ADVANCE HUMAN

RESOURCE
MANAGEMENT
BY VISHWA BHATT
Unit 1 : strategic human resource management
Definition :
1) strategy : means generalship
Widely use in military
“strategy is a unified(uniform or whole), comprehensive(all elements)
and integrated(to join) plan that relates the strategic advantages to the
firm to the challenges of the environment. It is designed to ensure that
the basic objectives of the enterprise are achieved through proper
execution by the organization”
What is Strategic management:
• Strategic management is that set of managerial decisions and actions
that determine the long-term performance of a corporation. It
includes environmental strategy formulation, strategy implementation
and evaluation and control.
What is SHRM:
• SHRM is to ensure that human resource management is fully integrated
into strategic planning, that HRM policies cohere both across policies
areas and across hierarchies and that HRM policies are accepted by line
managers as part of their every day work;
• Therefore, SHRM is concerned with the following,
• analyze the opportunities and threats existing in the external environment
• Formulation of strategies
• Implement the strategies
• Evaluate and control activities to ensure that organization's objective are
duly achieved.
Difference between traditional and strategic
HRM
• Traditional approach to HRM, the responsibility for people
management programme rest the staff specialist In an organization
• But in SHRM, in organization who has responsibility for people is HR
manager, no matter in which functional area he or she is working with
Process of linking HR strategy with
organizational strategy (role of HR in SM)
• Basically there is 4 stage:
• Environmental scanning
• Strategy formulation
• Strategy implementation
• Evaluation and control
Step 1 environmental scanning
• Environment needs to be scanned in order to determine trends and
projections of factors that will affect fortunes of the organization
• Scanning must focus on task environment
• Helps to identify opportunity and threats
• Ex , oil crisis of 1970 threatened oil fired electric utilities but provided
great opportunity for coal producers
Step 2 strategy formulation
• Strategy are formulated in 3 levels
1. Corporate level
2. Business unit level
3. Functional level
• Corporate level strategy :
This is formulated by the top management of the an organization made
up more then one line of business.
Example of siyaram Poddar company(family control) , continuously
innovate in all businesses with right technology, cut costs and focus on
the overseas markets
Various questions like, what kind of business should the company be
engaged in?
What are the goals and expectation from each business ?
How should resources be allocated to reach these goals ?
• If formulating corporate level strategy, eight area should be keep in
mind
• Market standing
• Innovation
• Productivity
• Physical and financial resources
• Profitability
• managerial performance and development
• Workers performance and attitude
• Social responsibility
2 business-level strategy
• While the major question at the corporate level is,” in what industries
or businesses should we be operating ? But the question in business
unit level is “ how we should compete in chosen industry or
business ?
• A business unit is an organizational subsystem that has a market, a set
of competitors, and a goal distinct from those of other subsystem in
the group
• The concept of strategic business unit (SBU) was pioneer by GE with
200 business unit
 • Business level strategy at of the siyaram Poddar group

Siyaram silk mills Govind rubber Balkrishna industries

Increase market share from 4 to 5 Focus on export Launching new coted board
per over the next two years products to improving market
presence

Launching new product with look Improving product mix to include Auto part will exported led, will
and feel of polyester wool more specialty products account for 60% of tire production

Focus shifting to exports Focus on two/three wheelers as

well as replacement market
3 functional level
• Several departments
• he actions and goals assigned to various departments that support
your business level strategy and corporate level strategy. These
strategies specify the outcomes you want to see achieved from the
daily operations of specific departments (or functions) of your
business.
Step 3 strategy implementation
• Strategies formulated need to be implemented. Implementation of
strategies is, often more difficult than their formulation. Although
implementation is the logical step to formulation.
• Implementing strategy requires such actions are altering sales
territories, adding new departments, closing facilities, hiring new
employees, changing organization’s pricing strategies, developing
financial budgets, formulating new employee benefits, cost control
procedures, changing advertising strategies, building new facilities,
transferring managers among divisions, building a better computer
information system
• Different types and size of organization
Additionally, HR function can contribute to strategic plans and
actions of the firm in following ways
A. Encouragement of pro active rather than reactive behavior
B. Explicit communication goals
C. Stimulation of critical thinking
D. Productivity as an HR based strategy
E. Quality and service are HR based strategy
F. Proficient strategic management
E. Quality and service are HR based strategy
F. Proficient strategic management
Strategy formulation Strategy implementation

Positioning forces before the action Managing forces during the action

Effectiveness Efficiency

Intellectual process Operational process

Good initiative and analytical skills Special motivation and leadership skills

Co-ordination among a few individual Co ordination among many people

4. Strategy Evaluation
• Strategic management process results in decisions that can have significant
and long- lasting consequences
• Strategy evaluation helps determine the extent to which the company’s
strategies are successful in attaining its objectives. basic activities involved in
strategy evaluation are:
1. Establishing performance targets, standards and tolerance limits for the
objectives, strategies and implementation plans.
2. Measuring the performance in relation to the targets at a given time. if
outcomes are outside the limits, inform manager to take action
3. Analyze deviation from acceptable tolerance limits
4. Execute modifications where necessary and are feasiable
From strategic HR perspective
• Are HR professionals present at M&A’s planning and implementation ?
• Does HR provide an annual report on its ROI
• Is HR rated by firms customers ?
• Is there an ROI process to evaluate HR initiatives connected to business strategy?
• Is HR role leveraged in change initiatives such as systems implementation and
reorganization ?
• Is there an ROI process to evaluate HR initiatives connected to business strategy ?
• Are line manager’s made responsible for people’s issues ?
• Do HR people go beyond and enter such domains as marketing, finance and
productions ?
Corporate and SBU strategy vis-à-vis
appropriate HR strategy
1 integrating HR strategy with corporate strategy:-
Hr strategy should be integrated with both the strategy of the firm.
Then only HR system become the source of organizational capabilities
4 type of corporate level strategy:
1 growth strategy
2 stability strategy
3 internal growth strategy
4 retrenchment strategy
1 growth strategy
• Growth can be achieved internally through market penetration,
market development or product development or expansion
• Hiring new employee
• Trained them
• Promotion and development
• quality and performance standard
• External growth comes from integration or diversification
• 3 key HR strategy :
• Merging dissimilar HR system
• Avoiding culture clash
• Carefully handling dismissals
2 stability strategy
• Maintaining the status quo
• Sees many limited opportunity in its environment and decide to
continue operation at present level
• Limited opportunity for employees so they started leaving the firm
here HR should be looking for such retention technique
• With this type of strategy, a company attempts to focus on what it
does best within its established markets and can be thought of as
“sticking to its knitting”
3 internal growth strategy
• Internal growth strategy present unique staff problems
• Constantly hire, transfer and promote
• Appraisals
• Ex: firm wants to expand internationally
4 retrenchment strategy
• Turnaround, divestiture, bankruptcy or liquidation are generally called
“retrenchment strategy”
• Down size or streamline
• Issue that need to be addressed “cross culture”
• Boosting moral
Integrating HR strategy with business
strategy
1 cost leadership strategy
2 differentiation strategy
3 focus strategy
1 cost leadership
• An organization pursuing this strategy to increase its efficiency, cut
cost and pass the saving to consumer
• A small change in price will affect the consumer
• HR should focus on short term performance measure, results
• Tailor to training, compensation management and performance
management
2 differentiation strategy
• Distinguished service or product
• HR strategy to focuses on incentives and compensation creativity
• External hiring's and recruiting individuals who bring fresh, unique
outside perspective to the organization
•
3 focus strategy
• This strategy realizes that different segment of the market have
different needs, and attempts satisfy one particular segment or niche
• What makes particular market unique: employee awareness
• Training
Business strategy HR strategy
Cost leadership HR strategy focuses on short-term performance
measures/results or outcomes°
Efficiency is the norm, job assignments are
specialized, explicit job descriptions
• Hierarchical pay, incentives
Narrow career paths, limited training
• Limited employment security
Cost-cutting
• Limited participation

Differentiation • Broad career paths• Extensive training• Incentives

for creativity• Long-term performance measures•
External recruitment to bring in new ideas• High
employee participation• Some employment security

focus Equal and fair pay with many incentives• Hiring

employees belonging to the target mark• Broad career
paths with extensive training High employee
participation •Some employee security.
Barriers to SHRM
• Short term
• Focus on current performance
• HR executive may not think every time strategically
• Lack of appreciation
• Functional manager see their selves as HR manager
• Problem of quantifying many of outcome and benefit of HR
programme
• Human assets are not owned by organization
Benefit of strategic HRM
• Faster achievement to company goal
• High productivity
• Conflict
• Overall success of an org
• More effective trainings of employees
• Improve implementation of leadership tools
• Promotion of company
• To recruit, retain and motivate people
Unit 2 international HRM
• Today’s economy has become globalized in which geographical
boundaries of a country have only political relevance, the economic
relevance has extended these
• Many country expand their business overseas
• IT companies are generating more revenue from overseas
Definition of IHRM
• IHRM is the process of accruing, allocating, and utilizing human
resource in the global business to achieve the stated objectives.
• IHRM is the interplay of 3 dimensions
• 1 HR activity
• 2 type of employee
• 3 countries of operation
• There are three broad activities in international HRM -- procuring,
allocating, and utilizing employees for international operations. These
three broad activities cover all HR functions which are relevant for
domestic operations and discussed in different parts of the text.
• There are three types of employees in a multinational firm based on
their place of origin - parent country nationals, host country nationals,
and third country nationals.
• Parent country nationals (PCNs) are those whose origin is the country
where the firm's headquarters are located.
• Host country nationals (HCNs) are those whose origin is the country
where the firm's operations are located.
• Third country nationals (TCNs) are those whose origin is a country
which is neither the home country nor the host country.
• There are three types of countries involved in international HRM
activities - home country, host country, and third country.
• Home country is the country of origin of the firm.
• Host country is the country in which operations of the firm are carried
on. For a single firm, there may be many host countries.
• Third country is a country from where resources - human and other
resources - are procured. There may be many third countries.
Need of IHRM
1. Culture diversity
2. Work force diversity
3. Language diversity
4. Economic diversity
1 cultural diversity
• People oriented approach
A individualism vs collectivism
B power orientation
C uncertainty avoidance
D masculinity vs femininity
E time orientation
2 workforce diversity
• Workforce diversity is increasingly becoming common for large
organizations even for domestic ones. However, in a global firm,
additional workforce diversity emerges because of hiring personnel
from different countries. We have seen earlier in this chapter that a
typical global firm may draw its employees from three types of
countries- home country (PCNs), host country (HCNs), and third
country(TCNs). In a global firm, workforce diversity can also be seen in
the context of employee mobility from one country to another
country for performing jobs. On this basis, an employee can be put in
one of the following categories:
• 1. Expatriate - a parent country national sent on a long-term
assignment to the host country operations.

• 2. Inpatriate - a host country national or third country national

assigned to the home country of the company where it is
headquartered.

• 3. Repatriate - an expatriate coming back to the home country at the

end of a foreign assignment.
3 language diversity
• Medium of expression

4 economic diversity
Per capita income of different countries where a global company
operates
Comparison between IHRM and Domestic
HRM
1 more and varied activity
2 need for broader perspective
3 more involvement in employees personal life
4 high emphasis on change in employee mix
5 high risk exposure
6 more external influence
HR functions at international level
• Recruitment
• Selection
• Performance management
• Compensation
• Cross cultural training and development
1 recruitment
• in general, the basic objective of recruitment is to ensure that the organization
is appropriately staffed. However, in order to achieve this objective in the
context of an international operation, issues involved may be different from
domestic HRM. A global firm operates in different countries which may have
different business environment affecting HR practices, more particularly socio-
cultural and legal factors. Therefore, a global firm's recruitment practices are
likely to be affected by host country requirements to a great extent. A global
firm has a mix of three types of employees based on their place of origin:
• parent country nationals (PCNS),
• host country nationals (HCNs), and
• third country nationals (TCNs).
• What would be the proportion of these three types of employees in
total workforce depends on the type of approach adopted by a global
firm in the context of international recruitment. For international
recruitment, there are four approaches with each approach having its
own pros and cons. These approaches are:
• ethnocentric,
• polycentric,
• Regio centric, and
• geocentric.
Ethno – centric:
• Here primary positions are held by, in headquarters as well as
subsidiaries, are staffed by parent country nationals (PCNs). Three
factors are to be considered in the staff:
• Should be able to adjust in family, cultures and personality problems to
avoid failure.
• To succeed, should enjoy local entertainment, develop local
relationships and communicate with locals.
• To achieve success, expatriates to have open attitude and take training
towards host – country. Under ethno centric, lines of communication are
one – directional, i.e. advice from headquarters. In fact, home country
attitude and culture dominates.
Disadvantage
• PCNs may take lot of time in understanding the culture of host
countries
• Employing PCNs costly affairs
• Higher pay to PCNs may HCNs feels discriminated
• HCNs may develop feeling of lack of opportunity
Poly – centric:
• Here primary positions in overseas subsidiaries are filled by host
country nationals( HCNs). Advantages of this are:
• Better local knowledge
• Reduce personal problems
• Host country managers can protect a MNC from hostile treatment by
host Government.
• Here subsidiary is allowed some autonomy but financial controls are
kept.
• Top people are limited to subsidiary and not for corporate position.
Disadvantages
• Likelihood of cultural conflict between parent country and
subsidiaries if the culture of parent country Is not adequately imbibed
by the HCNs, it is leads to conflict
• PCNs not get adequate exposure of global business by working on
global assignment
Regio-centric:
• Here primary positions are by people from countries with similar
culture practices and experienced in management practices (TCNs).
• Continents (Asia-pacific)
• For example, positioning in Sri lanka, South Indians can be preferred.
Disadvantage
• Similarity may not be available
• Career may remain limited to serving regional subsidiaries
Geocentric:
Key positions in headquarters as well as subsidiaries abroad are staffed by people based
on merit irrespective of their nationality
• Under this the best qualified individuals are hired at home and abroad regardless of
any nationality.

World wide talent

• Whole world is treated as market to implement global approach. As with PCNs, and
HCNs, hiring, TCNs has both merit as well as demerits. Advantages of TCNs include
better talent pool, development of international expertise, and help in building pan –
global culture. More expenses and difficulty of importing managerial and technical
employees are the main drawbacks of depending on TCNs .
Disadvantage
• Own specific requirement, because of this MNCs cannot transfer its
employees as freely as It wishes.
• Cultural mismatch even in case of highly qualified employees
International selection
• Various international recruitment approaches, except polycentric
approach, involve extensive employment of expatriate employees. An
expatriate is a person who is sent on a long-term assignment to the
host country operations.
• When the period of assignment is over, he comes back to his country.
Though in the category of expatriates, generally PCNs are included
but TCNs experience the same kind of problems.
Expatriate problem
Factors in expatriate selection
International Performance management
• One of the most challenging tasks of IHRM is managing the
performance of a firm's various international facilities. While
recruitment, selection, and training and development tend to focus
on pre-assignment issues, performance management looks at post-
assignment performance-related issues.

• In performance management there are several steps :

1 linking with organizational strategy : performance management
helps identify employees with high potentials, facilitates establishing
performance-reward linking and delineates employee needs for
development. All these offer vital inputs for formulation and execution
of strategies.
2 Setting Individual Performance Goals: It is critical, in the
international context, to closely link unit goals to individual/team goals
especially at the top and senior management levels. Goals' are the
future outcomes that individuals and organizations desire and strive to
achieve. Popularly, goals seek to serve three specific purposes:
• guide and direct behavior in the direction of the goal.
• offer benchmarks for employees to strive towards excellence.
• reflect what the employees and managers consider as important.
3 variables impacting performance : compensation packages, task,
moral and physical support, host environment, an alien culture

4 appraising the performance : Appraising performance is a routine job

but involves three key decisions areas:
• Specifying on performance criteria,
• identifying the appraisers,
• and deciding on the frequency of appraisal
5 providing feedback : Feedback refers to the information provided to
the assesses about work behaviour and outcomes The task of assessing
performance and providing feedback in MNCs is compounded by time
and distance. Physical distance between headquarters and subsidiary is
long and time zones are different.

6. Opportunities for improvement : performance feedback also helps

in highlighting the need for training and development. These activities
seek to provide opportunities to expatriates to improve, socialize, and
adjust to local environment ably.
7 Linking rewards and results : The final activity in expatriate
performance management relates to establishing linkages between
performance and compensation. Rewards must follow performance.
Only then there is positive reinforcement to repeat performance.
Compensation (paying expatriate)
1. Attract employees who are qualified and interested in international
assignments
2. Facilitate the movement of expatriates from one subsidiary to
another, from the home country to subsidiaries, and from
subsidiaries back to the home country;
3. Provide a consistent and reasonable relationship between the pay
levels of employees at the headquarters, domestic affiliates, and
foreign subsidiaries; and
4. Be cost-effective by reducing unnecessary expenses.
Generally, the following problems crop up while
designing an international remuneration package:
1. Discrepancies in pay between parent, host and third-country
nationals.
2. The need to vary expatriate compensation, depending on the 'stage
of life cycle' of the expatriate's family (e.g. young children, children
in college, etc.).
3. Remuneration issues related to re-entry into the parent-country
organization.
4. Remuneration issues to deal adequately with new waves of change
in the international business environment.
The expat remuneration generally comprise
• Base salary
• Benefits
• Allowances
• Incentives
• Taxes
Base salary
• The term base salary acquires a somewhat different meaning when
employees go abroad.
• In a domestic setting, base salary denotes the amount of cash
compensation that serves as a benchmark for other components (e.g
bonuses and benefits).
• For expatriates, it (base salary) is the primary component of a
package of allowances many of which are directly related to the base
salary (e.g. foreign service premium, cost-of-living allowance, housing
allowance) as well as the basis for in-service benefits and pension
contributions.

• It may be paid in home-country or host-country currency. The base

salary is the foundation block for international remuneration whether
the employee is a parent-country or third-country national.
Benefits
• One common allowance relates to the cost-of-living allowance -a
payment for differences between the home-country and the overseas
assignment.
• it may cover a variety of expenses, including relocation, housing,
education, and hardship. In any expatriate remuneration package
what is unique is the spouse assistance.
• Many MNCs offer spouse assistance to help guard against or offset
the income lost by an expatriate's spouse as a result of relocation
abroad. Although, some firms may pay an allowance to make up for a
spouse's lost income, the US firms are beginning to focus on providing
spouses with employment opportunities abroad, either by offering
job search assistance or employment in the firm's foreign subsidiary.
Incentives
• In recent years, some MNCs have been designing special incentives
programmes for keeping expatriate motivated. In the process, a
growing number of firms have dropped the ongoing premium for
overseas assignment and replaced it with one-time lump-sum
premium. For example, in the early 1990s, over 60 per cent of MNCs
gave ongoing premiums to their expats. Today, the figures have come
down to 50 per cent and the declining trend countinues.?!
• The lump-sum payment has at least three advantages. First,
expatriates realize that they are paid this only once and that too when
they accept an overseas assignment. So the payment tends to retain
its motivational value. Second, costs to the company are less because
there is only one payment and no future financial commitment. This is
so because incentive is a separate payment, distinguishable from a
regular pay, and it is more readily for saving or spending.
Taxes
• The final component of the expatriate's remuneration relates to taxes.
MNCs generally select one of the following approaches to handle
international taxation
• Tax equalization Firms withhold an amount equal to the home-
country tax obligation of the expatriate, and pay all taxes in the host
country.
• Tax protection The employee pays up to the amount of taxes he or
she would pay on remuneration in the home country. In such a
situation, the employee is entitled to any windfall received if total
taxes are less in the foreign country than in the home country.
Tailoring the package
• Working within the components described above, MNCs seek to tailor
remuneration packages to fit with the specific situation.
• For example, senior-level managers in Japan are paid four times more than
their junior staff members. This is in sharp contrast to the US, where the gap is
much higher. Many senior-level managers in Europe are paid much less than
their US counterparts.
• There are 5 approach
1 balance sheet approach
2 going rate approach
3 lumpsum method
4 cafeteria approach
5 regional system approach
• balance-sheet approach, which envisages a compensation package
that seeks to equate or balance an expat's purchasing power in the
host country with the purchasing power in his or her home country.
• In order to balance the compensation received for the international
assignment with compensation received in the home country, MNCs
usually provide additional salary.
• This increased salary includes adjustments for differences in taxes,
housing, and the costs of basic goods and services. Goods and
services include items such as food, recreation, personal care,
clothing, education, furnishing, transportation and medical care.
• going-rate approach In this, the expat compensation is linked to the
salary structure in the host country.
• A third approach is lumpsum method, which involves giving the
expat a predetermined pay and letting the individual decide about
how to spend it.
• Fourth is the cafeteria approach, which entails giving expat a series of
options and then deciding him or her how to spend the available
funds.
• Last is the regional system, under which the MNC sets a
compensation system for all expats who are assigned to a particular
region. Thus, everyone going to Europe falls under one particular
system and everyone going to South Africa falls under a different
system.
Training and development
• After selection, the next step in IHRM is to train and develop new hires,
particularly for those who are expected to be posted overseas.
• A few commonly understood objectives of training in the multinational
corporations are:
1. Bridging the cultural gaps between the host and the parent organizations.
2. Recognizing that orientation/induction challenges are different for the
parent and the host unit.
3. Ensuring that organizational success is critical in achievement of global
objectives.
4. Building a united corporate culture across subsidiaries.
• An expatriate needs pre-departure training before leaving for foreign
assignment. As noted earlier, training is one of the ways of reducing
expatriate failure rate. An expatriate needs cross culture training,
language training, and practical training.

• Cross culture training (cct)

• Language training
• Practical training
• Management development and strategy
• HCN training
Cross culture training (CCT)
• CCT seeks to foster an appreciation for the host country's culture. The
belief is that understanding the host country's culture will help the
manager empathize with the culture, which will enhance his or her
effectiveness in interacting with host-country citizens.

• An expatriate should receive training in the host country's culture,

history, politics, economy, religion, and social and business practices.

• it is also advisable to arrange for a familiarisation trip to the host country

before the formal transfer, as this is likely to ease a likely cultural shock.
• CCT is receiving considerable attention now as more and more
managers are required to travel around the globe frequently on
business deals. In 1994 the Japanese spent $17 million in business
etiquette training.
• Nearer at home, firms which have recognized the importance of CCT
are Mafatlal, O.P Jindal Group, Reckitt & Coleman India, and Ranbaxy.
Language training
• Language training is a seemingly obvious and desirable component of
a pre-departure programme.
• One weakness of many MNCs is that they do not give attention to the
importance of language training. English is the primary language of
international businesses, and most expatriates from all the countries
can converse in English.
• Those who can speak only English are at a distinct disadvantage
when doing business in non-English speaking countries like China.
Practical training
• Practical training seeks to help the expatriate manager and family feel
'at home', in the host-country. Sooner the expatriate settles down,
better are the prospects that he/she and his/her family will adapt
successfully.
• One important need is for a support network of friends. Where an
expatriate community exists, firms often try to integrate the new
expatriate family quickly into that group.
• The expatriate community can be a useful source of support and
information, and can help the family to adapt to an alien culture.
• Training expatriates before their departure to overseas assignment
cannot be over-emphasised. An extreme and tragic case highlights,
the importance of exposure and training for international
assignments.

• Management staff of an oil company operating in the Pacific assigned

young local workers to supervisory roles over considerably older
workers. Within one week, all supervisors were discovered dead. They
were murdered. The expatriate managers were unaware that status in
this region was related to age. This tragedy could have been averted
by training managers to re-orient their perspective when appointing
locals in a foreign culture, and providing them with right orientation.
Management development and strategy
• Management development programme help build corporate culture
by encouraging new managers to socialize and imbibe the values and
norms of the firm.
• In-house training programme and intense interaction during off-site
training can foster esprit-de-corps, shared experiences, informal
networks, perhaps a company language of jargons, as well as
competencies.
• These training courses often include songs, picnics, and sporting
events that promote feelings of togetherness. These rites of
integration may include initiation rites where personal culture is
stripped, company uniforms are donned, and humiliation is inflicted.
All these activities are aimed to strengthen a manager's identify with
that of the company.
HCN training
• it is not that an expatriate alone needs to be trained. A HCN who is
tipped to head a subsidiary should also be trained.
• In selecting a host country national for a subsidiary, the focus is on
ascertaining the technical and managerial fit for the role.
• In preparing a host country national for the assignment, the priority in
training is the knowledge and the awareness of the parent company,
beginning with the history and genesis of the organization, connecting
with its vision/mission, goals and the specific objectives of the
subsidiary.
• Specifically, HCN training should focus on:
• gaining knowledge about the parent organization and its global
presence and objectives.
• acquisition of technical know-how specific to the organization.
• role of the subsidiary in the MNCs road map both from the
technological as well as corporate cultural perspective.
• general awareness of the parent country cultural norms.
Expatriates (stages and problems)
• Global companies, after selecting the candidates place them on the jobs
in various countries, including the home country of the employee. But,
the employees of the global companies are also placed in foreign
countries. Even those employees who are placed initially in their home
countries are sometimes transferred to various foreign countries.
• Thus, the employees of global companies mostly work and live in
foreign countries and their family members also live in foreign
countries.
• Employees and their family members working and/or living in foreign
countries are called expatriates in the foreign country.
• Expatriates are those living or working in a foreign country. The
parent country nationals working in foreign subsidiary and third
country nationals are expatriates.
• Large number of expatriates normally has adjustment problems with
the working culture of the company, country's culture, laws of the
country etc. Some expatriates adjust themselves easily, while some
others face severe problems of adjustments.
• Such employees about their assignments and return to home country
by terminating their work contracts. Many Indian expatriate
employees in Maldives could not adjust to the culture and returned
to India before their assignments were completed. Thus, the major
problem with expatriates is adjustment in the new international
environment.
Stages or international adjustment
• The international adjustment is the degree to which the expatriate
feels comfortable living and working in the host culture.
• This significantly influences job performance. The expatriate is
completely new to the host country environments, social rules, norms
etc.
• The expatriates have a strong desire to reduce psychological
uncertainty in the new environment. Psychological uncertainty is also
called cultural shock.
• Nancy Adler defines cultural shock as, "the frustration and confusion
that result from being bombarded by un-interpretable cues.“

• For example, students in the USA drink beverages in the classroom,

students in African countries leave the class immediately after the
close of the lecture but before the teacher leaves the class, people in
the USA wish you immediately when there is eye-to-eye contact with
you. These cultural differences cause cultural shock to Indians.
• Researchers found that to a large degree culture shock follows the
general pattern of a U-shaped curve as presented in diagram .
• This figure presents the relationship between culture shock and the
length of time the expatriate has been working in the host country's
culture.

• The U' is divided into four stages, viz.,

1. honeymoon,
2. culture shock,
3. adjustment and
4. mastery.
Honeymoon stage:
• The expatriate and his family members are fascinated by the culture
of the host country, the accommodation, the transportation facilities,
educational facilities to the children etc., during the early stage of
arrival.
• This stage lasts up to 2-3 months period.
Culture shock stage:
• The Company takes care of the new arrivals and completely neglects
the previously arrived employee and his family after three months.
During this stage, the employee has to take care of himself and his
family members.
• Expatriate gets frustrated, confused and unhappy with living and
working abroad. His social relations are disillusioned during this stage.
He gets the shock of the existing culture.
Adjustment stage:
• The expatriate slowly learns the values, norms, behaviour, of the
people, their culture etc. He slowly adjusts himself to the culture of
the foreign country.
Mastery stage:
• The expatriate after adjusting himself with the culture of the foreign
country, can concentrate on working efficiently.
• He learns and adopts to the new environment completely and
becomes like a citizen.
• He behaves and functions like a citizen at this stage.
WHY EXPATRIATES FAIL?
There would be several reasons for the failure of the expatriates in their foreign assignments.
The Board reasons include:

• Inability of spouse to adjust to foreign environment

• Inability of employees to adjust
• Other family Problems
• Employee's personal or emotional maturity
• Inability to cope up with larger overseas responsibilities
• Difficulties with new environment
• Absence of educational, health and recreational facilities in host countries
• Lack of technical and job related competence
• Unsafe living and working conditions in host countries.
Repatriation
• Repatriation is the term used for parent country nationals employed
in subsidiary or branch in a foreign country where MNC is located. It
refers to termination of their foreign assignment and sending them
back to their parent/home country or the country where headquarter
is located or the home subsidiary from where they were expatriated.
Repatriation is a part of expatriation process itself.
Repatriation Process

Physical Re
Preparation Transition
relocation adjustment
Preparation:
Involves developing plans for the future and gathering information
about the new position. The firm may provide a checklist of items to be
considered before the return to home
(e.g. closure of bank accounts and settling bills) or a thorough
preparation of the employee and his or her family for the transfer to
home.
Physical Relocation
refers to saying good bye to colleagues and friends, and travelling to
the next posting, usually the home country. Personalized relocation
assistance reduces the amount of uncertainty, stress, and disruptions
experienced by the repatriate and the family.
Transition
Transition means settling into temporary accommodation, Where
necessary, making arrangements for housing and schooling, and
carrying out other administrative tasks such as renewing driving license,
and opening bank account.
Re-adjustment
involves coping with reverse culture shock and career demands. Of all
the steps in the repatriation process, re-adjustment is the most difficult
one. The re-entry adjustment is a tough task because of multiple
factors. First, there is anxiety experienced by the expatriate when he or
she returns home, the apprehension being accentuated by the
uncertainty about the placement in the firm, career prospects, and a
sense of isolation; feeling of 'devaluating' the international experience;
coping with new role demands; and probable loss of status and pay.
Problem or challenges repatriation
• Individual perspective
• Organizational perspective
Individual perspective
• Personal and professional
• Political, economical, social and culture climate have changed
• Perception, attitude, habits
• Fussiness
• Coming back to school, peer group, out in touch with current slang,
sport, fashion
• New skills
• Autonomy or authority
Organizational perspective
• Retention or Reentries
• Gain for rivals