Human Resource Management 11th Edition Chapter 14 GLOBAL HUMAN RESOURCE MANAGEMENT Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-1 HRM in Action: Global Bribery • Foreign Corrupt Practices Act - prohibits U.S. firms from bribing foreign officials • 43% reported that they had lost new business in last 5 years because a competitor had paid a bribe • Conducting business globally exposes U.S. and other companies to an environment that permits bribery Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-2 HRM in Action: Global Bribery (Cont.) • Law has teeth • Lockheed Corporation paid approximately $25 million • Titan Corporation paid $28.5 million • President of American Rice, Inc. sentenced to 63 months in prison • Not having ability to use bribery as a tool of doing business has been costly for American companies Copyright © 2010 Pearson Education, Inc. publishing as 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 U.S. • Many non-U.S. companies make products here such as Toyota – Americans making cars in Kentucky Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-4 Evolution of Global Business (Cont.) • 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 Copyright © 2010 Pearson Education, Inc. publishing as 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 entire world were one entity • Transnational corporation - Moves work to places with talent to handle the job and time to do it at the right cost Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-6 Global Professional in Human Resources • New certification for HRCI • Strategic international HR management • Organizational effectiveness and employee development • Global staffing • International assignment management • Global compensation • International employee relations and regulations Copyright © 2010 Pearson Education, Inc. publishing as 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 Copyright © 2010 Pearson Education, Inc. publishing as 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 Copyright © Competition 2010 Pearson Education, Inc. publishing as 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-10 Types of Global Staff Members • Expatriate - Employee working in firm who is 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 Copyright © 2010 Pearson Education, Inc. publishing as 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 Copyright © 2010 Pearson Education, Inc. publishing as 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-13 Selecting Expatriates • Self-selection - Employees determine if they are right for global assignment (family also) • Creating a candidate pool • Technical skills assessment • Making a mutual decision Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-15 Trends & Innovations: American Companies Hiring Foreign-Born Executives • Growing number of American companies are hiring foreign-born CEOs • PepsiCo, Coca-Cola Company, and Citigroup are examples • Many believe that foreign executives will become more common as companies confront the expanding global market Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-16 Global Human Resource Development • Expatriate Training & Development • Continual Development: Online Assistance and Training • Repatriation Orientation and Training Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-17 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall Near Completion: Repatriation Orientation Training U.S. Lifestyle U.S. Workplace U.S. Employees 14-18 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-19 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-20 Compensation for Host-Country Nationals (Cont.) • Factors to consider: minimum wage requirements (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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-21 Compensation for Host-Country Nationals (Cont.) • Culture often plays part • North American 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-22 Expatriate Compensation • Expatriate compensation provides exceptional challenges • 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-23 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-24 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. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-25 Global Employees and Labor Relations • Unionism maintains much of its strength abroad • Foreign unions less adversarial with management Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-26 Global Employees and Labor Relations in European Countries • Codetermination: 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 jobless from seeking new work Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-27 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. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-28 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-29 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-30 Legal and Political Factors Nature and stability of legal and political systems vary throughout globe Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-31 Legal and Political Factors (Cont.) • Does operating under local laws and customs free a company of all ethical considerations? • Continued child labor abuses in apparel and textile industries • Indentured servitude exists for many foreign workers in Asian factories Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-32 Tariffs and Quotas • Tariffs - Taxes collected on goods shipped across national boundaries • Quotas - Limit number or value of goods imported across national boundaries Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-33 Virtual Teams in Global Environment • Necessity of everyday working life • Enable companies to accomplish things more quickly and efficiently Copyright © 2010 Pearson Education, Inc. publishing as 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 14-35 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
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