Chapter 7

Human Resource Selection and

Development Across Cultures

McGraw-Hill/Irwin .
 Objectives
1. IDENTIFY the basic sources that MNCs can tap when
filling management vacancies in overseas operations.
2. DESCRIBE the selection criteria and procedures when
making final decisions.
3. DESCRIBE the training process, the most common
reasons for training, and the types of training that often
are provided.
 Chapter 7

1. Sources for Human Resources

2. Selection Criteria for International Assignments
3. International Human Resource Selection Procedures
4. Training in International Management
5. Compensation
 1. Sources of Human Resources
• MNCs can use four basic sources for filling
overseas positions
1. Home-Country Nationals

2. Host-Country Nationals

3. Third-Country Nationals

4. Inpatriates
1. Sources of Human Resources
Home-Country Nationals
• Expatriate managers who are citizens of the
country where the MNC is headquartered.
• Expatriates/expats: manager who live and
work outside their home country.
Discuss: Reasons to use home-country nationals?
Home-country nationals: reasons to use
1)To start up operations;
2)To provide technical expertise;
3)To help the MNC maintain financial control
4)To provide promising managers with international experience…
5)To maintain and facilitate coordination and control;
6)The unavailability of managerial talent in the host country;
7) Foreign operation as short lived;
8)The host country’s multiracial population, and selecting a manager of
either race would result in political or social problems;
9)To maintain a foreign image in the host country;
10) The belief that a home-country manager is the best person…
Discuss: Is the trend of using home-
country nationals increasing or
decreasing? Why?
 1. Sources for Human Resources
1.2. Host-Country Nationals: Local managers hired by the
MNC.
• Common reasons to use:
o Familiarity with the culture
o Knowledge of the language
o Good public relations
o Less expensive.
This source is most effective in subsidiaries that relies on
a local customer base.
 1. Sources for Human Resources
1.3. Third-Country Nationals (TCN)
• 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
• Reasons to use?
o Salary and benefit package usually is less than that of a
home-country nationals
o Knowledge of the region or speak the same language as
the local people.
1. Sources for Human Resources
1.4. Inpatriates: Individuals from a host country or third
country who are assigned to work in the home country.
Benefits:
• Developing global core competencies of MNCs.
• Multilingual, multiexperienced (“global managers” or
“trans-national managers”).
• Cost-effectiveness, compensating for labor shortages in
certain areas.
Is the trend of using inpatriates increasing or decreasing?Why?
Which source should be used when: 1. Home-Country
Nationals
• MNCs want to control subsidiaries?
• MNCs want to develop global core 2. Host-Country
Nationals
competencies?
• MNCs want managers to have 3. Third-Country
knowledge of the region and speak the Nationals
same language as the host country?
• When subsidiaries rely heavily on a local 4. Inpatriates
customer base?
Case: Important tips on working for foreigners

Present some tips on working for foreigners.

Which tip surprises you the most, why?
2. Selection Criteria for International Assignments

o Typically, both technical and human criteria are

considered.
o Firms that fail to consider both: rate of failure is
often quite high.
2. Selection Criteria for International Assignments
3. International Human Resource Selection
Procedures

 Testing: not extremely popular

o 80% MNCs did not use test!

 Interview: extensive interviews of candidates

provide the best method of selection.
o 52% of U.S. MNCs interview both managers and
spouses; sometimes children!
Case: An American engineer in Israel
An American engineer currently working in Israel told how he
was shocked when he saw the Israeli style of pointing
directly.
“They like to argue even though they tried to show a spirit of
cooperation. Israelis not only confront me, but they
confront everyone and still manage to cooperate effectively!
The situation only made me nervous!”
Discuss: What was the root cause of the American engineer
getting shocked? If you were in charge of HR at his MNC,
what would you do when sending him to Israel?
4. Training in International Management
• Training
• The process of altering employee behavior and
attitudes in a way that increases the probability of
goal attainment.
• What topic should they be trained on?
• Who should be trained?
• How they should be trained?
Case: U.S.-Style training for expats and
their teenagers
1. List the characteristics of U.S.-Style
training for expats and their teenagers.
2. What is the potential benefit of this
training for expats’ teenagers?
A survey shows:
 95% of all international assignments were
successful
 38%: family concerns were their primary reason
for assignment refusal.
 17%: spouse’s career was a reason to reject an
overseas assignment.
A survey (on international assignments) shows:
 19%: women
 71%: 30 to 49 years old
 74%: were married
 52%: had children accompanying them
 Primary emerging destinations: Brazil, China, and the
UAE.
 China, India: highest failure rates!
4.1. The Impact of Overall Management Philosophy on Training

ethnocentric

Overall
geocentric Management
polycentric
Philosophy

regiocentric
EPRG Model
4.1. The Impact of Overall Management Philosophy on Training

 An ethnocentric (vị chủng) MNC puts home-office

people in charge of key international management
positions.
 A polycentric (đa tâm) MNC places local nationals in
key positions and allows these managers to appoint
and develop their own people.
4.1. The Impact of Overall Management Philosophy on Training

 A regiocentric MNC relies on local managers from a

particular geographic region to handle operations in
and around that area.
 A geocentric (địa tâm/toàn cầu) MNC seeks to
integrate diverse regions through a global approach
to decision making.
Assignments are based on qualifications, and all subsidiary
managers are regarded as equal to those at headquarters.
 Review

Ethnocentric
(home-country
nationals)

Geocentric Management Polycentric

Philosophy (host-country
nationals)

May be third-
Regiocentric
country nationals
 Review Which philosophy:
1. High costs?
ethnocentric 2. Suitable for high-level
positions?
3. Requires managers to have
geocentric Management a high adaptability to
Philosophy polycentric various different cultures?

4. Training typically conducted

in the home/host country?
regiocentric
What philosophy is the best?
4.2. Types of Training Programs

Standardized: Small firms usually rely on

standard training programs.
E.g. how to use decision-making tools.
Larger firms tend to design their own (Tailor-
made) training programs.
4.2. Types of Training Programs

Tailor-made: programs are designed for the specific needs

of the participants.
• For whom? Expats, family members, especially children.
• When should training take place?
• Where should training be conducted?
• What? Increasing numbers of training programs address
social topics: how to take a client to dinner, apologize to a
customer, how to help others “save face”…
5. Compensation
Common elements of compensation packages:

base Expatriates:
taxes salary  2-5 times as much as
home-country
incentives benefits counterparts
 10 times as much as
allowances local nationals
5. Compensation
1) Base salary
• Amount of money that an expatriate normally receives in
the home country
2) Benefits
• 1/3 of compensation.
• MNCs provide with extra vacation, special leaves
• Many MNCs pay the airfare for expats and their families to
make an annual visit home, for emergency leave
5. Compensation
3) Allowances
• Cost-of-Living Allowance
• Payment for differences between the home country and
the overseas assignment.
• Including relocation, housing, education, and
hardship…
4) Incentives
• A growing number of firms have replaced the ongoing
premium with a lump-sum premium
5. Compensation
5) Taxes
• An expatriate may have two tax bills for the
same pay (in US, if exceeds $100,800)
• MNCs usually pay the extra tax burden (tax
equalization)
 Chapter 7
1.Sources for Human Resources
2.Selection Criteria for International Assignments
3.International Human Resource Selection Procedures
4.Training in International Management
5. Compensation