An Overview

Five Currents of Globalization( As per Boston Consultancy Group( 2005)

Growth of RDEs
Emergence of Global Competitors Cost & Capital advantage of RDEx

Planet Earth

Migration of Customers

Talent & capabilities of RDEs

RDEs identified are

China India Brazil Mexico South East Asia Central & Eastern Europe

No. of Us Jobs moving Off shore to low wage countries like India, China Mexico & Philippines*
2005 Life Sciences Legal Art Design Mgmt Bs Operations Computer Architecture Sales Office Support Total
Source: The ET, 2003

2010 14000 35000 14000 118000 162000 277000 83000 97000 791000

2015 37000 75000 30000 288000 348000 473000 184000 227000 1700000 3300000

3700 14000 6000 37000 61000 109000 32000 29000 295000 5888000

Why organizations expand internationally

 

 

To capture enhanced market opportunities that foreign countries may present To achieve economies of scale in production and administration by expanding scope and volume of operations to international markets Keeping up with industry leaders may require organization to enter foreign markets Acquiring ownership of foreign-based organization or subsidiary

How International & Domestic HRM Differ

International HRM requires
    

Managing broader range of functional areas Becoming more involved in employees personal lives Setting up several different HRM systems for different geographic locations Dealing with more complex external constituencies Participating in international assignments that have heightened exposure to personal risk

International Expansion
Strategies for expanding internationally
   

Exporting locally produced goods to host country Subcontracting or licensing production of certain goods or services to foreign partner Entering into joint venture with foreign partner Setting up operations (making a direct investment) in form of foreign branch or subsidiary

Assessing Culture: Hofstedes Cultural Differences Dimensions

Individualism or collectivism
 

Individualistic societies value development of, and focus on individual Collective societies value group relationships Extent to which society is hierarchical, and how power is distributed among its members

Power distance


Uncertainty avoidance


Extent to which society feels comfortable with ambiguity, and values and encourages risk-taking

Quantity versus quality of life (masculinity/femininity)



Emphasis on assertiveness and achievement, as compared to interpersonal relationships

Assessing Culture

Halls Model of Cultural Differences

Time


Importance or sense of time in daily activities Amount of physical distance individuals attempt to maintain between themselves & others Emphasis or inferences on possession of goods to signify power, success and status Importance of friendships in conferring status Considers how agreements are reached

Space (distance)


Material goods


Friendships


Agreements


Strategic HR Issues in Global Assignments

Approaches to sending employees abroad


Administrative approach
Assisting employee destined for international assignment with paperwork and minor logistics

Tactical approach
Managing risk or failure factor of overseas assignment by providing paperwork assistance and modest amount of training

Strategic approach
Extensive support and coordination of international assignment, and strategized repatriation program at the end of the assignment

Strategic management of global assignments

1. 2. 3. 4.

5. 6.

Establish specific purpose for assignment Select appropriate employee for assignment Organizational and individual purposes for assignment must be identified and matched Assess adaptability to host culture of both employee and any family members who will be accompanying employee Provide appropriate training for employee and family members Simultaneous training should be conducted for headquarters staff

Strategic HR Issues

Determining Expatriate Compensation

Balance sheet method
 

Expatriate salary based on home country pay Additional expenses associated with relocation and assignment Hardship and incentives to determine overall reimbursement and compensation level

Higher-of-home-or-host method


Employees salary at home adjusted upward to account for higher cost of living (localization approach) Salary converted to host countrys equivalent when employee is on permanent assignment

Four Approaches to IHRM

Make strategic decision as to level of standardization desired across locations


Ethnocentric approach
Exporting organizations home country practices and policies to foreign locations

  

Polycentric approach
Allowing each location to develop own practices and policies

Regiocentric approach
Developing standardized practices and policies by geographic region

Geocentric approach
Developing one set of global practices and policies applied at all locations

Setting Strategic HR Standards

Repatriation

Managing Global Workforce: Challenges and Strategies

Challenges:
 

Deployment in getting right skills to right place in organization, regardless of geographic location Knowledge and innovation dissemination and transfer, where all business units concurrently receive and provide information Talent identification and development of those employees with abilities and skills to function effectively in global organization

Strategies for managing global workforce



Develop careers for employees to provide rich contextual knowledge of environments and cultures. Provide specific awareness building assignments that develop cross-sensitivity in high potential employees in short time Adopt virtual solutions by using electronic communication technologies to connect local employees to distant problems

Diagnosing Challenges
Deployment challenge
 

Contact time required Extent to which skills can be applied out of cultural context Choosing among four strategies depends on technical complexity of information to be shared, and extent to which it must be culturally embedded Organizations should select well, then develop

Knowledge and innovation dissemination challenge



Talent identification and development challenge



Adapting to a Boundary less World

90% of companies base international selections on technical expertise, downplaying other areas Openness to profound personal transformation is most fundamental sign of expatriate readiness Personality aspects that impede adaptation
  

Authoritarianism Rigidity Ethnocentrism

Clarification of expectancies beforehand

Need to provide on-going, hands-on training, rather than just pre-departure awareness training Training is opportunity to provide social support Executives should learn to view identification with host as compatible with identification with parent culture Expatriates need to become aware of consequences that old repertoire of coping responses has in host culture

Employer should facilitate integration into a local or regional network of other expatriates Delicate equilibrium among multiple stakeholders calls for skills similar to those possessed by political diplomats Parent organization should not create additional role conflict for the expatriate with policies that are insensitive to cultural differences

Repatriation


 

Feeling that others do not share multicultural identification can create sense of isolation Frequent loss of autonomy Unrealistic expectations about being promoted upon return

Why International Assignments End in Failure

Career blockage Culture shock Lack of pre-departure cross-cultural training Overemphasis on technical qualifications Getting rid of a troublesome employee Family problems

Key Human Resource Management Factors for Global Firms

Selection


Selection criterion should include cultural sensitivity Length of assignment determines depth of training Cross-cultural training is critical to success International assignments should be part of career advancement plan Incentives and quality-of-life concerns

Training
 

Career Development


Compensation and Benefits