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 © 2008 by 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 © 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