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Chapter 2

Global Human
Resource
Management

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
1. Describe the drivers behind globalization.
2. Comprehend how global HRM practices support an
organization’s expansion into the global marketplace.
3. Give examples of how culture can influence the effective use
of human resource practices.
4. Distinguish between multinational and global corporations in
terms of how they utilize their human resources.
5. Examine several factors related to the successful selection,
training, and compensation of expatriates.
6. Recognize the unique role that host country nationals play in
global corporations.
7. Compare and contrast the legal and ethical components of
global human resource management.

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GLOBALIZATION
 Domestic

 International

 Multinational
Reasons for Globalization?

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 Expand Market Share
 Cheap labour, Raw material is easily
available
 Extensive Global Communication
 New technology
 To Sustain in Foreign Competition
 Trade Agreement like NAFTA
What is an Expatriate?
An employee who is working and
temporarily residing in a foreign country

They are also called ‘international


assignees’
by some firms.

All three categories of employees, i.e.


PCNs,
TCNs, and HCNs are expatriates
Nationality of the employee is major factor in
determining the person’s ‘category
Transfer of subsidiary staff back to
the parent country (headquarters)
operations.
The external environment greatly Laws
influences HRM activities

Business customs
The most difficult challenge to
overcome is the “people challenge” Workforce
characteristics

Each country has its own… Political climate

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Top 10 Most Important HRM Challenges for
Global Companies

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 Recent years have seen a rapid increase in
global activity and global competition.

 As the MNCs increase in number and


influence, so the role of international HRM in
those companies grows in significance.

 The effective management of human resources


internationally is increasingly being recognized
as a major determinant of success or failure in
international business
Individualism vs Long- vs
Collectivism short-term
Hefstede’s orientation
Cultural
Dimensions

Power distance Masculinity

Avoidance of
uncertainty

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Sources of employees for an
international assignment

Parent country nationals (PCNs)

Host country nationals (HCNs)

Third country nationals (TCNs)


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The geocentric organization
ignores national boundaries
for staffing overseas
The believe key
operations
personnel should
Ethnocentricity is strong in be PCNs
many foreign organizations
conducting business in the They use HRM
U.S. policies from
home with minor
MNCs generally take an adaptations
ethnocentric perspective

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80 Percent of all Middle- to Large-size
Companies Use Expatriates

Many are not American


effectively selecting 74 percent of expatriates fail
and preparing companies provide more often than
employees for cross-cultural their Japanese
overseas training and European
assignments counterparts

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Success in domestic operations may have
little to do with success overseas
• Many expats believe too little attention is
paid to other critical factors during the
selection process
Expatriate selection should focus on
manager’s
• Self-image
• Interaction with others
• Perceptual orientation

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Role of Expat’s
Family Should Training
Not be Under- Process
estimated

Selection
Process
Schooling

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• A phenomenon experienced by
people who move across cultures.
They experience a shock reaction
(or psychological disorientation)
when exposed to new cultural
experiences, because they
misunderstand or do not recognize
important cues
Training Determinants Self-Awareness

Level of contact with the Important aspect of


host culture successfully preparing for
Degree of dissimilarity an international assignment
between the home and
host cultures

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Phase 2 of training occurs at host country site

Language training continues

Mentoring relationships established

Immersion (interest) with daily experiences

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Helping managers deal with culture shock

Actively plan
Identify
how the Treat every new
prospective
overseas hire as a
international
assignment will prospective
managers early
fit with career global employee
in their careers
aspirations

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Middle- to Upper-Level
Balance-sheet Approach
Executives

1. Can cost two to three 1. Ensure similar standard


times more than a of leaving
domestic manager 2. “Extras” often provided
2. Often due to the as an incentive
compensation practices
of multinational
organizations

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Broad Categories of
Compensation

Family Social
Financial Adjustment
Support

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