Ihrm chapter4

2. Chapter Learning Objectives After reading this chapter, you should be able to: • discuss issues relating to the various approaches to staffing foreign operations • provide reasons for using international assignments: filling positions, management development and organizational development • define the various types of international assignments: short term, extended and longer term, along with non- standard arrangements: commuter, rotator, contractual and virtual (c) 2009 by Nelson Education Limited. 2

3. Chapter Learning Objectives • describe the role of expatriates and non-expatriates in supporting international business activities • outline the possibilities on a return on investment of international assignments • define the role of the corporate HR function (c) 2009 by Nelson Education Limited. 3

4. Opening Vignette Help! • IHRM plays a leading role in the staffing of international operations by supporting and guiding managers involved in assignments in foreign companies. (c) 2009 by Nelson Education Limited. 4

5. Opening Vignette • Discuss some of the areas and aspects that should have been managed by his company’s HRM team. • How could the HR function help its Dutch employee? (c) 2009 by Nelson Education Limited. 5

6. Terms Expatriate roles: Assignments: short-term agent of direct control extended agent of socialization traditional ROI approach commuter language node rotational network builder contractual boundary spanner virtual inpatriates Approaches to staffing: expatriates ethnocentric polycentric flexpatriat geocentric regiocentric es (c) 2009 by Nelson Education Limited. 6 IHRM Chapter 4 6

8. Ethnocentric • few foreign subsidiaries have any autonomy and strategic decisions are made at headquarters • key positions in domestic and foreign operations are held by headquarters’ personnel • subsidiaries are managed by staff from the home country (PCNs). (c) 2009 by Nelson Education Limited. 8

10. Cost of Employing Expatriates (IHRM Today 4.3) • the costs of sending this manager on a international assignment are nearly a million dollars, compared to the approximately $300,000 it would cost to employ a U.K. – based manager. (c) 2009 by Nelson Education Limited. 10

12. Polycentrism • subsidiary is treated as a distinct national entity with decision‑making autonomy • subsidiaries are managed by local nationals (HCNs) • HCNs are seldom promoted to positions at headquarters • PCNs are rarely transferred to foreign subsidiary operations (c) 2009 by Nelson Education Limited. 12

14. Geocentrism • a global approach to its operations, recognizing that each part (subsidiaries and headquarters) makes a unique contribution • world wide integrated business; nationality is ignored in favour of ability. (c) 2009 by Nelson Education Limited. 14

15. Advantages of Geocentrism • develops international executive teams and internal pools of labour • overcomes federation drawback • supports cooperation and resource sharing across units (c) 2009 by Nelson Education Limited. 15

16. Disadvantages of Geocentrism • host governments may utilize immigration controls in order to force HCN employment • companies required to provide extensive documentation • increased training and relocation costs (c) 2009 by Nelson Education Limited. 16

17. Disadvantages of Geocentrism • compensation structure with standardized international base pay • large numbers of PCNs, TCNs, and HCNs need to be sent abroad • requires longer lead time and centralized control of the staffing process (c) 2009 by Nelson Education Limited. 17

18. Regiocentrism • reflects the geographic strategy and structure of the MNE • it utilizes a wider pool of managers but in a limited way • staff may move outside their countries but only within the particular geographic region • regional managers may not be promoted to headquarters positions but enjoy a degree of regional autonomy (c) 2009 by Nelson Education Limited. 18

19. Advantages of Regiocentrism • interaction between executives • sensitivity to local conditions (staffed by HCNs) • way to gradually move from a purely ethnocentric or polycentric approach to a geocentric approach (c) 2009 by Nelson Education Limited. 19

21. A Philosophy Towards Staffing The internal and external contingencies facing an internationalizing MNE influence its staffing practices • managerial attitude • degree of culture differences • local government requirements • foreign market • maturity of operation • organizational needs (c) 2009 by Nelson Education Limited. 21

23. Transferring Staff for International Business Activities HRM implications • reasons for using international assignments • types of international assignments • role of expatriates and non-expatriates • role of inpatriates (c) 2009 by Nelson Education Limited. 23

30. Non-standard International Assignments Commuter go home every one to two weeks Rotational commute for set period followed by in home country Contractual specific skills employees hired for 6 to 12 months on specific projects (c) 2009 by Nelson Education Limited. 30

31. Non-standard International Assignments Virtual • employee manages international responsibilities from home country base • relies on communications technologies such as telephone, email or video conferences • frequent visits to the host country (c) 2009 by Nelson Education Limited. 31

32. Virtual Assignments Advantages • overcoming high costs of international assignments • fills shortage of mobile staff prepared to accept longer term postings Disadvantages • stress resulting from intensive travel commitments • role conflict, dual allegiance, and identification issues • interpersonal and work relationships (c) 2009 by Nelson Education Limited. 32

35. Agent of Socialization • the transfer of shared values and beliefs; related to the use of corporate culture as an informal control mechanism • assist in knowledge sharing and competence transfer, and adoption of common work practices (c) 2009 by Nelson Education Limited. 35

37. Boundary Spanners • collect host country information and act as representatives of their firms in the host country • can influence agents • bridge internal and external organizational contexts (c) 2009 by Nelson Education Limited. 37

38. Language Nodes • many MNEs operate through language standardization – or corporate language, usually English. • employees competent in other languages may be the person in which other country representatives preferred to conduct queries from the MNE. (c) 2009 by Nelson Education Limited. 38

40. The Role of Non-Expatriates • travel internationally yet do not relocate to another country • a large proportion of their role involves constant international visits to foreign markets, subsidiary units, international projects (c) 2009 by Nelson Education Limited. 40

41. Stress Factors • the international component of their work is performed within the context of their ‘normal’ duties • a high level of stress involved for those whose job responsibilities contain a large proportion of international business travel (c) 2009 by Nelson Education Limited. 41

43. The Role of Inpatriates • international assignments of HCNs or TCNs from a foreign location to the MNE headquarters • “linking pins” between the different organizational units (c) 2009 by Nelson Education Limited. 43

44. Expatriate ROI • a calculation in which the financial and non-financial benefits to the MNC are compared to the financial and non-financial costs of the international assignment (c) 2009 by Nelson Education Limited. 44

46. 4-Steps to Calculate Expatriate ROI • identify financial and non-financial costs and benefits. • link the costs and benefits to the purpose of the long-term assignment. • identify the appropriate antecedents from a system’s perspective. • conduct the calculation at an appropriate time within the context of the assignment’s purpose. (c) 2009 by Nelson Education Limited. 46

48. Discussion Questions 1. Outline the main characteristics of the four approaches to international staffing. 2. Which factors determine the choice of a staffing approach? Would a MNE choose the same staffing approach worldwide? Place your arguments in the context of the model outlining determinants of staffing choices. (c) 2009 by Nelson Education Limited. 48 IHRM Chapter 4 48

49. Discussion Questions 3. What are the reasons for using international assignments? 4. What is the role of inpatriates? Do inpatriates guarantee a geocentric staffing policy? 5. Why is it important to measure return on investment of international assignments? Which indicators can be used? (c) 2009 by Nelson Education Limited. 49 IHRM Chapter 4 49

50. Discussion Questions 6. As a newly appointed Project Manager of a research team, you consider that you will be able to manage the project virtually from your office in London, even though the other six members are located in Munich. This will solve your personal dilemma as your family does not want to be relocated. The project has a six-month deadline. What factors should you need to consider in order to make this virtual assignment effective? (c) 2009 by Nelson Education Limited. 50 IHRM Chapter 4 50

51. Case: RBC Dexia Investor Services Questions PART A 1. When two international companies like RBC and Dexia partner up in a joint venture many positions are double occupied. From a HR perspective how would you approach this problem? What are your options to solve this problem? 2. What are some of the other key HR challenges in an international partnership such as Canada’s RBC and Belgium/Luxembourg Dexia? (c) 2009 by Nelson Education Limited. 51

52. Case: RBC Dexia Investor Services Questions PART A 3. What are your options to fill the 300 additionally required jobs in Luxembourg? 4. What kind of impression could the sudden and justification lacking announcement of changes at the top management level have on employees? (c) 2009 by Nelson Education Limited. 52

53. Case: RBC Dexia Investor Services Questions PART B 1. Based on the message from this note what are the consequences for employees wanting to move between RBC to RBC Dexia? 2. With regard to service history, pensions and benefits, what are the options for HRM to help employees wanting to move from RBC to RBC Dexia? (c) 2009 by Nelson Education Limited. 53

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