Chapter
14
Human Resource Selection
and Development Across Cultures
The specific objectives of this chapter are:
1. IDENTIFY the three basic sources that MNCs can tap
when filling management vacancies in overseas
operations in addition to options of subcontracting and
outsourcing.
2.
DESCRIBE the selection criteria and procedures used
by the organization and individual managers when
making final decisions.
Chapter
14
Human Resource Selection
and Development Across Cultures
The specific objectives of this chapter are:
3. DISCUSS the reasons why people return from
overseas assignments, and present some of the
strategies used to ensure a smooth transition back into
the home-market operation.
4.
DESCRIBE the training process, the most common
reasons for training, and the types of training that
often are provided.
Chapter
Human Resource Selection
and Development Across Cultures
The specific objectives of this chapter are:
5. EXPLAIN how cultural assimilators work and why
they are so highly regarded.
14
4
Sources of Human Resources
MNCs can use four basic sources for filling overseas positions:
Home-country Nationals
(Expatriates)
 Expatriate managers who are citizens
of the country where the multinational
corporation is headquartered
 Sometimes called headquarters
nationals
 Most common reason for using home-
country nationals, or expatriates, is to
get the overseas operation under way
5
Sources of Human Resources
MNCs can use four basic sources for filling overseas positions:
Home-country Nationals
(Expatriates)
Host-country Nationals
 Local managers hired by the MNC
 They are familiar with the culture
 They know the language
 They are less expensive than home-
country personnel
 Hiring them is good public relations
6
Sources of Human Resources
MNCs can use four basic sources for filling overseas positions:
Home-country Nationals
(Expatriates)
Host-country Nationals
 Managers who are citizens of
countries other than the country in
which the MNC is headquartered or
the one in which the managers are
assigned to work by the MNC
 These people have the necessary
Third-country Nationals
expertise for the job
7
Sources of Human Resources
MNCs can use four basic sources for filling overseas positions:
Home-country Nationals
(Expatriates)
Host-country Nationals
 Individuals from a host country or a
third-country national who are
assigned to work in the home country
 The use of inpatriates recognizes the
need for diversity at the home office
 Use of inpats helps MNCs better
Third-country Nationals
Inpatriates
develop their global core
competencies
 MNCs can subcontract or outsource to
take advantage of lower human
resource costs and increase flexibility
8
Selection Criteria for International
Assignments
General Criteria
 Many criteria are used in selecting managers for overseas
assignments including:

Adaptability

Education

Independence

Knowledge of local language

Self-reliance

Motivation

Physical & emotional health

Support of spouse & children

Age

Leadership

Experience
9
Rank of Criteria in Expatriate
Selection
Adapted from Table 14–1: Rank of Criteria in Expatriate Selection
10
Selection Criteria for International
Assignments
Adaptability to Cultural
Change
 Organizations examine a number of characteristics to determine
whether an individual is sufficiently adaptable.

Work experiences with cultures other than one’s own

Previous overseas travel

Knowledge of foreign languages
Recent immigration background or heritage
 Ability to integrate with different people, cultures, and types
of business organizations

11
Selection Criteria for International
Assignments
Adaptability to Cultural
Change
 Organizations examine a number of characteristics to determine
whether an individual is sufficiently adaptable.
 Ability to sense and accurately evaluate developments in the
host country
 Ability to solve problems within different frameworks and
perspectives
 Sensitivity to differences of culture, politics, religion, and
ethics
 Flexibility in managing operations on a continuous basis
despite lack of assistance and gaps in information
12
Development of Satisfaction in Host
Country
Note: Satisfaction scale: 1 = extremely low; 7 = extremely high.
Adapted from Figure 14–1: Development of Satisfaction in Host Country over Time
13
Selection Criteria for International
Assignments
Adaptability to Cultural
Change
 Those who were best able to deal with their new situation
had developed coping strategies characterized by
sociocultural and psychological adjustments including:

Feeling comfortable that their work challenges can be
met

Being able to adjust to their new living conditions

Learning how to interact well with host-country
nationals outside of work

Feeling reasonably happy and being able to enjoy dayto-day activities
14
Activities That Are Important for
Expatriate Spouses
Adapted from Table 14–2 :Activities That Are Important for Expatriate Spouses (scale: 1–5, 5 very important)
15
Activities That Are Important for
Expatriate Spouses
Adapted from Table 14–2 :Activities That Are Important for Expatriate Spouses (scale: 1–5, 5 very important)
16
Selection Criteria for International
Assignments
Other Considerations
Applicants better prepare themselves for international assignments
by carrying out the following three phases:
Phase I
 Focus on self-evaluation and general awareness
include the following questions:
Is an international assignment really for me?
Does my spouse and family support the decision to
go international?
 Collect general information on available job
opportunities
17
Selection Criteria for International
Assignments
Other Considerations
Applicants better prepare themselves for international assignments
by carrying out the following three phases:
 Conduct a technical skills assessment – Do I have
Phase I
Phase II
the technical skills required for the job?
 Start learning the language, customs, and etiquette
of the region you will be posted
 Develop an awareness of the culture and value
systems of the geographic area
 Inform your superior of your interest in the
international assignment
18
Selection Criteria for International
Assignments
Other Considerations
Applicants better prepare themselves for international assignments
by carrying out the following three phases:
Phase I
Phase II
Phase III
 Attend training sessions provided by the company
 Confer with colleagues who have had experience in
the assigned region
 Speak with expatriates and foreign nationals about
the assigned country
 Visit the host country with your spouse before the
formally scheduled departure (if possible)
19
International Human Resource
Selection Procedures
 Anticipatory Adjustment
 Training
 Previous experience
 In-country Adjustment
 Individual’s ability to adjust effectively
 Ability to maintain a positive outlook, interact well with
host nationals, and to perceive and evaluate the host
country’s cultural values and norms correctly
 Clarity of expatriate’s role in the host management team
 Expatriate’s adjustment to the organizational culture
 Nonwork matters
20
The Relocation Transition Curve
Perceived Competence
1. Unreality
The feeling that
the relocation
is a dream
2
6. Search for Meaning
3. Interest
Understanding reasons for
success and failure. New
models/personal theories
created
A deeper exploration
of the environment
and a realization that
it is fundamentally
different from home 5
3
1
7. Integration
of New Skills
and Behavior
Acceptance of the
new environment
5. Experimentation and
Testing of New Approaches
Practice phase – trying to do things
differently Feedback of results –
success and failure
2. Fantasia
The feeling of
enchantment and
excitement in the
new environment
6
7
4
4. Acceptance of Reality
“Letting go” of past comfortable attitudes and
realizing you are a stranger in a strange land
Beginning of Transition
Adapted from Figure 14–2: The Relocation Transition Curve
Time
21
Common Elements of
Compensation Packages
 Compensating expatriates can be difficult
because there are many variables to consider
 Most compensation packages are designed
around four common elements:
Allowances
COMPENSATION
Base Salary
Taxes
PACKAGE
Benefits
22
Relative Cost of Living in Selected Cities
Tokyo
Oslo
Zurich
Hong Kong
Copenhagen
Paris
London
New York
Singapore
Stockholm
Seoul
New York = 100
Adapted from Figure 14–3: Relative Cost of Living in Selected Cities (New York = 100)
23
Relative Cost of Living in Selected Cities
Frankfurt
Beijing
Moscow
Rome
Tel Aviv
Mexico City
Toronto
Prague
Jakarta
Warsaw
Kuala Lumpur
New York = 100
Adapted from Figure 14–3: Relative Cost of Living in Selected Cities (New York = 100)
24
Relative Cost of Living in Selected Cities
Johannesburg
Bangkok
Cairo
Buenos Aires
Sao Paulo
Manila
New York = 100
Adapted from Figure 14–3: Relative Cost of Living in Selected Cities (New York = 100)
25
Common Elements of
Compensation Packages
 Base salary
 Amount of money that an expatriate normally receives in the home
country
 Benefits
 Should host-country legislation regarding termination of
employment affect employee benefits entitlements?
 Is the home or host country responsible for the expatriates’ social
security benefits?
 Should benefits be subject to the requirements of the home or host
country?
 Which country should pay for the benefits?
 Should other benefits be used to offset any shortfall in coverage?
 Should home-country benefits programs be available to local
nationals?
26
Common Elements of
Compensation Packages
 Allowances

Cost-of-Living Allowance




Payment for differences between the home country and the overseas
assignment.
Designed to provide the expatriate the same standard of living enjoyed
in the home country
May cover a variety of expenses, including relocation, housing,
education, and hardship
Incentives

A growing number of firms have replaced the ongoing premium
for overseas assignments with a one-time, lump-sum premium
27
Common Elements of
Compensation Packages
 Taxes


Tax equalization
An expatriate may have two tax bills for the same pay



Host country
U.S. Internal Revenue Service
MNCs usually pay the extra tax burden
28
Employer Incentive Practices
Around the World
Adapted from Table 14–3: Employer Incentive Practices Around the World
29
Tailoring the
Compensation Packages
 Balance-sheet approach
 Ensure the expatriate does not lose money from the assignment
 Complementary approach
 Negotiate to work out an acceptable ad hoc arrangement
 Localization
 Pay the expatriate a salary comparable to local nationals
 Lump sum method
 give expatriate a lump sum of money
 Cafeteria approach
 Compensation package that gives the individual a series of options
 Regional system
 Set a compensation system for all expatriates who are assigned to
a particular region
30
Individual and Host-Country Viewpoints
 Individual desires


Why do individuals accept foreign assignments?
Greater demand for their talents abroad than at home
 Host-country desires


Whom would it like to see put in managerial positions?
Accommodating the wishes of HCOs can be difficult:



They are highly ethnocentric in orientation
They want local managers to head subsidiaries
They set such high levels of expectation regarding the desired
characteristics of expatriates that anyone sent by the MNC is unlikely
to measure up
31
Quality of Life in Select Major
Metropolises, 2002
Zurich
Vancouver
Vienna
Sydney
Copenhagen
Frankfurt
Stockholm
Amsterdam
Brussels
San Francisco
Tokyo
Paris
Singapore
New York = 100
40
50
60
70
80
90
100 110
Adapted from Figure 14–4: Quality of Life in Select Major Metropolises, 2002 (New York 100)
32
Quality of Life in Select Major
Metropolises, 2002
Madrid
New York
London
Rome
Hong Kong
Buenos Aires
Kuala Lumpur
Johannesburg
Sao Paulo
Mexico City
Shanghai
Moscow
New Delhi
Belgrade
New York = 100
40
50
60
70
80
90
100 110
Adapted from Figure 14–4: Quality of Life in Select Major Metropolises, 2002 (New York 100)
33
Beliefs of Home-Country
Organization Expatriates
Adapted from Table 14–4: Beliefs of Home-Country Organization Expats
34
Repatriation of Expatriates
 Reasons for returning to home country
Most expatriates return home from overseas assignments when
their formally agreed-on tour of duty is over
 Some want their children educated in a home-country school
 Some are not happy in their overseas assignment
 Some return because they failed to do a good job
 Readjustment problems
 “Out of sight, out of mind” syndrome


Organizational changes

Technological advances

Adjusting to the new job back home
35
Time Back in Home Country
Effectiveness of Returning Expatriates
6 Years
5 Years
4 Years
3 Years
2 Years
1 Year
1.0 1.5
Low
2.0 2.5
3.0 3.5
Neutral
Effectiveness
Adapted from Figure 14–5: Effectiveness of Returning Expatriates
4.0 4.5
5.0
High
36
Repatriation of Expatriates
 Transition strategies
 Repatriation Agreements


Firm agrees with individual how long she or he will be posted
overseas and promises to give the individual, on return, a job
that is mutually acceptable
Some of the main problems of repatriation include:




Adjusting to life back home
Facing a financial package that is not as good as that overseas
Having less autonomy in the stateside job than in the overseas
position
Not receiving any career counseling from the company
37
Human Resource Management
Practices in Select Countries
Adapted from Table 14–5: Human Resource Management Practices in Select Countries
38
Training in International Management
Four basic philosophic positions
Ethnocentric MNC
 Stresses nationalism and often
puts home-office people in
charge of key international
management positions
39
Training in International Management
Four basic philosophic positions
Ethnocentric MNC
Polycentric MNC
 Places local nationals in key
positions and allows these
managers to appoint and develop
their own people
40
Training in International Management
Four basic philosophic positions
Ethnocentric MNC
Polycentric MNC
Regiocentric MNC
 Relies on local managers from a
particular geographic region to
handle operations in and around
that area
41
Training in International Management
Four basic philosophic positions
Ethnocentric MNC
Polycentric MNC
Regiocentric MNC
Geocentric MNC
 Seeks to integrate diverse regions of
the world through a global approach
to decision making
42
Training in International Management
 Corporate Reasons for Training

Ethnocentrism

The belief that one’s own way of doing things is superior to
that of others
 Personal reasons

To train overseas managers to improve their ability to
interact effectively with local people in general and with
their personnel in particular

Increasing numbers of training programs address social
topics – these programs also focus on dispelling myths and
stereotypes by replacing them with facts about the culture
43
Model for the Development of Multinational Managers
Increasing effectiveness of expatriate and repatriated executives
Feedback
 Internal relations
 External relations
 Family relations
 Relations with host government
Feedback
 Review terms and conditions of assignment
 Increase cultural awareness
 Increase knowledge of the host country
 Headquarters relations
 Relations with home government
 Impart working knowledge of the foreign language
 Increase conflict management skills
 Minimize re-entry problems
How much development?
Feedback
 Knowledge about cultural, political, economic, business, legal, and social factors of the host country
 Awareness of the needs and expectations of the different parties interested in international operation
 Awareness of the problems of family relations in the host country
Feedback
 Behavioral
simulation




Orientation
Area study
Language instruction
Cross-cultural group
 Case method
 Postarrival training
 Re-entry training
Evaluation
Effectiveness of the expatriate executives
Feedback
Re-entry training
Evaluation
Effectiveness of the repatriated executives
Problem recognition
Development
objectives
Assessment of
development needs
Feedback
 Predeparture
training
Overall objective
 Orientation & training
 Intergroup problem solving
Adapted from Figure 14–6: A Model for the Development of Multinational Managers
Development method
Intermediate result
Desired result
Development method
Desired result
44
Model for the Development of Multinational Managers
Use your cursor to “Click” on the text box
you want to view in a larger format.
Then use the following buttons to:
Return to the full model on slide #44
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Advance to the next slide
You may also use your space bar or click (not on a button) to skip
the “enlarged views” of this model and go on to the next topic
Adapted from Figure 14–6: A Model for the Development of Multinational Managers
50
Cross-Cultural Training Programs
Major types of cross-cultural training programs
Environmental Briefings  Provide information about things
such as geography, climate,
housing, and schools
51
Cross-Cultural Training Programs
Major types of cross-cultural training programs
Environmental Briefings  Familiarize the individual with
Cultural Orientation
cultural institutions and value
systems of the host country
52
Cross-Cultural Training Programs
Major types of cross-cultural training programs
Environmental Briefings  Programmed learning techniques
Cultural Orientation
Cultural Assimilators
designed to expose members of
one culture to some of the basic
concepts, attitudes, role
perceptions, customs, and values
of another culture
53
Cross-Cultural Training Programs
Major types of cross-cultural training programs
Environmental Briefings  Provide information about things
Cultural Orientation
Cultural Assimilators
Language Training
such as geography, climate,
housing, and schools
54
Cross-Cultural Training Programs
Major types of cross-cultural training programs
Environmental Briefings  Develop attitudinal flexibility
Cultural Orientation
Cultural Assimilators
Language Training
Sensitivity Training
55
Cross-Cultural Training Programs
Major types of cross-cultural training programs
Environmental Briefings  Send participant to the country of
Cultural Orientation
Cultural Assimilators
Language Training
Sensitivity Training
Field Experience
assignment to undergo some of
the emotional stress of living and
working with people from a
different culture
56
Cross-Cultural Training Programs
 Steps in cross-cultural training programs
Send participant
country
 Local instructors and
a translator
observe to
thethe
pilot
trainingof




program or examine written
training materials
assignment
to undergo some of
Educational designer debriefs
the observation
with
the and
the emotional
stress of
living
translator, curriculum writer,
and local
working
with instructors
people from a
The group examines thedifferent
structureculture
and sequence, ice
breaker, and other materials to be used in the training
The group collectively identifies stories, metaphors,
experiences, and examples in the culture that fit into the new
training program
The educational designer and curriculum writer make
necessary changes in training materials
57
Cross-Cultural Training Programs
 A variety of other approaches can be used to
prepare managers for
international
assignments
 Send
participant
to the country of
including:
assignment to undergo some of
 Visits to the host country
the emotional stress of living and
 Briefings by host-country
managers
working
with people from a
 In-house management programs
different culture


Training in local negotiation techniques
Analysis of behavioral practices that have proven most
effective
58
Contingency Approach to Cross-Cultural Training
1–4 Weeks
Less than a
Week
LOW
HIGH
Immersion
Approach
Level of Rigor
1–2 Months+
Cross-Cultural Training Approach
LOW
Length of
Training
HIGH
Affective
Approach
Information
Giving
Approach
LOW
Length of Stay
1 Month or less
MODERATE
Degree of Integration
2-12 Months
Adapted from Figure 14–7: A Contingency Approach to Cross-Cultural Training
HIGH
1-3 Years
59
Types of Training Programs
Global Leadership
Development
 The Global Leadership Program (GLP)
 A consortium of leading U.S., European, and Japanese
firms, global faculty, and participating host countries




Provide an intensive international experience
Develop a global mindset
Instill cross-cultural competency
Provide an opportunity for global networking
60
Tichy Development Matrix
Deep
High Risk
Long Time
Adapted from Figure 14–8: The Tichy Development Matrix
Low Risk
Little Time
Team
Organization
Individual
Pair
Superficial
Required
Approach
Action
Learning
Emerging
Trend
Current
Approach
Old Way
Developing
Awareness
Target of Change
Developing
Cognitive
Understanding
Long Time
Developing
Skills
High Risk
Developing New
Problem-Solving
Approaches
Developing
Fundamental
Change
Deep
Depth of Change
Superficial
Low Risk
Little Time
61
Case
 BP’s Global Shift







1.Discuss John Browne’s leadership style. How would you characterize his approach to global
leadership?
2.How much of an impact do you think BP’s marketing efforts will have on shareholder value?
3.Discuss the pros and cons of BP’s strategy in Russia, both short-term and long-term.
4.Do you think Browne’s initial plan to back the U.S. government’s proposal to open up the
Arctic Refuge in Alaska was a mistake? If so, why?
5.Discuss the difficulties of simultaneously securing growth and promoting social
responsibility for oil and gas firms. What are the major challenges?
6.Given BP’s huge commitment to re-branding itself as “socially responsible,” do you think
customers will believe this message from a company that, by nature, contributes to
environmental pollution? What other relationships/ associations could BP develop that would
be more credible?
7.Do you view corporate social responsibility initiatives as a barrier to entry for new oil and
gas concerns?
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