Human Resource Management
10th Edition
Chapter 14
GLOBAL HUMAN RESOURCE
MANAGEMENT
© 2008 by Prentice Hall
14-1
Cultural Differences Affecting Global
Human Resource Management
Cultural differences
vary from country
to country with
corresponding
differences in HR
practices
© 2008 by Prentice Hall
14-2
Country’s Culture
• Set of values, symbols, beliefs, languages,
and norms that guide human behavior
within country
• Learned behavior that develops as
individuals grow from childhood to adult
• Countries are recognizing that they need
to understand culture of countries in which
they do business
© 2008 by Prentice Hall
14-3
Evolution of Global Business
• Not long ago, Mercedes-Benz was still a
German company, General Electric was
American, and Sony was Japanese
• Many United States firms such as Coca-Cola,
Procter & Gamble, and Texas Instruments do
most of their business and employ most of their
workers outside the U.S.
• Many non-U.S. companies make products here
such as with Toyota American making their cars
in Kentucky
© 2008 by Prentice Hall
14-4
Evolution of Global Business
• Exporting - Selling abroad
retaining foreign agents and
distributors
• Licensing - Organization grants
foreign firm right to use
intellectual properties
• Franchising - Parent company
grants another firm right to do
business in prescribed manner
© 2008 by Prentice Hall
14-5
Evolution of Global Business (Cont.)
• Multinational corporation - Firm based in
one country and produces goods or
provides services in one or more foreign
countries
• Global corporation - Corporate units in
countries are integrated to operate as one
organization worldwide - Operates as if the
entire world were one entity
© 2008 by Prentice Hall
14-6
Global Professional in Human
Resources (HRCI)
• Strategic international HR management
• Organizational effectiveness and
employee development
• Global staffing
• International assignment management
• Global compensation
• International employee relations and
regulations
© 2008 by Prentice Hall
14-7
Global Human Resource
Management
Global HR managers
develop and work
through integrated
global human resource
management system
similar to one they
experience
domestically
© 2008 by Prentice Hall
14-8
Environment of Global Human Resource Management
GLOBAL ENVIRONMENT
EXTERNAL ENVIRONMENT
INTERNAL ENVIRONMENT
Marketing
Society
Operations
Unanticipated Events
Legal Considerations
UNITED STATES
Customers
Safety and
Health
Competition
© 2008
by Prentice Hall
Other
Functional
Areas
Shareholders
Economy
Human
Resource
1
Management
Finance
Technology
Unions
Labor Market 14-9
Global Staffing
• Types of Global
Staff Members
• Approaches to
Global Staffing
© 2008 by Prentice Hall
14-10
Types of Global Staff Members
• Expatriate - Employee working in firm who
not citizen of country in which firm is
located but citizen of country where
organization is headquartered
• Host-country national - Employee’s
nationality same as location of subsidiary
• Third-country national - Citizen of one
country, working in second country, and
employed by organization headquartered
in third country
© 2008 by Prentice Hall
14-11
Approaches to Global Staffing
• Ethnocentric staffing - Companies
primarily hire expatriates to staff higherlevel foreign positions
• Polycentric staffing - When more hostcountry nationals are used throughout the
organization, from top to bottom
© 2008 by Prentice Hall
14-12
Approaches to Global Staffing (Cont.)
• Regiocentric staffing - Regional groups of
subsidiaries reflecting organization’s
strategy and structure work as a unit
• Geocentric staffing - Uses worldwide
integrated business strategy
© 2008 by Prentice Hall
14-13
Expatriate Selection Stages
• Self-selection - Employees determine if
they are right for a global assignment
(family also)
• Creating a candidate pool
• Technical skills assessment
• Making a mutual decision
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14-14
Background Investigation
• Conducting background investigations is
equally, or more, important
• Differences across cultures and countries
often put up barriers to overcome
• Each country has own laws, customs and
procedures for background screenings
© 2008 by Prentice Hall
14-15
Global Human Resource
Development
• Expatriate Training &
Development
• Continual Development:
Online Assistance and
Training
• Repatriation Orientation
and Training
© 2008 by Prentice Hall
14-16
Expatriate Preparation and
Development Program
Expatriate Preparation and Development
Prior to Departure:
Orientation and Training
Language
Culture
History
Local Customs
Living Conditions
During Assignment:
Continual Development
Expanding Skills
Career Planning
Home-Country Development
© 2008 by Prentice Hall
Near Completion:
Repatriation Orientation
Training
U.S. Lifestyle
U.S. Workplace
U.S. Employees
14-17
Trends & Innovations:
Global E-learning
• Globalization has created special need for
e-learning
• Challenges for global e-learning
implementation are language and
localization issues
• Companies that want to offer courses in
several languages usually turn to
translators
© 2008 by Prentice Hall
14-18
Compensation for Host-Country
Nationals
• Organizations should think globally but act
locally
• Compensation - Normally, it is slightly
above prevailing wage rates in the area
• Variations in laws, living costs, tax policies,
and other factors all must be considered
© 2008 by Prentice Hall
14-19
Compensation for Host-Country
Nationals (Cont.)
• Factors to consider: minimum wage
requirements, which often differ from country to
country and even from city to city within a
country; working time information such as
annual holidays, vacation time and pay, paid
personal days, standard weekly working hours,
probation periods, and overtime restrictions and
payments; and hiring and termination rules and
regulations covering severance practices
© 2008 by Prentice Hall
14-20
Compensation for Host-Country
Nationals (Cont.)
• Culture often plays a part in determining
compensation
• North American compensation practices
encourage individualism and high performance
• Continental European programs typically
emphasize social responsibility
• Traditional Japanese approach considers age
and company service as primary determinants of
compensation
© 2008 by Prentice Hall
14-21
Expatriate Compensation
• Cost 3 - 5 times an assignee’s hostcountry salary per year and more if
currency exchange rates become
unfavorable
• Largest expatriate costs include overall
remuneration, housing, cost-of-living
allowances and physical relocation
• U.S. citizens living overseas can exclude
up to $80,000 of income earned abroad
© 2008 by Prentice Hall
14-22
Expatriate Compensation (Cont.)
• Country’s culture can affect compensation
• People in U.S. derive great status from
high pay
• Nations in large parts of Europe and Asia
shun conspicuous wealth
• In Italy, teamwork is more valued than
individual initiative
© 2008 by Prentice Hall
14-23
Global Safety and Health
• Important because employees who
work in safe environment and enjoy
good health more likely to be
productive and yield long-term
benefits to organization
• U.S.-based global operations are
often safer and healthier than hostcountry operations, but not as safe
as similar operations in U.S.
© 2008 by Prentice Hall
14-24
Global Employees and Labor
Relations
• Unionism maintains
much of its strength
abroad
• Foreign unions less
adversarial with
management
© 2008 by Prentice Hall
14-25
Global Employees and Labor
Relations in European Countries
• Codetermination, which requires firms to
have union or worker representatives on
their boards of directors, is very common
• Laws make it hard to fire workers, so
companies are reluctant to hire
• Generous and lengthy unemployment
benefits discourage the jobless from
seeking new work
© 2008 by Prentice Hall
14-26
Global Employees and Labor Relations
in South American Countries
• In countries such as Chile, collective
bargaining for textile workers, miners, and
carpenters is prohibited
• Unions are generally allowed only in
companies of 25 workers or more.
Practice has encouraged businesses to
split into small companies to avoid
collective bargaining
© 2008 by Prentice Hall
14-27
North American Free Trade
Agreement (NAFTA)
• Between Canada, Mexico, and
United States
• Facilitated movement of goods
across boundaries within North
America
• Free-trade zone of over 400 million
people
• Combined gross domestic profit of
about $12 trillion
© 2008 by Prentice Hall
14-28
Central American Free Trade
Agreement
• Ratified by America’s
Congress after long
political battle, and
signed into law in 2005
• Could provide huge
economic boost for
region
© 2008 by Prentice Hall
14-29
Political and Legal Factors
Nature and
stability of
political and
legal systems
vary throughout
globe
© 2008 by Prentice Hall
14-30
Tariffs and Quotas
• Tariffs - Taxes
collected on goods
shipped across
national boundaries
• Quotas - Limit number
or value of goods
imported across
national boundaries
© 2008 by Prentice Hall
14-31
Global Bribery
• Foreign Corrupt
Practices Act
• Law has teeth
• Not having ability to use
bribery as tool of doing
business has been costly
for American companies
© 2008 by Prentice Hall
14-32
Global Equal Employment
Opportunity
• Women constitute more than 20% of total
expatriate workforce percent of U.S.
expatriate managerial workforce
• Some cultures today will not accept
woman as a boss
• Sexual harassment is global problem
• Sexual harassment laws differ from
country to country
© 2008 by Prentice Hall
14-33
Virtual Teams in Global
Environment
• Necessity of everyday
working life
• Enable companies to
accomplish things more
quickly and efficiently
© 2008 by Prentice Hall
14-34
Difficulties that Virtual Teams
Confront
• Do not feel as connected
or committed to team
• Communication problems
directly proportional to
number of time zones
separating them
• Language problems
© 2008 by Prentice Hall
14-35
© 2008 by Prentice Hall
14-36
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