International Management Human Resource Management Visiting Professor @ VSE FM sinclair@fm.vse.cz CR Sinclair - IHRM 1 CARL SINCLAIR - CV F Summary of Experience: F Now: Visiting Professor at VSE FM in International Marketing/Management, Strategy, HRM and Organizational Behavior. F Last 11 years: Lectured/consulted on International Business and Project Management all over Asia and at three universities in Australia. F 25 years experience as HR Project Eng/Manager or Sr. Executive on international projects in India, USA, Indonesia, the Philippines, Beirut, Kuwait, Saudi Arabia. Worked 4 years as Sr. Integration/Risk Engineer for Grumman/NASA (Houston, Texas, USA) CR Sinclair - IHRM 2 INTERNATIONAL HRM F - is the process of: F Selecting F Hiring F Employing - - Developing -Train & Educate - Rewarding people in international or global organizations F Repatriating CR Sinclair - IHRM INTERNATIONAL APPROACH F Explicit recognition by the parent org. that its managing of HR reflects some of the values of: F Home culture F That HQ ways are neither better or worse F Foreign subs management may be "local" F Should develop cross-cultural learning F Hofstede's cultural dimensions F http://www.geert-hofstede.com A CR Sinclair - IHRM Si*: ■ u V Par^ Human Resource Selection and 5 RESOURCING POLICIES F Resourcing international operations with right caliber expatriots and locals: F Competent and of character F Familiar with local situation F Speak local language F L/T view F Do not patronize CR Sinclair - IHRM Sources of Human Resources F Home Country Nationals - Expatriate managers who are citizens of the country where the MNC is headquartered u Expatriates - Those who live and work away from their home country - Citizens of the country where the MNC is headquartered u Expatriates are useful for: - starting up operations - providing technical expertise - helping the MNC maintain financial control over the operation u Expatriates almost always were men - Situation is changing u Expatriates typically used in top management positions CR Sinclair - IHRM 7 Sources of Human Resources (cont.) F Host-Country Nationals - Local managers who are hired by the MNC - Used in middle- and lower-level management positions - Nativization u Requirement of host-country government that mandates employment of host-country nationals - Some companies tend to rely fairly heavily on host-country managers (McDonalds, KFC) n CR Sinclair - IHRM 8 Sources of Human Resources (cont.) Third-Country Nationals (TCNs) - Citizens of countries other than the one in which the MNC is headquartered or the one in which the managers are assigned to work by the MNC - Found in MNCs that have progressed through the initial and middle stages of internationalization - Advantages of using TCNs u Require less compensation u Good working knowledge of the region u Given home office experience, often can achieve objectives better than other types of managers u Offer different perspectives es CR Sinclair - IHRM F 9 Sources of Human Resources (cont.) F Inpatriates - Individual from a host country or a third-country national who is assigned to work in the home country - Help develop MNC's global core competencies - Able to manage across borders - Do not fit the mold of traditional third-country nationals CR Sinclair - IHRM 10 Selection Criteria F Factors used to choose personnel for international assignments F General criteria F No 1 = ATTITUDE & BEHAVIOR - Technical and human abilities - Adaptability to cultural change - Independence and self-reliance - Physical and emotional health - Age, experience, and education - Language training - Motivation for a foreign assignment - Special requirements ir - IHRM 11 Selection Criteria for International Assignments (cont.) F General criteria (cont.) - Spouses and dependents or work-family issues u Adaptability screening - Process of evaluating how well a family is likely to stand up to the stress of overseas life - Leadership ability u Based on maturity, emotional stability, communication skills, independence, initiative, creativity, and good health - Preparing oneself for overseas assignment u Self-evaluation and general awareness u Concentration on activities that should be completed prior to and subsequent to selection CR Sinclair - IHRM 12 International HR Selection Procedures F Testing Procedures - Not extremely popular because: u Testing is expensive u Lack of good measures of job performance in overseas jobs u Testing did not do as good a job of selecting as other selection procedures F Interviewing Procedures - Popular screening method for international assignments - May require both expatriate and local interviewers F Adjustment Model - Explains the factors involved in effective adjustment CR Sinclair - IHRM 13 Theoretical Model for Explaining International Adjustment of Expatriates Anticipatory Adjustment _In-Country Adjustment_ Individual Training Previous experience Individual expectations Anticipatory Adjustment Organization Selection mechanisms and criteria Individual (1,2,3) Self-efficacy (1,2,3) Relation skills (1,2,3) Perception skills Job (1) Role clarity (1) Role discretion (1) Role novelty (1) Role conflict Organizational Culture^ (1) Organization culture novelty (1) Social support (2C) Logistical heM Organization Socialization Socialization tactics Socialization content Mode of Adjustment Degree of Adjustment 1. Work adjustment 2. Interaction adjustment 3. General adjustment ~2L Nonwork (1) Culture novelty (1,2,3) Family-spouse adjustment , The Relocation Transition Curve Perceived Competence 2. Fantasia The feeling of enchantment and excitement in the new environment Interest A deeper exploration of the environment and a realization that it is fundamentally different from home 7. Integration of new skills and behavior. Acceptance of the new environment a 6. Search for meaning. Understanding reasons for success and failure. New models/personal theories created 1. Unreality The feeling of that the relocation is a dream Beginning of transition rent from ^ 5. Experimentation and testing e of new approaches. Practice phase, trying to do things differently. Feedback of results, success and failure ^ 4. Acceptance of reality "Letting go" of past comfortable attitudes. The realization that you are a stranger in a strange land_^ CR Sinclair - IHRM Time 15 3. The Compensation Issue Common Elements of Compensation Packages - Base salary u Amount of money that an expatriate normally receives in the home country u Used to establish expatriate pay u Serves as benchmark against which bonuses and benefits are calculated Benefits u Substantial portion of expatriate compensation u Many thorny issues surround the amount and nature of the benefit package for expatriates CR Sinclair - IHRM F 16 The Compensation Issue (cont.) F Common Elements of Compensation Packages (cont.) u Allowances - Expensive feature of expatriate packages • Cost of living • Relocation • Housing • Education • Hardship u Incentives - Used to motivate expatriates - Lump-sum payments u Tax equalization - Expatriates get two tax bills CR Sinclair - IHRM 17 Relevant Cost of Living in Selected Cities: New York = 100; December 2009 Individual and Host-Country Viewpoints F Candidate Motivations for Accepting a Foreign Assignment - Reasons for accepting a foreign assignment include: u Greater demand for their talents abroad than at home u Enhancement of one's international business career u Attraction of overseas assignments - Motives affected by occupation - Motives affected by home country of manager F Host Country Preferences for Managerial Personnel - Ethnocentric, by and large u Prefer local managers CR Sinclair - IHRM 19 Repatriation of Expatriates F Repatriation - Return to one's home country from an overseas management assignment F Reasons for returning - Formally agreed-on tour of duty is over - Expats want their children educated in the home country - Unhappiness with foreign assignment - Failure to perform well F Readjustment problems - Permanent position upon return constitutes a demotion - Lack opportunity to use skills learned abroad upon return - Salary and benefits may decrease upon return CR Sinclair - IHRM 20 Repatriation of Expatriates (cont.) Transition Strategies - Help smooth the adjustment from an overseas to a stateside assignment u Repatriation agreements - Individual and firm agree upon the length of the tour of duty - Mutually agreeable job identified when expat returns - Keep expat involved in home office communication and projects while s/he is abroad - Proactive strategy that provides an effective support system to allay concerns about career issues CR Sinclair - IHRM 21 F Ani V Parŕ 2nd Human Resource Training in International Management F Training - Process of altering employee behavior and attitudes in a way that increases the probability of goal attainment - Cultural integrator u Responsible for ensuring that the operation's business systems are in accord with those of the local culture - The most common topics in cultural training include: u social etiquette u customs u economics u history u politics u business etiquette CR Sinclair - IHRM 23 Training in International Management (cont) F Impact of Management Philosophy on Training - Ethnocentric MNC - stresses nationalism and often puts home-office people in charge of key international management positions - Polycentric MNC - places local nationals in key positions and allows these managers to appoint and develop their own people - Regiocentric MNC - relies on local managers from a particular geographic region to handle operations in and around that area - Geocentric MNC - seeks to integrate diverse regions of the world through a global approach to decision making CR Sinclair - IHRM 24 Training in International Management (cont.) F Impact of Different Learning Styles on Training and Development - Learning u Acquisition of skills, knowledge, and abilities that results in a relatively permanent change in behavior - Learning organizations u Continual focus on activities such as training and development - Teaching organizations u Ensure that everyone in the organization passes their learning on to others - Cultural differences can affect learning and teaching - Learned behaviors must be reinforced CR Sinclair - IHRM 25 Training in International Management (cont.) F Reasons for Training - Organizational reasons u Overcome ethnocentrism - Belief that one's own way of doing things is superior to that of others u Improve the flow of communication between home office and foreign subsidiaries u Increase overall efficiency and profitability - Personal reasons u Improve ability to interact effectively - Arrogant demeanor - Overruling decisions of lower level managers - Open criticizing by expatriate managers of home or host country u Improve overall management style CR Sinclair - IHRM 26 Model for the Development of Multinational Managers Overall objectives Problem recognition — Increasing effectiveness of I expatriate and Internal relations External relations Family relations Relations with host government Developmental objectives Predeparture training Behavioral simulation Case method Postarrival training Reentry training Assessment of developmental needs How much development? Development methods Intermediate result Predeparture training Behavioral simulation Case method Postarrival training Reentry training Knowledge about cultural, political, economic, business, legal, and social factors of the host country Awareness of the needs and expectations of the different parties Awareness of problems of family relations in the host country Desired result Developmental method CR Sinclair - IHRM Types of Training Programs F Standardized vs. Tailor-Made - Standardized or generic training does not have to be culturally specific - Tailor-made training is created for specific needs - Designed to provide a new set of skills for a new culture - Self-evaluation training provides personal insights u Factual manager - Examines available information and makes decisions based on that data u Intuitive manager - Imaginative, innovative, and able to jump from one idea to another u Analytical manager - Systematic and logical and careful in weighing alternatives to problems u Normative manager - Idealistic and concernediW&h howthings should be done 28 Types of Training Programs (cont.) F Standardized vs. Tailor-Made (cont.) - Training approaches that are successful in one geographic region may have to be modified substantially if they are to be effective elsewhere F Types of cross-cultural training programs - Environmental briefings - Cultural orientation - Cultural assimilators - Language training - Sensitivity training - Field experience - Cross-cultural training often provided to expat families CR Sinclair - IHRM 29 Types of Training Programs (cont.) F Cultural Assimilators - Programmed learning technique designed to expose members of one culture to some of the basic concepts, attitudes, role perceptions, customs, and values of another culture - Choice of Assimilator Content u Content must be important - Critical incidents u Validation of the Assimilator - Validity • Quality of being effective, of producing the desired results • Valid test or selection technique measures what it is intended to measure u Cost-Benefit Analysis of Assimilators CR Sinclair - IHRM 30 Organization Development (OD) F OD - Deliberate and reasoned introduction, establishment, reinforcement, and spread of change for the purpose of improving an organization's effectiveness - Basic purpose is to reconcile individual-group-organization differences F Nature of OD - OD change agent u Individual skilled in the u behavioral sciences who u knows how to guide and facilitate u the introduction and implementation u of change CR Sinclair - IHRM Contingency Approach to Cross-Cultural Training Cross-Cultural Training Approach Immersion Approach Affective Approach Information Giving Approach LOW MODERATE HIGH Degree of Integration Organization Development (cont.) F Nature of OD (cont.) - OD intervention u Structured activity for targeted individuals to accomplish task goals related to OD - Team building • Extension of classic T-groups and sensitivity training • Geared to enhancing organizational effectiveness through cooperation and a 'team' effort of key personnel - Management by objectives (MBO) • System for the joint setting of subordinate goals, coaching and counseling personnel, and providing feedback on their performances - Confrontation meetings • Gathering and analysis of information related to intra- and intergroup conflict followed by the formulation of a plan of action by the participants for the purpose of resolving these problems CR Sinclair - IHRM 33 Organization Development (cont.) F Nature of OD (cont.) - OD intervention (cont.) - Third-party peacemaking • Diagnosis of group conflict followed by the use of an outside party (usually the OD change agent) to facilitate a constructive resolution of a problem - Survey feedback • Involves the gathering and analysis of information related to group behavior and problems and the feeding back of this information to develop effective action plans F OD in International Settings - Cultural barriers limit the usefulness of OD u Some OD concepts are difficult to translate into a foreign language u OD interventions must be adapted to local conditions CR Sinclair - IHRM 34 Organization Development (cont.) F Organizational Behavior Modification (O.B.Mod.) - Behavioral management approach, if applied properly, can improve performance across cultures - In the U.S., O.B.Mod. has positive impact on employee performance in manufacturing and service settings F Global Leadership Development - A number of leadership training approaches can be used - Effective MNCs now encourage strong leadership in hard and soft organizational issues u GLP Program - Consortium of leading U.S., European, and Japanese firms, faculty, and participating host countries - Provides intensive international experience to develop global mindset - Blends rigorous intellectual development of global leaders CR Sinclair - IHRM 35 OB Modification Model G H ZT p a: o - era rt> H r re re H r 5* ° 3 s re QTQ C/3 ^ ■ Developing Fundamental Change Developing New Problem-solving Approaches Developing Skills Developing Cognitive Understandii Developing Awareness QUESTIONS?