3 4 5
The strategic Different Management Performance Compensation
role of human approaches to development appraisal systems
resource staffing policy and training systems
management in international programs
in international business.
business.
Learning Outcomes
• Understanding about the strategic role of human resource management.
• Identify the different approaches to staffing policy in international business.
• Understanding about Training and Management Development.
• Explain performance appraisal systems might vary across nations.
• Understand how and why compensation systems might vary across nations.
• Compensation systems.
⁃ Human resource management (HRM): refers to the activities an organization carries out to
use its human resources effectively.
⁃ In an international business, the strategic role of HRM: is more complex, where related
activities are complicated by profound differences between countries in labor markets, culture,
legal systems, economic systems.
1. Strategic Role of Global HRM: Managing a Global Workforce
➢ Firms need to ensure the strong fit between Human-resource
practices and a company’s strategy is required for high profitability.
➢ For a firm to outperform its rivals in the global marketplace,
it must have the right people in the right postings.
➢Those people must be trained so that they have the skill sets
required to perform their jobs effectively.
➢ The compensation packages must create incentives for them to
take actions that are consistent with the strategy of the firm.
➢ Building the accurate performance appraisal system.
The role of human resources in shaping
organizational architecture.
2. Staffing Policy
➢ Staffing policy is concerned with the selection of employees for particular
jobs.
➢ At another level, staffing policy can be a tool for developing and promoting
the desired corporate culture of the firm.
➢ Some MNCs, is not just concerned with hiring people who have the skills
required for performing particular jobs; it wants to hire individuals whose
behavioral styles, beliefs, and value systems are consistent with those of
MNCs.
2.1. Types of staffing policy
Ethnocentric
(Theo lối vị chũng)
Polycentric
(Chính sách đa trung tâm)
Geocentric
(Chính sách địa tâm)
a. The Ethnocentric Approach (Theo lối vị chũng)
An ethnocentric staffing policy is one in which all key management positions are filled by parent-country
nationals. This has implications for companies pursuing an international strategy.
⁃Limit advancement opportunities for host
⁃ Firms believe the host country lacks qualified
country nationals. This can lead to resentment,
individuals to fill senior management
lower productivity, and increased turnover
positions.
among that group.
⁃ This is the best way to maintain an unified
⁃Lead to cultural myopia. The adaptation of
corporate culture.
foreign managers can take a long time, during
⁃ Firm is trying to create value by transferring
which they may make major mistakes.
core competencies to a foreign operation.
a. The Ethnocentric Approach (Theo lối vị chũng)
all key management positions
are filled by parent-country
nationals
Parent company Subsidiary
(Headquarter) (Host country)
b. The Polycentric Approach (Chính sách đa trung tâm)
A polycentric staffing policy requires host-country nationals to be recruited to manage subsidiaries,
while parent country nationals occupy key positions at corporate headquarters.
- This policy has implications for companies pursuing a localization strategy.
⁃ Host-country nationals have limited opportunities
⁃ In this approach, the firm is less likely to to gain experience outside their own country and
suffer from cultural myopia. thus cannot progress beyond senior positions in
their own subsidiary. This may cause resentment.
⁃ A polycentric approach may be less ⁃ The gap that can form between host-country
expensive to implement. managers and parent-country managers: language
barriers, national loyalties, and a range of cultural
differences…
b. The Polycentric Approach (Chính sách đa trung tâm)
host-country nationals
to be recruited to
manage subsidiaries
Parent company Subsidiary
(Headquarter) (Host country)
c. The Geocentric Approach (Chính sách địa tâm)
- A geocentric staffing policy seeks the best people for key jobs throughout the organization,
regardless of nationality.
- This policy has implications for companies pursuing a global standardization strategy or
transnational strategy
⁃ It enables the firm to make the best use of its ⁃ A geocentric staffing policy also can be
human resources. expensive to implement.
⁃ A geocentric policy enables the firm to build a ⁃ Training and relocation costs increase when
cadre of international executives who feel at transferring managers from country to country.
home working in a number of cultures. ⁃ The higher pay enjoyed by managers placed on
⁃ Reduce cultural myopia and to enhance local an international fast track may be a source of
responsiveness. resentment within a firm.
c. The Geocentric Approach (Chính sách địa tâm)
seeks the best people for key jobs
regardless of nationality.
Parent company Subsidiary
(Headquarter) (Host country)
Types of
Staffing
Policies
Summary
2.2. Expatriate managers
⁃ Expatriates are citizens of one country who are working in another country.
⁃ Expatriate failure represents a failure of the firm’s selection policies to identify
individuals who will not thrive abroad.
⁃ The consequences include premature return from a foreign posting and high
resignation rates, with expatriates leaving their company at about twice the rate of
domestic managers.
- The reason for expatriate failure:
▪ Inability of spouse to adjust.
▪ Difficulties with new environment
▪ Other family problems
Expatriate Selection
There are 4 dimensions that seem to predict success in a foreign posting:
Self- Others- Perceptual Cultural
Orientation Orientation Ability toughness
(Tự định hướng) (Định hướng khác) (Khả năng nhận thức)
Expatriates with The attributes of this This is the ability to This dimension refers
high self-esteem, dimension enhance understand why people to the relationship
self-confidence, the expatriate’s of other countries between the country
and mental well- ability to interact behave the way they of assignment and how
being were more effectively with host do—that is, the ability well an expatriate
likely to succeed -country nationals to empathize adjusts to a particular
in foreign postings posting
3. Training and Management Development
- Training program might be used to give expatriate managers the skills required for success
in a foreign posting.
- Management development is intended to develop the manager’s skills over his or her career
with the firm.
- As part of a management development program, a manager might be sent on several foreign
postings over a number of years to build his or her cross-cultural sensitivity & experience.
3.1 Training for expatriate managers
Cultural Training Language Training Practical Training
- Expatriates should receive - A willingness to communicate in - Practical training is aimed at
training in the host country’s the language of the host country, helping the expatriate manager and
culture, history, politics, economy, even if the expatriate is far from family ease themselves into day-
religion, and social and business fluent, can help build rapport with to-day life in the host country.
practices. local employees and improve the - Where an expatriate community
- Understanding a host country’s manager’s effectiveness. exists, firms often devote
culture will help the manager considerable effort to ensuring the
empathize with the culture, which new expatriate family is quickly
will enhance his or her integrated into that group.
effectiveness in dealing with host-
country nationals.
3.2 Management development and strategy
- Management development programs are designed to increase the overall skill levels of
managers through a mix of ongoing management education and rotations of managers
through a number of jobs within the firm to give them varied experiences.
- The management development is crucial in firms pursuing a transnational strategy.
Because these firms need a strong unifying corporate culture and informal management
networks to assist in coordination and control.
- Transnational firm managers need to be able to detect pressures for local
responsiveness—and that requires them to understand the culture of a host country.
4. Performance appraisal
- Performance appraisal systems are used to evaluate the performance of managers against some
criterias that the firm judges to be important for the implementation of strategy and the attainment of
competitive advantage globally.
- A firm’s performance appraisal systems are an important element of its control systems, and control
systems are a central component of organizational architecture.
Performance appraisal systems
Guidelines for
Performance
performance
appraisal problems Appraisal
4.1 Performance appraisal problems
- Home-country managers’ appraisals may be biased by distance and by their own lack of experience
working abroad.
=> This could be one reason many expatriates believe a foreign posting does not benefit their careers.
4.2 Guidelines for performance appraisal
⁃ First, most expatriates believe more weight should be given to an onsite manager’s appraisal than to
an offsite manager’s appraisal.
⁃ Second, a former expatriate who served in the same location should be involved in the appraisal to
help reduce bias.
⁃ Finally, home-office managers should be consulted before an onsite manager completes a formal
termination evaluation. This gives the home-office manager the opportunity to balance what could be
a very hostile evaluation based on a cultural misunderstanding.
5. Compensation
- Two issues are raised in every discussion of compensation practices in an international
business.
+ One is how compensation should be adjusted to reflect national differences in economic
circumstances and compensation practices.
+ The other issue is how expatriate managers should be paid.
Compensation
National difference
Expatriate Pay
in compensation
5.1 National difference in compensation
- There are substantial differences in executive compensation across countries.
- Firms have to decide whether to pay executives in different countries according to the
prevailing standards in each country, or equalize pay on a global basis.
This is an especially challenging issue in firms with geocentric staffing policies. Many
firms have recently moved toward a compensation structure that is based on global Standards.
5.2 Expatriate Pay
- Most firms use the balance sheet approach to pay. This equalizes purchasing power across
countries so employees have the same living standard in their foreign posting as at home.
An expatriate’s compensation package is made up of:
o base salary
o a foreign service premium
o various allowances
o tax differentials
o benefits
5.2.1. Base Salary
• An expatriate’s base salary is normally in the same range as the base salary for a
similar position in the home country.
• Base salary can be paid wither in the home currency or in the local currency.
5.2.2. Foreign Service Premium
• A foreign service premium is extra pay the expatriate receives for working outside
his or her country of origin.
• It is generally offered as an incentive to accept foreign assignments.
5.2.3. Allowances
Expatriate compensation package often include :
• hardship allowances
• housing allowances
• cost-of-living allowances
• education allowances
5.2.4. Taxation
• The expatriate may have to pay income tax to both the home country and the host-country
governments if the host country does not have a reciprocal tax treaty with the expatriate’s
home country
5.2.5. Benefits
• Many firms provide the same level of medical and pension benefits abroad that they
received at home
