INTERNATIONAL HUMAN RESOURCE MANAGEMENT

REVISION
Topic Covered
Week 1: Introduction to IHRM - Chapter 1
Week 2: The Organizational Context - Chapter 2 & 3
Week 3: International Recruitment and Selection - Chapter 4 & 5
Week 4: International Training and Development - Chapter 6
Week 5: International Reward Management - Chapter 7
Week 6: Re-entry and Career Issues - Chapter 8
Week 7: IHRM in the Host Country-Context - Chapter 9
Week 8: International Industry Relations - Chapter 10
Week 9: International Performance Management - Chapter 11
Week 10: International Business Ethic - Reading
Week 11: IHRM Trends & Issues – Summary - Chapter 12
TOPIC 1: INTRODUCTION TO IHRM
I. Human Resource Management
Definition: Human Resource Management is an integrated set of personnel activities, linked
strategically with organization objectives
Functions: Human Resource Planning
Staffing (Recruitment, Selection, Replacement)
Performance Management
Training and Development
Compensation (remuneration) and benefits
Industrial Relations

II. International Human Resource Management

Question: Which activities change when HRM goes international?
Answer: Morgan’s Model – THREE dimensions of IHRM
1. The broad human resource activities of
- Procurement;
- Allocation; and
- Utilization
2. The national or country categories involved in international HRM activities
- The host-country where a subsidiary may be allocated;
- The home-country where the firm is headquartered; and
- “Other” countries that may be the source of labor, finance and other inputs
3. The three categories of employees in an international firm
- Host-country nationals (HCNs)
- Parent-country nationals (PCNs)
- Third-country national (TCNs)
 International HRM is defined as the interplay among these three dimensions – human
activities, types of employees, and countries of operation.

III. Differences between Domestic and International HRM

 1. More HR activities:
International taxation; international relocation and orientation; administrative services
for expatriates; host-government relations; and language translation services
2. A need for a broader perspective
Work in international environment  face the problem of designing and administrating
programs for more than one national group of employees
3. More involvement in employees’ personal lives
Ensure expatriates understand housing agreements, healthcare, and all aspects of
compensation provided for the assignment (cost-of-living, taxes, etc)
 “International HR service” for PCN and TCN employees
4. Change in emphasis as the workforce mix of PCNs and HCNs varies
As foreign operations mature, the emphases out on various human resource activities
change (e.g. need for TCNs and PCNs declines and more trained locals become available
 change the emphasis from expatriate taxation, relocation and orientation to local
staff selection, training and development)
5. Risk exposure
Failures in international arena are more serve than in domestic business
- Direct cost: salary, training cost, travel and relocation expense
- Indirect cost: loss of market share, damage to key host-country relationships
Terrorism
6. Broader external influences
Types of government, the state of economy and the generally accepted practices of
doing business in each of the various host country
IV. Moderating Influences
- A “Moderating influence” is an influence which will increase or decrease the final result
- The key variable that differentiates domestic and international HRM is the complexity involved
in operating in different countries and employing different national categories of employees.
- There are 4 other variables that moderate (either diminish or accentuate) differences between
domestic and international HRM:

The Culture Environment

- “Culture shock”: is a phenomenon experienced by people who move across cultures.
The new environment requires many adjustments in a relatively short period of
time, challenging people’s frame of reference (= belief system) to such that extent
that their sense of self, especially in terms of nationality, comes into new question.
People, in effect, experience a shock reaction to new culture experiences that cause
psychological disorientation because they misunderstand or do not recognize
important cues (=signal, indication)
- Culture shock can lead to negative feeling about the host country and its people and
a longing to return home.
The Industry with which the multinational is primarily involved
- Patterns of international competition vary widely from one industry to another 
the industry in which the multinational is involved is considered important
- Common strategic methods:
Global Standardization Strategy: pursuing a low-cost strategy on a global
scale and increasing profitability and profit growth by reaping the cost
reductions that come from economies of scale
Localization/Multi-domestic Strategy: Increasing profitability by customizing
the firm’s goods and services so that they provide good match to tastes and
preferences in different national markets
Transnational Strategy: attempting to simultaneously achieve low costs
through location economies, economies of scale, and learning effects while
also differentiating products offerings across geographic markets to account
for local differences and fostering multidirectional flows of skills between
different subsidiaries in the firm’s global network of operations
International Strategy (Mainly export): When a firm takes products first
produce for its domestic market and sells them internationally with only
minimal local customization.
Global efficiency
Pressures for

Global Standardization Transnational

High
Strategy Strategy

Low International Localization (Multi-

 Domestic)
Strategy
Strategy
Low High

Pressures for Local Responsiveness

The extent of reliance of the multinational on its home-country domestic market

The attitudes of senior management
If senior manager does not have a strong international orientation, the importance of
international orientation may be underemphasized in terms of goals and objectives

V. Strategic HRM in Multinational Enterprises (MNE’s)

TOPIC 2: ORGANIZATIONAL CONTEXT AND CROSS BORDER ALLIANCES

I. Inter-relationships between HCN, PCN and TCN
1. Inter-relationship between approaches to the field

2. International assignments create expatriates

3. Key difference among HCN, PCN and TCN

 Key Differences HR Implications
PCN - Different culture, philosophy, values - Country training for easy adaption
- Higher expectations - Cultural awareness training or innate
- Role to pass on knowledge - Tax
- More senior - Staffing
- More control, authority - Training
- Knowledge direct from head office
- Understand how company works
- Company links back home
- Better compensated
- Tax
HCN - Know the culture, - Integration of cultures
- Don’t to have to adapt - Standard hr
- Don’t have family problems - Company specific training, values
- Don’t have expat benefits - Labour laws
- Local knowledge - Culture
- Local networks - Training & Dev of PCN and TCN
- Culturally attuned
TCN - May not speak the language - More incentives
- Better qualified - More benefits and support
- Difference set of networks - Career development
- Special skills - Job security –contracts
- Tax - Training & Development of PCN and HCN

II. The path to global status

- The process of internationalization of a firm leads to the change in organizational structure
 - The structure of the Multinational Enterprise (MNE) changes due to:
 Strain of geographical spread
 Need for control across countries and business units
 Constraints imposed by government on foreign organizations
- The graph below shows the major elements encountered as a result of international growth
that places demand on management

III. Stages of internationalization (for manufacturing firms entering international operations)

1. Export department structure

 - Exporting tends to be handled by an intermediary as local knowledge is critical
- Growth in exporting may lead to establishment of an export department
- At this stage, role of HR department are unclear since selection and training of export
staff are handled by Marketing Department.

2. Sale subsidiary structure

- As firm develop expertise in foreign market → replacing agents/ distributors with the
company’s own sales or branch offices/subsidiaries
- This decision is prompted by:
 Problems with foreign agency
 Want more confidence in international activities
 Desire for greater control
 Give greater support to export activities
→ It depends on firm whether to use PCNs or HCNs
→ However, PCNs may be selected to work in host countries, leading to some HR involvement
3. International Division structure: When a company has a branch that is located abroad and
that abroad company is said to be attached with the original company, then this is an
international division structure.
- Step from the establishment of sale subsidiary to a foreign production or service facility
- Method of establishment:
 Assembling the product abroad
 Establish its own foreign production facilities
 Enter into joint venture with local firm
 Buy a local firm
- Miniature replicas:  the Parent company will establish an exact copy of its factory in the
foreign country.
- Objectives regarding foreign activities may determine approach to staffing of key position
- Subsidiary managers report to head of international division
4. Global production
- If firm international activities become more strategically more important, the fact that
international division operates as a separate unit makes communication and operation
difficult.
- MNE’s 2 major issues affecting structure:
 Will key decision be made at the parent-country headquarter? (centralization)
Or Will key decision be made in the subsidiary units? (decentralization)
 The type or form of control exerted by the parent over the subsidiary unit
- Because of these conflict demands, firms need to consider an appropriate structure
Factors push MNEs for global Factors push MNEs for local
integration: responsiveness:

1. Multinational 1. Different market

customers structures

2. Global competitors 2. Distribution channels

3. Rapid information flow 3. Customer needs

and common technology
4. Local culture
4. The need for large
volume production to gain 5. Pressure from Host
economies of scale Governments
 Growth strategy go through product or service-diversification

b. Global area division structure

Growth strategy is through geographical expansion

c. Global Matrix structure

Large multinational corporations that use a matrix structure most commonly combine
product groups with geographic units. Product managers have global responsibility for the
 development, manufacturing, and distribution of their own product or service line, while
managers of geographic regions have responsibility for the success of the business in their
regions. Each group shares responsibility over foreign operations
Disadvantage:
 Dual reporting, which leads to conflict and confusion.
 The huge amount of communication channels which creates difficulty.
 Overlapping responsibilities, which produce disagreement and a loss of
accountability.
 The barriers of distance, language, time and culture, which often make it very
difficult for managers to resolve conflicts and clarify confusion

5. Network of subsidiary
- MNE can form a complex network of interactive centres
- Also called a hierarchy, recognising that many different units become the controlling expert
an effectively headquarters for that function eg designing new products
- Staff important as an informal control mechanism

- Management features 5 dimensions (=aspects):

 Delegation (ủy thác) of decision-making authority to appropriate units and levels.
(HQ learns from subsidiaries and vice versa)
 Geographical spreading of key functions across units in different countries.
 De-layering (reducing number of staff) of organizational levels.
 De-bureaucratization of formal procedures.
  Differentiation of work, responsibility and authority across the networked
subsidiaries

IV. Control mechanism

How do managers control an organization spread across the world?
Control through 3 methods:
 Policy and Procedures
 Personal Relationship
 Organizations need processes and forums where staff from various units can
develop types of personal relationship that can be used for organizational
purposes.
 E.g. Training and development program held in regional centers or at headquarters
become an important forum for the development of personal networks
 Corporate culture
 The process of socializing people so that they come to share a common sets of
values and beliefs
 E.g. HR activities to reinforce Corporate culture
 Recruit and select people who seem to hold similar value
  Training and development program, Reward system and promotion leads
to more committed and productive employees
 Placement of staff (find a suitable job for staffs)

V. Cross-border mergers and acquisitions

- A merger: a result of an agreement between two companies to join their operation together
- An acquisition: one company buy another company with the interest of controlling the activities
of the combined operations

VI. Culture context

1. Edward T Hall – High and Low Culture Context
High Culture Context: (including much of the Middle East, Asia, Africa, and South America) are
relational, collectivist, intuitive, and contemplative (think seriously about sth). 
- This means that people in these cultures emphasize interpersonal relationships. 
- Developing trust is an important first step to any business transaction. 
- According to Hall, these cultures are:collectivist, preferring group harmony and
consensus to individual achievement;and people in these cultures are less controlled by
reason than by feelings. 
- Words are not so important as context, which might include the speaker’s tone of voice,
facial expression, gestures, posture—and even the person’s family history and status
Low Culture Context: (including North America and much of Western Europe) are logical,
linear, individualistic, and action-oriented. 
- People from low-context cultures value logic, facts, and directness. 
- Solving a problem means lining up the facts and evaluating one after another. 
- Decisions are based on fact rather than intuition. 
- Discussions end with actions. 
- Communicators are expected to be straightforward, concise, and efficient in telling what
action is expected.  To be absolutely clear, they strive to use precise words and intend
them to be taken literally. 
- Explicit contracts conclude negotiations.  This is very different from communicators in
high-context cultures who depend less on language precision and legal documents
2. Hofstede’s Five Culture Dimensions Model
- Power distance: the extent to which the less powerful members of society expect and
accept that power is distributed unequally
- Individualism vs collectivism: people belong to ‘in groups’ to look after them in exchange
for loyalty or people look after themselves and their immediate family
- Masculinity vs. femininity: whether the dominant values in society are achievement and
success, or caring for others and quality of life
- Uncertainty avoidance: the extent to which people feel threatened by uncertainty and
ambiguity and try to avoid such situations
- Long-vs. Short-term orientation: the extent to which a society shows a pragmatic future
oriented perspective rather than a conventional historical or short-term point of view
TOPIC 3: INTERNATIONAL RECRUITMENT AND SELECTION
I. Approaches to staffing

1. Ethnocentric
- Foreign subsidiaries have no autonomy
- Strategic decision are made at headquarters
- Key positions in domestic and foreign operations are held by headquarters’ personnel
- Subsidiaries are managed by staff from the home country (PCNs)
2. Polycentric
- Treat each subsidiary as a distinct national entity with some decision-making autonomy
- Subsidiaries are usually managed by local nationals (HCNs) – who are seldom promoted
to positions to headquarters
- PCNs are rarely transferred to foreign subsidiary operations
3. Geocentric
- Take a global approach
- Recognize that each part (subsidiary and headquarter) make a unique contribution with
its unique competency
- Nationality is ignored in favour of ability
- PCNs, HCNs and TCNs can be found in key positions anywhere
4. Regiocentric
- Utilizes a wider pool of manager but in a limited way
- Personnel may move outside their country but only within a particular geographic region
- Regional managers might not be promoted to headquarter position but enjoy a degree of
regional autonomy in decision making
- E.g. European Union staff moved within that region to places all over Europe
II. Advantages and Disadvantages of Using PCNs, TCNs, and HCNs

1. Advantages

PCN HCN TCN

 Cheap for recruitment  Cheap for recruitment  Wider choice
 Know corporate culture  Cheap for compensation  Fulfil skills requirement
 Know the job expectations  More culturally appropriate  Know the job expectations
 Fulfil skills requirement to host country
 Save time for recruitment  Better understanding of host
country’s market and legal
system
 Trust in local staff
 Longer time commitment to
the position

2. Disadvantages

PCN HCN TCN

 Less choices  Less choice  Expensive for recruitment

 Less objective  Skill limitations  Time needed for recruitment
 No long term commitment  Unfamiliar with  Unfamiliar to corporate
tothe position corporateculture’s culture’s understanding
 Unfamiliar with understanding  Unfamiliar with host
hostcountry’s culture,  Limited expectations of country’s culture, market
market andlegal system thejob and
 More expensive  Time needed for recruitment legal system
forcompensation  Involved with host  Involved with family issues
 Involved with family issues labourpolicy  More expensive for
compensation
III. Determinants of Staffing Choices

E.g. A firm is maturing into a networked organization (company specificity) will require IHRM
approaches that assists its ability to develop flexible globel organization that is centrally integrated
and locally responsive – a geocentric approach.

IV. The role of an expatriate

 1. An agent of direct control
Staff are transferred as a “control” mechanism. Using expatriates for control reflects an
ethnocentric condition. However, it is important in ensuring subsidiary compliance, enabling
strategic objectives for local operations to be achieved.
2. An agent of socialization
Related to the use of corporate culture. Expatriates assist in transfer of shared value and
beliefs: Knowledge sharing, encourage adoption of common work practices, spreading of
corporate culture and give a sense of belonging to the large organisation.
3. Network builders
Fostering international linkages that can support for informal control and communication
purposes. The length of the international assignment is important.
4. Boundary spanners
Activities that bridge internal and external organisation context.
E.g. Attending a social function at the local embassy to form relationships outside of the
company
5. Language nodes
Expatriates who gain language skills in on a foreign placement, become important in their home
country in communicating with the host country using language skills.
6. Transfer of competence and knowledge
Main aim, but multiple factors needed;Open support for two-way learning; Consider personal
networks in staffing decisions; Length of assignment is important; Need to commit to training
HCNs.

V. Recruitment for International Business

1. Recruitment
Searching for and obtaining potential job candidates in sufficient numbers & quality so that the
organization can select the most appropriate people to fill its job needs
2. Framework
 Strategic Business Objectives
What is to be achieved and how

Human Resource Planning

Determine number and type of jobs to be filled
Matched HR supply with job opening

Job analysis
Collect job information
FEEDBACK

Job Description Job Specification

Job tittle Experience
Duties and responsibilities Qualifications
Relationships Skills, abilities, knowledge
Know-how Personal quantities
Accountability Special requirements
Authority
Special circumstances

Identify and Attract a pool of

qualified applicants

VI. Expatriate Failure

1. Definition
- Definition 1: Regarded as premature return of the expatriate (ie before assignment is complete)
- Definition 2: includes those who remain overseas but perform very poorly

2. Cost of Failure
 - Direct Costs: Relocation expense, salary and training. Plus replacement cost of this
manager.
- Indirect Costs:
 Contacts with gov, clients, suppliers may damage business relationship &profits.
 Damage to the expatriates career

VII. Influences on Selection

Factors that increase or decrease the risk of failure
1. Inability to adjust a foreign culture
- Inability of the spouse to adjust
- Family concerns
- Accepted new position in the company
- Completed assignment early
- Cultural adjustment challenges
- Security concerns
- Career concerns
Dual Career Couple solutions
- Inter-company networking: place spouse with another multinational – gain work permit
- Job- hunting assistance: for spouse in Host country
- Intra- company employment: spouse employed by same company
- On-assignment career support: MNE pays education for spouse

2. Length of assignment

ASSIGNMENT TIME FRAME

Short-term UP TO 3 MONTHS

Extended UP TO 1 YEAR

Long-term FROM 1 YEAR TO 5 YEARS

ASSIGNMENT
(traditional assignment) TIME FRAME
Commuter go home every one to two weeks
Rotational commute for set period followed by break in home country
Contractual specific skills employees hired for 6 to 12 months for specific projects
Virtual employee manages international responsibilities from home-country base
 3. Willingness to move
- Willingness to relocate is a predictor of success – but also include family members
willingness to relocate
- A desirable location helps this
4. Work-related factors
- Job autonomy is a powerful factor influencing expatriate turnover
- Another moderator is the perceived level of organizational support (from home and host
unit)
5. Psychological contract

VIII. Selection criteria

1. Technical ability
Most selected on the basis of technical skills & managerial competence
2. Cross-culture suitability
Suitability indicated by a set of attributes:cultural empathy, adaptability, diplomacy, language
ability, positive attitude, emotional stability, and maturity
3. Family requirements
The reaction of the accompanying spouse (most important) & family members is critical to
successful expatriate placement. Some issues:
  Employing house servants difficult for westerners
 Inability for spouse to work in host country
 Disruption to children’s education
 Risk of divorce
Despite this very few companies include the spouse in selection of employee for overseas
posting
4. Country/Culture requirements
- Many countries require a company to show that a HCN is not available to do the job before
employing a PCN
- Work permits do not include spouse
- Dangerous or harsh places are hard to place expats e.g. war or poor facilities
5. Language
The ability to speak the local language is an aspect often linked with cross-cultural ability
6. MNE requirements
- Selection ratio – PCN: TCN: HCN
- The mode of operation involved
- The duration and type of assignment
- The amount of knowledge transfer

IX. Women and international assignments

TOPIC 4: INTERNATIONAL TRAINING AND DEVELOPMENT

I. Expatriate training

1. Definition
- Training: aims to improve current work skills and behavior
- Development: aims to increase abilities in relation to future position or assignments
2. Type
- Pre-departure training: to help people (including the spouse/partner and children of the
manager) cope with unexpected events in a new culture
- Internal and external recruitment require different training
II. Component of effective Pre-departure training program

1. Culture awareness program

- Area studies programs that include:
 Environmental briefings & cultural orientation;
 Cultural assimilators;
 Sensitivity training;
 Field experiences
- When people are working outside their native land, it seems that Germans become more
German and Japanese become more Japanese.
- Cultural diversity training program under ‘Valuing diversity’ or ‘Managing diversity
- Cross-culture training model/ Approach
 Three dimensions: training methods, level of training rigor; and duration of the
training relative to degree of interaction and culture novelty
 Recommendation:
 Training should be more oriented to life-long learning
 Emphasize on foreign language training
 Emphasize on communication competence
 Cross culture training
2. Preliminary Visits
- Send them on a preliminary trip to the host country
- Provide candidate and spouse a preview in order to test their suitability and interest
- Give candidate opportunity to reject the replacement

3. Language training
- The ability to speak foreign language can improve the expatriate’s effectiveness and
negotiating ability
- English the language of the world of business
- But most firms – especially from English language countries regard local language skills
unimportant in contrast to those from other countries.
- Lack of local language skills limits the MNE’s ability to monitor competitors, and to detect
theft of technology, improves adjustment and understanding of local environment

4. Training for training role

- Expatriates find themselves training HCNs as their replacement
- Train them the ability to transfer knowledge and skills in a culturally sensitive manner
- Expatriate as trainer:
 Expats are trainers and transfer knowledge and competence between various units.
 Expected to train and develop HCNs to replace the PCN expats.
 Ensure systems and processes work for effective performance
 Job rotation through different locations to develop them

5. Practical Assistance
- Provide information that assists the relocation
- Use of relocation specialists who will move belongings, find accommodation, schools, health
care etc
- Further language training for family
III. Training and Communication throughout Replacement

Culture Intelligence (CQ) involves three interactive, fundamental components:

 Cognitiverefers to one’s specific knowledge in relation to perceiving and understanding
a new culture based on various types of cues provided.
 Motivationalrefers to one’s self-motivation and commitment to adapt and adjust a new
cultural environment.
 Behavioural refers to the capability of a person to generate the behaviours/actions
needed to reflect cognition and motivation.

IV. Developing staff through International Assignment

1. Individual development
Employees believe that overseas experience will improve their careers. The experience does
train them for more international work
2. Developing International Team
Creating a team of people trained for international assignments. These may have certain
personality characteristics – See Cultural Intelligence
TOPIC 5: INTERNATIONAL REWARD MANAGEMENT

I. Objectives of compensation for international staff

- Attract and retain employees qualified for service abroad;
- Facilitate transfers between foreign affiliates & between home-country and foreign affiliates;
- Establish and maintain a consistent & reasonable relationship between compensation of
employees of all affiliates, both at home and abroad;
- Maintain compensation in relation to the competitor’s practices at minimized costs

II. Two different expectations of rewards

1. Employees
- Financial protection in the areas of benefits, social security, living costs in the foreign
location;
- Financial advancement through attainable or non-devaluated income and/or savings;
- Additional expenses such as housing, education of children and recreation subsidies if
not fully covered;
- Career advancement and proper repatriation arrangement
2. Company
- To be consistent with the organisation strategy, structure and business needs
- Attract, retain and motivate staff
- Facilitate the transfer of international employees in a cost-effective way
- Consider the issue of equity and ease of administration

III. Key components of an international compensation program

1. Base salary
- Donates the amount of cash compensation serving as a benchmark for other compensation
elements
- The foundation block for international compensation whether the employee is a PCN/ TCN
 2. Foreign service inducement/ Hardship premium
- PCNs often receive a salary premium as an inducement to accept a foreign assignment for
any hardship caused by the transfer
- Such payment (5 to 40% of base pay) vary, depending upon:
 the assignment;
 actual hardship;
 tax consequences;
 the length of assignment
3. Allowances
- The cost of living allowance (COLA): compensate for difference in expenditure
- The housing allowance;
- Home leave allowances;
- Education allowances;
- Relocation allowances;
- Spouse assistance.
4. Benefits
- Pension;
- Medical coverage;
- Social security benefits

IV. Approaches to international compensation

1. The Going Rate Approach (The Market Rate Approach)
• Based on local market rates of pay for similar work
• Relies on survey comparisons among:
– Local nationals (HCNs)
– Expatriates of same nationality
– Expatriates of all nationalities
• Compensation based on the selected survey comparison
• Base pay and benefits may be supplemented by additional payments for low-pay
countries
 Advantages Disadvantages
 Equality with local nationals  Variation between assignments for same
 Simplicity employee
 Identification with host country  Variation between expatriates of same
 Equity amongst different nationalities nationality in different countries
 Potential re-entry problems

2. The Balance Sheet Approach

• Basic objective is maintenance of home-country living standard plus financial
inducement
• Home-country pay and benefits are the foundations of this approach
• Adjustments to home package to balance additional expenditure in host country
• Financial incentives (expatriate/hardship premium) added to make the package
attractive
• Most common system in usage by multinational firms

Advantages Disadvantages
 Equity:  Can result in great inequities:
 Between assignments  Between expatriates of different
 Between expatriates from same nation nationalities
 Facilitates expatriate re-entry  Between expatriates and local
 Easy to communicate to employees employees
 Can be quite complex to administer

- Four Balance Sheet Approach categories

 Goods and services– home-country outlays for items such as food, personal care,
medical care.
 Housing– the major costs associated with housing in the host country.
 Income taxes– parent-country and host-country income taxes.
 Reserve– contributions to savings, payments for benefits, pension contributions,
investments, education expenses, social security taxes, etc
V. Taxation
 - Tax equalization: firms withhold an amount equal to the home-country tax obligation of the
PCN, and pay all taxes in the host country.
- Tax protection: the employee pays taxes in the home country and is entitled to any windfall
received if total taxes are less in the foreign country than in the home country.
- Ad hoc approach

VI. Strategic Reward Management

1. Pay for performance
2. Link rewards to organisational change
3. Reward for measurable competencies
4. Match incentives to the culture
5. Keep group incentives clear and simple
6. Over-communicate for best results
7. Remember the work itself is the reward
TOPIC 6: INTERNATIONAL CAREER MANAGEMENT

I. The repatriation process

1. Preparation
- Involves developing plans for the future & gathering information about the new position (a
checklist and training)
2. Physical reaction
- It refers to removing personal effects, breaking ties with colleagues and friends, and
travelling back to home.
- Comprehensive and personalised relocation assistance is useful
3. Transition
- Means settling into temporary accommodation where necessary, making arrangements for
housing & schooling and carrying out other administrative tasks
4. Readjustment
- Involves coping with reverse culture shock and career demands
II. Individual reactions to re-entry
Factors influence expatriate adjustment

III. Predictors for repatriation maladjustment

 - Length of time abroad
- Unrealistic expectations of job opportunities in the home company
- Downward job mobility
- Reduced work status
- Negative perceptions of the help and support provided by employers during/ after repatriation.
- Degree to which you are ‘forgotten’ while on assignment

IV. Designing a repatriation program

1. Topic covered by a repatriation program

2. Mentor Duties
- Maintaining contact with expat;
- Ensuring expat. are kept up-to-date with developments in the home country;
- Ensuring expat. are retained in existing management development;
- Assisting expat. with the repatriation process
3. Strategic repatriation and knowledge management
- Expatriate knowledge categories
 Market specific knowledge
 Personal skills
 Job-related management skills
 Network knowledge
 General management capacity
 - Three major issues that MNEs need to consider to develop their repatriation strategy
 Individuals have different career goals
 Differences across types of global assignments
 The integration among selection, performance management and repatriation
systems
4. Reasons for inability to provide Repatriation programs
- Lack of expertise;
- Cost of program to train repatriates;
- No perceived need for repatriation training by top management;
- Other factors: size, organisational responsibility, nationality, etc
TOPIC 7: MANAGEMENT IN HOST COUNTRY CONTEXT

I. Standardization and localization of HRM practices

Depends on
1. Receptivity of local workforce to adhere to corporatenorms of behaviour
2. Effectiveness of expatriates as agents of socialization
3. Whether localization is timely (not just prompted by cost considerations)
4. Appropriateness to the local environment

II. Factors driving standardization

1. Host-country culture and workplace environment
2. Mode of operation involved
3. Size and maturity of the firm
4. Relative importance of the subsidiary

III. Factors driving localization

1. The Cultural Environment
- Work behaviour is culturally determined
- Often, what is meant by corporate culture translates into universal work behaviours –
standardisation of work practices
- The larger the culture distance the more important are forces for local adaption
2. The Institutional Environment
- Institutional effect: These are related to an institution e.g. government, education and
religions, and any other significant group. Also includes the company in the home and host
country.
- Country-of-origin effect: implies that multinationals are shaped by institutions existed in
their country of origin and that they attempt to introduce these parent-country-based HRM
practice in their foreign subsidiary → ethnocentric firm
- Host-country effect: refers to the extent to which HRM practices in subsidiaries are
impacted by the host-country context
- Home-country effect: HRM activities are influenced by home-country environment
 3. Conclusion on the host-country environment

HRM Practices Impact of Impact of the

CULTURAL CONTEXT INSTITUTIONAL CONTEXT
RECRUITMENT • In societies LOW on ‘IN- EDUCATION SYSTEM
AND SELECTION GROUP COLLECTIVISM’ individual The reputation of educational
achievements represent important institutions such as public and private
selection criteria. universities varies in different countries.
• In societies HIGH on ‘IN- This is reflected in the recruiting
GROUP COLLECTIVISM’ the processes (i.e., HR marketing) and
emphasis in the recruiting process is selection criteria of the firms in those
more on team-related skills than on countries.
individual competencies.
TRAINING AND • In societies HIGH on GENDER EDUCATION SYSTEM
DEVELOPMENT EGALITARIANISM women have the Education systems differ between
same chances for vertical career different countries (existence of a dual
advancement as men. vocational training system, quality and
• In societies LOW on GENDER reputation of higher education
EGALITARIANISM female managers institutions). This has an effect on the
are rare. training needs perceived and fulfilled by
MNEs.
COMPENSATION • In societies HIGH on LEGISLATION AND INDUSTRIAL
UNCERTAINTY AVOIDANCE, RELATIONS:
employees tend to be rather risk Legislation such as the regulation of
averse and prefer fixed minimum wages or respective union
compensation packages or agreements with respect to
seniority-based pay. compensation have an impact on the
• In societies LOW on firm’s compensation choices with
UNCERTAINTY AVOIDANCE , respect to pay mix and pay level.
employees tend to be rather risk-
taking and accept high income
variability through performance-
based pay
 TASK • Societies HIGH on LEGISLATION AND NORMS
DISTRIBUTION COLLECTIVISM tend to emphasise Legislation and respective norms
group work support gender-based division of labour
• Societies HIGH on to a differing extent in different
INDIVIDUALISM rather attribute countries. While in some countries the
individual responsibilities in the percentage of female managers is
work system relatively high, in other countries it is
not common that women work at all.

IV. Cross-culture awareness

- Understanding what ‘culture’ is and how it does influence our strategic and organizational
thinking
- Understand the major frameworks for explaining different cultures/societies
- Understand the importance of the notion of cultural sensitivities for the management decision-
making process.
- The importance of the notion of integrity & transparency across cultures and its effect on
international investment in emerging markets

V. Vietnamese Culture through Hofstede’s dimensions

- The high power distance characteristic is present in the daily life of Vietnamese as well as in
business. In the family, sons and daughters have to obey parents’ orders. In organisations, there
is a clear subordinate-superior relationship. Titles, status, and formality are very important in
Vietnamese society.
- Collectivism has existed for a very long time in Vietnam. It is characterised by tight social
frameworks and self-functioning communities. People expect ‘in groups’ to look after their
members to protect them, and provide them with security in return for their loyalty.
Vietnamese people place importance on fitting in harmoniously and avoiding losing the other’s
face. In conflicts, they prefer to come out with a win-win situation.
- Uncertainty Avoidance - Vietnamese culture displays moderate uncertainty avoidance. People
in society feel threatened by ambiguous situations and try to avoid these situations by
providing greater job stability, establishing more formal rules, and rejecting deviant ideas and
behaviour
VI. HRM roles with global code of conduct
- Drawing up and reviewing codes of conduct
- Conducting a cost–benefit analysis to oversee compliance of employees and relevant alliance
partners
- Championing the need to train employees and alliance partners in elements of the code of
conduct
- Checking that performance and rewards systems take into consideration compliance to codes
of conduct

VII. HRM roles with offshoring

- Consultation with unions/employee representatives
- Manpower planning, considering the scope for employee redeployment
- Contributing to the internal communication strategy
- Identifying training needs
- Designing new jobs which stem from offshoring operations
- Highlighting potential risks, such as the implications of employment regulation both in the
home country and in foreign locations.
TOPIC 8 : INTERNATIONAL INDUSTRIAL RELATIONS

I. Factors underlying differences in structure of IR systems across the World

- The mode of technology and industrial organization at critical stages of union development
- Methods of union regulation by government
- Ideological divisions within the trade union movement
- The influence of religious organizations on trade union development
- Managerial strategies for labor relations in large corporations

II. Key issues in industrial relations

1. Industrial relations policies and practices of multinational firms
- Because of different political systems
- Concern about precedents being set in one subsidiary that could flow to another
2. The degree of inter-subsidiary production integration
- When products of one subsidiary are needed by another, then coordinated IR policy is more
important. Example: Ford introduced employee involvement.
3. Nationality of ownership of the subsidiary
- More ethnocentric such as US firms centralise labour negotiations and IR policy, more than
UK or EU firms
4. International HRM approach
- Firms from ethnocentric nations have more industrial conflict, while geocentric firms have
less as try to “fit-in” with the host country environment
5. MNE prior experience in industrial relations
- European firms deal with industrial unions at industry level via employer associations. In the
USA firm based IR is the norm.
6. Subsidiary characteristics
- Acquired subsidiaries tend to be given IR autonomy. But subsidiaries that are poor
performers, receives a lot of funds from HQ or of strategic importance all are given less IR
autonomy.
 7. Characteristics of the home product market
- If domestic sales are small compared to the foreign market then the MNE will try harder to
adapt – including to local IR practices
8. Management attitudes towards unions
- For example union avoidance seems “deeply rooted in the values systems of American
managers”

III. IR in the USA

- Dramatic changes in the American workplace:
 Global and domestic competition;
 Work systems innovations;
 Increasing productivity, reducing costs and improving quality;
 Increasing the number of part-time and casual workers, real wage decrease, downsizing
and lack of job security.
 Weak Federal employment laws
- Positive’ managerial outlook: HRM; various reasons firms ‘should’ offer favourable conditions of
employment to employees.
- Mostly private white-collar employment.
- Fast-food industry is entirely without unions, but this is definitely a disadvantage to workers
- Characterized by broad management discretion & control over the terms & conditions of
employment
- Expected to provide Health Insurance to most full-time employees, but not to part-time
employees
- Corporations have a great deal of power compared to workers and successfully lobby Federal
and State Governments to limit the protection available from the law
- In contrast strong antidiscrimination laws exist

IV. IR in the East Asia

- Basic elements of HRM:
 Flexibility;
 Strategic planning -> common goal;
  Leadership - the quality of CEO & managers;
 Collectivism: team work, information sharing, QCC;
 Harmony;
 Hierarchy;
 Doctrine & training (management autonomy & on-the-job training);
 Discipline (reward- & punishment-system).
- Different approaches are applied to IR in different countries, some support unions others do
not.
- Unions are discouraged in some countries unless the union is “friendly” to government
- Unions in Asia are relatively weak
- Governments tend to make arbitration compulsory
- It is accepted that parties in the dispute are a unequal in power and social status. But there is
also a desire to avoid conflict.
- That workers and employers represent a “Yin and Yang”, they are complementary and need
each other. However neither side must be allowed to grow too powerful

V. IR in Europe
- emerging new values and issues;
- ageing population;
- unemployment;
- innovation and technology;
- common market with unequal conditions (‘Social Dumping’ companies will locate in countries
with low labour costs due to low social security & low wages);
- ‘post-modernist’ state + multi-cultural challenges
- More collective approach:
 The involvement of union leaders and line managers
 new economy requires innovative HRM
 HRM in a strategic alliance cooperation process and decision-making in cross-cultural
environment
VI. Trade Union and MNEs
1. Trade union limits on MNE strategic choices
- Influence wage levels. Union may support wage growth
- Constrain the ability of MNEs to vary employment levels conditions at will by preventing
dismissals and lay-offs
- Hinder or prevent global integration of operations of multinationals – production is less
than optimal (15% lower in Europe)
2. Trade union concerns about MNEs
- MNEs have formidable financial resources
- MNEs have alternative sources of supply
- MNEs can move production facilities to other countries
- MNEs have a remote locus of authority
- MNEs have production facilities in many industries
- MNEs have superior knowledge and expertise in industrial relations
- MNEs have the capacity to stage an ‘investment strike’
3. Trade union responses to MNEs
- International trade secretariats (ITSs)
- Lobbying for restrictive national legislation
- Regulation of multinationals by international organizations, test cases
- Cross-country interventions
- Personnel exchanges
TOPIC 9: INTERNATIONAL PERFORMANCE MANAGEMENT

I. Multinational Performance Management

- Definition: A process that enables the MNE to evaluate and continuously improve individual,
subsidiary unit and corporate performance against clearly defined, pre-set goals and targets.
→ By adopting a performance management approach, MNEs are building on the goal-setting
strengths of management-by-objectives (MBO)

There are various constrains that might affect goal attainment

- Constraints:
1. Whole vs part
- The good of the whole is more important than one subsidiary’s short-term profitability
- The MNE may have a strategy that allows some subsidiaries to run at a loss so as to
benefit the whole organisation through growing a new market or to provide some semi-
processed product to the other subsidiaries at lower cost
2. Non-comparable data
- Data obtained from the subsidiaries maybe neither interpretable nor reliable
- E.g sale is increasing, but the government impose new law that makes firm unable to
repatriate its profit. Does this mean that MNE is performing effectively? Is the subsidiary
performing effectively?
- Import tariff can distort pricing schedule
3. Volatility of the global environment
- Volatility: the adoption of Euro as single currency, Chinese market reforms, SARS and
bird flu epidemic, international terrorism, rising oil prices.
- Problems arise when subsidiary manager perceive that goal and deadlines set by a
distant headquarters strategy team are unrealistic and inflexible, due to failure to take
into account local conditions that change as a result of volatile environment
4. Separation by time and distance
- The agreement between the multinational and local subsidiary activities are further
complicated by the physical distance, time-zone difference, the frequency of contact
between head office staff and subsidiary manager and cost of reporting system
- Fax machine, video conference, internet connect → not enough
- Need to travel to meet expatriate and local manager in foreign country
5. Variable levels of maturity
- Without supporting infrastructure of parent, market development in foreign subsidiaries
is slower and more difficult to achieve.
→ More time may needed to achieve results
→ Variations in work practice between parent country and foreign subsidiary meed to
be considered
6. Control and performance management
- Through formal control mechanism, and communication through feedback and
appraisal aspects, performance management also contributes to shaping corporate
culture, both formally and informally.
II. Expatriate performance management
When attempting to determine expatriate performance, it is important to consider the impact of
the following variables and their interrelationship
 1. The compensation package
- Remuneration and potential career progression are important.
- If expectations are not met motivation will decrease
2. The task
- Tasks such as manager or technical role.
- Task set by Parent HQ. But expectations of behaviour may be culturally inappropriate.
- A manager in the US is not the same as in Indonesia
3. Headquarters’ support
- Level of headquarters support for individual and family also determines how difficult the
assignment is
4. The environment in which performance occurs – the subsidiary or foreign facility
- Environment has the biggest impact – differing societal, legal, economic, technical and
physical demands.
- Type of operation – fully owned by Parent Country or a joint venture – conflicting goals
in International Joint Venture (IJV). Thus degree of control is limited
- These and other factors moderate the likelihood of success and therefore performance
appraisal results
5. Culture adjustment
- Critical determinant of expatriate job performance – because of impact on assignment
failure.
- Expat’s family’s adjustment is also critical (sadly, few companies act on this knowledge)

III. Cross-cultural context for performance management

Points to consider:
- Criteria selected
- Task definitions
- Timing
- Purpose of performance management
IV. Performance Appraisal of International employees
1. Further Considerations in Performance Appraisal
- Links to organisation strategy HR planning. Job design and analysis
- Setting individual performance goals from Job Description (JD): performance appraisal
- Providing regular feed back on progress towards those goals performance appraisal
- Providing opportunities for improving performance appraisal: training and development
- Linking results and rewards to performance appraisal: compensation

2. Criteria used for performance appraisal

i. Performance criteria
Goal tends to be translated into performance appraisal criteria
- Hard goals: are objective, quantifiable and can be directly measured – such as return-
on-investment, market share, etc.
- Soft goals: tend to be relationship or trait-based, such as leadership style or
interpersonal soft skills
- Contextual goals: attempt to take into consideration factors that result from the
situation in which performance occurs. E.g. changes of exchange rate, and host
government policy on repatriation of profits
→ Using multiple criteria wherever possible is recommended

ii. Who conduct performance appraisal

- Employees are appraised by their immediate supervisors.
- For subsidiary managers: they tend to be assessed according to subsidiary performance,
with a reliance on hard criteria similar to that applied to heads of domestic units or
divisions
- Avoid favouring short-term performance to the detriment of longer-term organizational
goals.
- Appraisal of other expatriate by CEO, host-country managers or the individual’s home-
country manager, depending on the nature and level of the position concerned.
- Multiple evaluators: the so-called 360-degree valuation
iii. Performance feedback
- Year-based evaluation cannot provide critical feedback for improvement.
- More frequent evaluation in different patterns may be required for a better outcome
TOPIC 10: IHRM TRENDS AND ISSUES

I. Returning to topics of strategic HRM in MNEs

II. New HR roles and responsibilities

1. Searching for global talent
- The need to select, train and support international managers who are able to lead a diverse
work force
2. Managing diversity
- Migrants, women and age group
3. Managing ethical issues
- Enhancing corporate social responsibility
- Upholding ethical standards across global supply chains
4. Integrate HR strategy with business strategy

III. Strategic HRM

 1. Theoretical Development
Two streams of inquiry:
- The micro-level: HRM activities, particularly expatriate management;
- The macro-level: a more strategic focus with national and international implications
2. Research Issues
- Cross-cultural HRM (cross-country and multi-cultural environments):
Eg. Commonality vs. differences;
- Organizational restructuring and the impact on IHRM (eg. merger and acquisitions,
global partnerships);
- HRM in different countries and comparison between countries

IV. Future trend

1. Determinate variables
- Industry: location, sector, ownership, size; market
- Environment: political, social, cultural, historical, &
- economic influences
2. Convergence vs Divergence
- Divergence: adopting different patterns and paths.
- Convergence: adopting a similar pattern and path