Chapter 3

IHRM: Sustaining international business operations

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Chapter objectives
The previous two chapters concentrated on the global environment and organizational contexts. We now focus on the managing people aspect. The aim is to establish the role of HRM in sustaining international business operations and growth. We cover the following: issues relating to the various approaches to staffing foreign operations the reasons for using international assignments: position filling, management development and organizational development (cont.)
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Chapter objectives (cont.)

the various types of international assignments: short-term, extended and longer-term; and non-standard arrangements: commuter, rotator, contractual and virtual the role of expatriates and non-expatriates (international business travelers) in supporting international business activities the role of the corporate HR function.

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Approaches to staffing
Factors affecting approaches to staffing
General staffing policy on key positions at headquarters and subsidiaries
Ethnocentric Polycentric Geocentric Regiocentric

Constraints placed by host government Staff availability

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Ethnocentric
Strategic decisions are made at headquarters Limited subsidiary autonomy Key positions in domestic and foreign operations are held by headquarters personnel; PCNs manage subsidiaries

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Polycentric
Each subsidiary is a distinct national entity with some decision-making autonomy HCNs manage subsidiaries who are seldom promoted to HQ positions PCNs rarely transferred to subsidiary positions

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Geocentric
A global approach - worldwide integration View that each part of the organization makes a unique contribution Nationality ignored in favour of ability:
Best person for the job Colour of passport does not matter when it comes to rewards, promotion and development
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Figure 3-1: Geocentric staffing requirements

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Regiocentric
Reflects a regional strategy and structure Regional autonomy in decision making Staff move within the designated region, rather than globally
Staff transfers between regions are rare

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Table 3-1: The advantages and disadvantages of using PCNs, TCNs and HCNs
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Figure 3-2: Determinants of IHRM approaches and activities

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Reasons for international assignments

Position filling
Eg. Skills gap, launch of new endeavour, technology transfer

Management development
Training and development purposes, assisting in developing common corporate values

Organizational development
Need for control, transfer of knowledge, competence, procedures and practices
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Types of international assignments

Short term
Up to 3 months

Extended
Up to 1 year

Long term
Varies from 1 to 5 years The traditional expatriate assignment
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Non-standard assignments
Commuter assignments Rotational assignments Contractual assignments Virtual assignments Some of these arrangements assist in overcoming the high cost of international assignments but are not always effective substitutes for the traditional expatriate assignment
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Figure 3-3: Factors influencing virtual assignments

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Roles of an expatriate
Agent of direct control Agent of socialization Network builder Boundary spanner Language node Transfer of competence and knowledge
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Figure 3-4: The roles of an expatriate

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The role of non-expatriates

People who travel internationally yet are not considered expatriates as they do not relocate to another country
Road warriors, globetrotters, frequent fliers

Much of international business involves visits to foreign locations, eg.

Sales staff attending trade fairs Periodic visits to foreign operations
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A glamorous life?
International business travelers cite the positives as:
Excitement and thrills of conducting business deals in foreign locations Life style (top hotels, duty-free shopping, business class travel) General exotic nature

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But a high level of stress!

Home and family issues frequent absences Work arrangements domestic side of position still has to be attended to Travel logistics waiting in airports, etc. Health concerns poor diet, lack of sleep, etc. Host culture issues limited cultural training
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Table 3-2: Various roles of corporate HR

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The role of the corporate HR function

Can we manage our people like a global product? The feasibility of:
The concept of a global internal labour market Standardization of work practices and HR activities

What HR matters require central control and what can be decentralized?

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Chapter summary
This chapter has expanded on the role of IHRM in sustaining international business operations. We have: Looked at the various approaches to staffing international operations ethnocentric, polycentric, geocentric and regiocentric examining their advantages and disadvantages and factors that may determine the choice of these options. Considered the reasons for using international assignments: position filling, management development and organization development. (cont.)
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Chapter summary (cont.)

Discussed the various types of international assignments: short, extended and long-term (traditional); and non-standard forms such as commuter, rotational, contractual and virtual assignments. Examined the various roles of the expatriate: as an agent for direct control, as an agent for socialization, as network builders, as boundary spanners and as language nodes. These various roles of the expatriate help to explain why expatriates are utilized and illustrates why international assignments continue to be an important aspect of international business from the organizations perspective. (cont.)
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Chapter summary (cont.)

Recognized that non-expatriates are also critical to international business operations. International business travelers present their own challenges, such as the effect of frequent absences on family and home life, the possible negative health effects and other stress factors. The management of such individuals, however, does not appear to fall within the domain of the HR department. Looked at the role of the corporate HR function as the firm grows internationally, building on sections from Chapters 1 and 2.

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