Human Resource Management: An Asian Perspective

(Second Edition) Chapter 17

Managing Global Human Resources

Gary Dessler and Chwee Huat Tan

2009 Pearson Education South Asia Pte Ltd. All rights reserved.

After studying this chapter, you should be able to:

1. List the HR challenges of international business 2. Illustrate how inter-country differences affect HRM 3. Discuss the global differences and similarities in HR
practices

4. Explain five ways to improve international

assignments through selection

5. Discuss how to train and maintain international

employees

6. Discuss the labor flow among Asian countries and its

impact on HRM
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Purpose of this Chapter

More effective at managing international aspect of HR duties including:
Internationalization of business Inter-country differences affecting HR

Improving international assignments through selection and training international employees Inter-country labor flow in Asia
International employment issues in Asia
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The Internationalization of Business

Management Challenges of International Business
Coordinate market, product, and production plans on a worldwide basis Create organization structures capable of balancing centralized home-office control with adequate local autonomy.

Extend its HR policies and systems to service its staffing needs abroad
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The Internationalization of Business

Global Staffing Issues
Special candidate selection Overseas assignment Immigration processing Cultural and language orientation and training Compensation administration and payroll processing Tax administration Career planning and development Handling of spouse and dependent matters
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Inter-country Differences Affecting HRM

Cultural factors

Economic systems
Legal and industrial relations factors

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Global Differences and Similarities in HR Practices

HR selection procedure

Purpose of performance appraisal

Training and development practices Importance of pay incentives

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How to Implement a Global HR System

Making the global HR system more acceptable
Remember that global systems are more accepted in truly global organizations. Investigate pressures to differentiate and determine their legitimacy. Try to work within the context of a strong corporate culture.

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How to Implement a Global HR System

Develop a more effective global HR system
Form global HR networks. Remember that its more important to standardize ends and competencies than specific methods.

Implement the global HR system

Remember, You cant communicate enough. Dedicate adequate resources for the global HR effort.

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Summary of Best Practices

Do

Work within existing local systems integrate global tools into local systems.
Create a strong corporate culture.

Create a global network for system development global input is critical.

Treat local people as equal partners in system development Assess common elements across geographies. Focus on what to measure and allow flexibility in how to measure.
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Source: Ann Marie Ryan et al., Designing and Implementing Global Staffing Systems: Part 2Best Practices, Human Resource Management 42, no. 1 (Spring 2003), p. 93.

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Summary of Best Practices

Do

Allow for local additions beyond core elements.

Differentiate when necessary. Train local people to make good decisions about which tools to use and how to do so. Communicate, communicate, communicate! Dedicate resources for global HR efforts.

Know, or have access to someone how knows the legal requirements in each country.
Source: Ann Marie Ryan et al., Designing and Implementing Global Staffing Systems: Part 2Best Practices, Human Resource Management 42, no. 1 (Spring 2003), p. 93.

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Summary of Best Practices

Dont Try to do everything the same way everywhere. Yield to every claim that were different make them prove it. Force a global system on local people. Use local people just for implementation.

Use the same tools globally, unless you can show that they really work and are culturally appropriate.
2009 Pearson Education South Asia. All rights reserved.

Source: Ann Marie Ryan et al., Designing and Implementing Global Staffing Systems: Part 2Best Practices, Human Resource Management 42, no. 1 (Spring 2003), p. 93.

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Summary of Best Practices

Dont Ignore cultural differences Let technology drive your system design you cant assume every location has the same level of technology investment and access. Assume that if we build it they will come you need to market your tools or system and put change management strategies in place.
Source: Ann Marie Ryan et al., Designing and Implementing Global Staffing Systems: Part 2Best Practices, Human Resource Management 42, no. 1 (Spring 2003), p. 93.

2009 Pearson Education South Asia. All rights reserved.

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Staffing the Global Organization

International staffing: Home or local?

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Staffing the Global Organization

Offshoring
Having local employees abroad do jobs that the firms domestic employees previously did in-house.

Issues in offshoring
Having an effective supervisory and management structure in place to manage the workers.
Screening and required training for the employees receive the that they require. Ensuring that compensation policies and working conditions are satisfactory.
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Staffing the Global Organization

Values and International Staffing Policy
Ethnocentric
The notion that home-country attitudes, management style, knowledge, evaluation criteria, and managers are superior to anything the host country has to offer.

Polycentric
A conscious belief that only the host-country managers can ever really understand the culture and behavior of the host-country market.
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Staffing the Global Organization

Values and International Staffing Policy
Geocentric
The belief that the firms whole management staff must be scoured on a global basis, on the assumption that the best manager of a specific position anywhere may be in any of the countries in which the firm operates.

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Staffing the Global Organization

Why International Assignments Fail
Personality
Personal intentions

Family
Inability of the spouse to adjust Inability to cope with larger overseas responsibility. Lack of cultural skills

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Staffing the Global Organization

Selecting International Managers
Adaptability screening
Assessing the assignees (and spouses) probable success in handling the foreign transfer. Overseas Assignment Inventory A test that identifies the characteristics and attitudes international assignment candidates should have.

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Staffing the Global Organization

Selecting International Managers
Realistic previews
The problems to expect in the new job as well as about the cultural benefits, problems, and idiosyncrasies of the country.

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Staffing the Global Organization

Five Factors Important in International Assignee Success

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Training and Maintaining Expatriate Employees

Training Employees on International Assignments
There is little or no systematic selection and training for assignments overseas.

Training is needed on:

The impact of cultural differences on business outcomes. How attitudes (both negative and positive) are formed and how they influence behavior.

Factual knowledge about the target country.

Language and adjustment and adaptation skills.

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Training and Maintaining Expatriate Employees

Trends in Expatriate Training
Continuing, in-country cross-cultural training Use of returning managers as resources to cultivate the global mind-sets of their home-office staff.

Use of software and the Internet for cross-cultural training.

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Compensating Expatriates
Balance Sheet Approach
Home-country groups of expensesincome taxes, housing, goods and services, and discretionary expensesare the focus of attention.

The employer estimates what each of these four expenses is in the expatriates home country, and what each will be in the host country.
The employer then pays any differences such as additional income taxes or housing expenses.

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Compensating Expatriates
Incentives
Foreign service premiums
Financial payments over and above regular base pay, and typically range between 10% and 30% of base pay.

Hardship allowances
Payments to compensate expatriates for exceptionally hard living and working conditions at certain foreign locations.

Mobility premiums
Lump-sum payments to reward employees for moving from one assignment to another.

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Appraising Expatriate Managers

Challenges in appraising overseas managers
Determining who should appraise the manager. Deciding on which factors to base the appraisal.

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Appraising Expatriate Managers

Improving the expatriate appraisal process
Stipulate the assignments difficulty level, and adapt the performance criteria to the situation. Weigh the evaluation more toward the on-site managers appraisal than toward the homesite managers.

If the home-office manager does the actual written appraisal, use a former expatriate from the same overseas location for advice.
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International Employment Relations

Differences in International Labor Relations Refer Chapter 15 on Collective Bargaining and Employment Relations. Centralization Union structure Employer organization Union recognition Content and scope of bargaining Grievance handling Strikes Worker participation

Union security

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Terrorism, Safety and Global HR

Kidnapping and ransom (K&R) insurance
Crisis situations
Kidnapping: the employee is a hostage until the employer pays a ransom. Extortion: threatening bodily harm. Detention: holding an employee without any ransom demand. Threats to property or products unless the employer makes a payment.

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Repatriation: Problems and Solutions

Problem
Expatriates fear theyre out of sight, out of mind

Solutions
Making sure that the expatriate and his or her family dont feel that the company has left them adrift. Ensure that expatriates are kept informed of happenings in home office.

Prepare expatriates for next career move in company.

Provide formal repatriation services.
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Auditing the HR Function

What should HRs functions be? Participants then rate each of these functions to answer the question, How important are each of these functions? Next, they answer the question, How well are each of the functions performed? Next, compare (2) and (3) to focus on What needs improvement? Then, top management needs to answer the question, Overall, how effectively does the HR function allocate its resources?
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Inter-Country Labor Flow

For centuries, Asians have been going abroad to work.
People from China and India went to work in tin mines and rubber estates in Malaysia. Others worked in UK, US and other Western countries.

In recent years, the flow within Asia has increased because of rapid economic growth in Hong Kong, Japan, Malaysia, Singapore, South Korea and Taiwan.
Some countries are both exporters and importers of labor.
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Brunei Darussalam
Brunei has a small population. It depends on foreign workers from neighboring countries (e.g. Philippines, East Malaysian states of Sabah and Sarawak).
Foreign workers need work permits.
There is a quota by sector to ensure that foreigners do not displace locals.

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China
Chinese workers abroad
1. Engineering projects for other governments on basis of international bidding 2. Individuals as arranged by employment agents

Foreigners in China
1. Professionals in areas needed by China 2. Those with permit to work in jobs that cannot be filled by locals

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Hong Kong
Depends on foreign workers and professionals
Supplementary Labor Scheme monitored by Labor Advisory Board to allow entry of more foreigners Admission of Talents Scheme to allow mainland professionals

Foreign domestic helpers from Philippines, Thailand and Indonesia

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Indonesia
Many Indonesians work in neighboring Malaysia
Similar language and culture

Government encourages export of workers

Ease domestic labor surplus

Foreign exchange earning

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Japan
Foreigners need resident visas to stay
Type A for working purposes Type B for recognized partial work Type C resident status without limitation

Serious problems of foreigners over-staying after their permits expire

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Malaysia
Both exporter and importer of labor
Import: from Indonesia, Bangladesh, Philippines, Thailand Export: to Singapore (mainly from Johor), Japan, Taiwan, Middle East

Government imposes foreign worker levy on employers to control number

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Philippines
Millions work overseas
Middle East, Hong Kong, Singapore and other Asian countries

POEA government agency

Assists workers to go abroad
Pre-employment orientation Pre-departure seminar

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Singapore
Highly dependent on foreign workers
Government controls number by
Foreign worker levy Industry-specific quota

Contact Singapore
Organization has overseas offices to attract international talent

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South Korea
Employment of foreign workers is restrictive
Employment is offered in specific industries or professions.

Immigration law does not allow entry of unskilled workers except as trainees.

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Thailand
Both exporter and importer of labor
Export to
Middle East, other Asian countries Wworkers are mostly from Northern provinces

Import from
Cambodia, Laos, Myanmar

Faces problem of illegal workers from neighboring countries

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Vietnam
In 1980s, many Vietnamese worked in Soviet Bloc countries. With collapse of USSR, workers now go to other countries such as Korea and Japan.
Recent years, some go to Liberia and Kuwait

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