Human Resource Management
11th Edition
Chapter 14
GLOBAL HUMAN RESOURCE
MANAGEMENT
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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14-16
Global Human Resource
Development
• Expatriate Training &
Development
• Continual Development:
Online Assistance and
Training
• Repatriation Orientation
and Training
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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
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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
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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
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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
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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
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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
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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
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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.
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14-25
Global Employees and Labor
Relations
• Unionism maintains
much of its strength
abroad
• Foreign unions less
adversarial with
management
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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
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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.
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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
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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
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14-30
Legal and Political Factors
Nature and
stability of legal
and political
systems vary
throughout
globe
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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
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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
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14-33
Virtual Teams in Global
Environment
• Necessity of everyday
working life
• Enable companies to
accomplish things more
quickly and efficiently
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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
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14-35
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