Human Resource Selection and Development Across Cultures

HUMAN RESOURCE IMPORTANCE

Human Resource Management is an essential part of an organization
Productive for an Efficient workplace Positive Organizational structure leads to companys success

Motivation Techniques and for reduction of turnovers

Monetary Benefits
Competitive Salary Good benefits Promotion etc.

Non Monetary Benefits

Training Education opportunities Daily Meals at reduced cost / Free Meals etc

Company should always be on a lookout to find out how employees feel. Due to Globalization, individual talent is being encouraged / recognized. For MNC, selection and development of HR is very important.
Tacit Knowledge Knowledge that cannot be formalized in manuals.

HR Issues with International Assignments are critical for MNCs.

SOURCES OF HUMAN RESOURCE

MNCs can use four basic sources for filling overseas positions: (1) Home-Country Nationals (Expatriates):
Expatriate managers are citizens of the country where the MNC is headquartered Sometimes called Headquarters Nationals or Expats are deployed at Key positions in foreign country for e.g. US and European companies send Expats to India etc. Most common reason for using home-country nationals (expatriates) are:
To get the overseas operation under way Provision of Technical Expertise Maintain Financial Control over the foreign operation

However in some instances, host country nationals may be better suited like:
In developing countries Reliance on Customer base is high

Previously Expatriates were mostly males, however Female expatriates are increasingly growing. Trend in Home-Country Nationals is decreasing, even in Japanese companies, because:
As MNCs are increasing, it is becoming difficult to have more talented personals. Local Managers are becoming more qualified High cost is associated in keeping Expats overseas Change in Policy

SOURCES OF HUMAN RESOURCE

(2) Host-Country Nationals:
Local managers (usually at middle and low level) are hired by the MNC They are familiar with the culture They know the language They are less expensive than home-country personnel Hiring them is good public relations Exception in staffing pattern occurs when government intervenes ,For e.g.:
In Brazil, 2/3 of employees in a foreign subsidiary have to be Brazilians.

In European countries, home country managers remain in top positions for the rest of careers. They are not transferred back to Headquarter. However in U.S, Managers are transferred back or shifted to other subsidiaries.

(3) Third-Country Nationals (TCNs):

Managers who are citizens of countries other than the country in which the MNC is headquartered or the one in which the managers are assigned to work by the MNC. Advantages of having TCNs can be:
These people have the necessary expertise for the job Salary Package may be less than a home country national May speak multiple languages and may be a multi-cultural individual

SOURCES OF HUMAN RESOURCE

(4) Inpatriates:
Individuals from a host country or a third-country national who are assigned to work in the home country Advantages of having Inpats in top management or Board of Directors can be:
To recognizes the need for diversity at the home office Help MNCs better develop their global core competencies

MNCs can subcontract or outsource to take advantage of lower human resource costs and increase flexibility

Sub Contracting and Outsourcing:

Sub Contracting Employee hired through a third party organization for the MNC Offshore Outsourcing Hiring of temporary workers from abroad on special visas.

REASONS FOR OUTSOURCING WORK

SELECTION CRITERIA FOR INTERNATIONAL ASSIGNMENTS

Organizations examine a number of characteristics to determine whether an individual is sufficiently adaptable.
Work experiences with cultures other than ones own Previous overseas travel Knowledge of foreign languages Recent immigration background or heritage Ability to integrate with different people, cultures, and types of business organizations

SELECTION CRITERIA FOR INTERNATIONAL ASSIGNMENTS

Adaptability to Cultural Change Those who were best able to deal with their new situation had developed coping strategies characterized by socio-cultural and psychological adjustments including:
Feeling comfortable that their work challenges can be met Being able to adjust to their new living conditions Learning how to interact well with host-country nationals outside of work Feeling reasonably happy and being able to enjoy day-to-day activities

Physical and Emotional Health Overseas Managers must have good physical and emotional Health. Should have ability to withstand cultural shock Marital Status
In Middle East, Europe etc. middle age men are best suited for jobs In Saudia, Africa etc. young people are preferred.

SELECTION CRITERIA FOR INTERNATIONAL ASSIGNMENTS

Age, Experience and Education
Young managers are eager for International assignments. They are more worldly and can handle pressure. However, they are least developed in management experience.
U.S, European and Russians managers are young and can be easily be considered for International assignments.

Many companies prefer minimum level of degree / qualification. In Arab countries, International assignments are based on experience. In Japan and China, trend for experienced and senior age managers still prevails.

Language Training
Not much attention Is given by MNC on language training. U.S. managers are worst in the language area. Executives from Japan, Eurpoe and Brazil placed high priority on speaking more than one language. Asian countries are following the same trend and consider multi language as a competitive edge.

SELECTION CRITERIA FOR INTERNATIONAL ASSIGNMENTS

Motivation for a Foreign Assignment
Employee must have a sense of mission. Desire for adventure or pioneering spirit, risk taking are acceptable reasons for wanting to go abroad. Other factor can also include opportunity to improve self economic status. U.S. Managers lead; as they are self motivated society with individualist approach towards management

Family work issues / Dependants

If Family is not happy, it can effect the expatriates performance. Most MNCs, especially in Singapore, MNCs also interview the spouse. Adaptability Screening: Process to evaluate how well the family is likely to stand up to the rigors and stress of overseas life. Unmarried employees are more willing to accept foreign assignments as compared to married employees with children. Leadership Ability Leadership: Ability to influence people to act in a particular way. Process determines if the manager was an effective leader in the home country.
Variables Include Maturity, Emotional Stability, Communication, Creativity, Health etc.

MANAGER PREPARATION FOR INTERNATIONAL ASSIGNMENTS GLOBALLY APPLIED

Applicants better prepare themselves for international assignments by carrying out the following three phases: Phase 1: Focus on self-evaluation and general awareness include the following questions:
Is an international assignment really for me? Does my spouse and family support the decision to go international? Collect general information on available jobs.

Phase 2: Conduct a technical skills assessment

Do I have the technical skills required for the job? Start learning the language, customs, and etiquette of the region you will be posted Develop an awareness of the culture and value systems of the geographic area Inform your superior of your interest in the international assignment.

Phase 3:
Attend training sessions provided by the company Confer with colleagues who have had experience in the assigned region Speak with expatriates and foreign nationals about the assigned country Visit the host country with your spouse before the formally scheduled departure (if possible)

INTERNATIONAL HUMAN RESOURCE SELECTION PROCEDURES

Two common selection procedures are:
Tests and Interviews Adjustment Model

Tests and Interviews

Testing is not a popular method for selection as compared to Interview. Interviewing spouse along with the candidate for Management position for international assignments is a common norm both is U.S. and Germany. However for Technical position, this percentage is low.

Adjustment Process
Anticipatory Adjustment
Training: Include cross cultural seminars or workshops. Previous experience: Expats with working experience in same cultures before.

In-country Adjustment
Individuals ability to adjust effectively Ability to maintain a positive outlook, interact well with host nationals, and to perceive and evaluate the host countrys cultural values and norms correctly Clarity of expatriates role in the host management team Expatriates adjustment to the organizational culture Non-work matters Socialization Tactics: Whos who and Whats what

THE RELOCATION TRANSITION CURVE

COMMON ELEMENTS OF COMPENSATION PACKAGES

Compensating expatriates can be difficult because there are many variables to consider Most compensation packages are designed around four common elements:

Allowances

Taxes

Base Salary

Benefits

Other than the above, special Incentives programs are also designed to keep Expats motivated

RELATIVE COST OF LIVING IN SELECTED CITIES

COMMON ELEMENTS OF COMPENSATION PACKAGES

BASE SALARY
Amount of money that an expatriate normally receives in the home country Base salary for U.S., Japan and European upper-middle manager is around $ 175,000 annually. Exchange rate effects real wages Expatriate salary is set according to base pay and currency of home country
German Manager working in a U.S based company in India will have salary equivalent to German Market.

BENEFITS
Approximately 1/3 of compensation for employees is Benefits. For e.g. extra vacation time for U.S. employees, Discount Coupons, etc. Issues regarding compensation of expatriates include:
Should host-country legislation regarding termination of employment affects employee benefits entitlements? Is the home or host country responsible for the expatriates social security benefits? Should benefits be subject to the requirements of the home or host country? Which country should pay for the benefits? Should other benefits be used to offset any shortfall in coverage? Should home-country benefits programs be available to local nationals?

COMMON ELEMENTS OF COMPENSATION PACKAGES

ALLOWANCES Cost-of-Living Allowance
Payment for differences between the home country and the overseas assignment. Designed to provide the expatriate the same standard of living enjoyed in the home country

Relocation Allowance:
House shifting

House Allowance
Predetermined cost for house Residence provided by MNC

Education Allowance
Tuition fee, enrollment fee, books, transportation of Expats children

Hardship Allowance
To induce expats to work in hazardous areas / disputed areas Hardship Premium is allocated to Expats of China, Afghanistan etc.

Related Allowances may also include club memberships etc.

COMMON ELEMENTS OF COMPENSATION PACKAGES

INCENTIVES
A growing number of firms have replaced the ongoing premium for overseas assignments with a one-time, lump-sum premium

TAXES
Tax equalization An expatriate may have two tax bills for the same pay
Host country U.S. Internal Revenue Service

MNCs usually pay the extra tax burden

TAILORING THE COMPENSATION PACKAGES

Senior Level Managers in China are paid around 4 times as much as junior staff U.S. senior level managers salary is much higher as compared to Europe and Asian counterparts

Balance-sheet approach
Ensure the expatriate does not lose money from the assignment.

Complementary approach
Negotiate to work out an acceptable ad hoc arrangement.

Localization
Pay the expatriate a salary comparable to local nationals Common with young professionals who are given a long term overseas assignment e.g. Asian managers going to Iraq.

Lump sum method

Give expatriate a pre determined lump sum amount of money Expat will chose himself how and when to spend it

Cafeteria approach
Compensation package that gives the individual a series of options Married Expats may chose Education allowance, whereas Unmarried Expats can chose a Chauffer driver car

Regional system
Set a compensation system for all expatriates who are assigned to a particular region Expats for Europe will have same salary slab.

HUMAN RESOURCE MANAGEMENT PRACTICES IN DIFFERENT COUNTRIES

Training is the process of altering employee behavior and attitudes in a way that increase the probability of goal attainment. Common topics covered in cultural training are social etiquette, customs, economics and business etc.

IMPACT OF OVERALL MANAGEMENT PHILOSOPHY ON TRAINING

Four basic philosophic positions: (1) Ethnocentric MNC: Stresses nationalism and often puts home-office people in charge of key international management positions
In China, Japan etc.

(2) Polycentric MNC: Places local nationals in key positions and allows these managers to appoint and develop their own people
In Singapore, Australia

(3) Regiocentric MNC: Relies on local managers from a particular geographic region to handle operations in and around that area
Advertising managers from subsidiary in Italy, Germany and France will come together to formulate advertising campaign for overall EU countries. E.g. Gillette

(4) Geocentric MNC: Seeks to integrate diverse regions of the world through a global approach to decision making

CROSS-CULTURAL TRAINING PROGRAMS

Steps in cross-cultural training programs:
Local instructors and a translator observe the pilot training program or examine written training materials Educational designer debriefs the observation with the translator, curriculum writer, and local instructors The group examines the structure and sequence, ice breaker, and other materials to be used in the training The group collectively identifies stories, metaphors, experiences, and examples in the culture that fit into the new training program The educational designer and curriculum writer make necessary changes in training materials

GLOBAL LEADERSHIP DEVELOPMENT

The Global Leadership Program (GLP) A consortium of leading U.S., European, and Japanese firms, global faculty, and participating host countries
Provide an intensive international experience Develop a global mindset Instill cross-cultural competency Provide an opportunity for global networking