IHRM.pptx

IBUS 618 Dr. Yang 1

Chapter 3

IHRM: Sustaining International Business Operations

IBUS 618 Dr. Yang 2

Chapter Objectives

Issues related to various approaches to staffing foreign operations;

Reasons for using international assignments: position filling, management development and organizational development;(cont.)

Issues related to various approaches to staffing foreign operations;

Reasons for using international assignments: position filling, management development and organizational development;(cont.)

The previous two chapters have 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 will cover the following:

IBUS 618 Dr. Yang 3

Chapter Objectives (cont.)

Various types of international assignments: Standard assignments: Short-term, extended, and

longer-term; Non-standard arrangements: Commuter, rotator,

contractual, and virtual. The role of expatriates and non-expatriates

(international business travellers) in supporting international business activities

The role of the corporate HR functions

Various types of international assignments: Standard assignments: Short-term, extended, and

longer-term; Non-standard arrangements: Commuter, rotator,

contractual, and virtual. The role of expatriates and non-expatriates

(international business travellers) in supporting international business activities

The role of the corporate HR functions

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Pendekatan Staffing

• Faktor yang mempengaruhi proses staffing– Ketentuan-ketentuan umum pada posisi kunci di

HQ (Headquarters/Induk Perusahaan) dan subsidiary (cabang/anak perusahaan)

– Kebijakan-kebijakan dari pemerintah tuan rumah– Ketersediaan staff

EthnosentrisPolysentrisGeosentrisRegiosentris

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Ethnosentris

• Keputusan strategis dibuat oleh HQ;• Anak perusahaan memiliki otonomi yang

terbatas;• Posisi kunci ditempati oleh orang-orang

dari induk perusahaan; • Anak perusahaan dikendalikan oleh PCN.

IBUS 618 Dr. Yang 6

Polysentris

• Each subsidiary is a distinct national entity with some decision-making autonomy;

• Orang-orang HCN yang menangani anak perusahaan jarang dipindahkan ke PCN;

• Orang-orang dari PCN jarang ditransfer ke anak perusahaan.

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Geosentris

• Pendekatan Global – terintegrasi dengan seluruh dunia;

• Masing-masing bagian daro organisasi memiliki kontribusi yang unik;

• Tidak memandang kebangsaan dan mementingkan kemampuan:– Best person for the job;– Warna passport tidak mempengaruhi penghargaan

promosi dan pengembangan karyawan.

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Ketentuan Staffing Geosentris

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Regiosentris

• Cerminan dari struktur dan strategi regional; • Otonomi regional untuk mengambil

keputusan; • Perpindahan karyawan hanya terjadi terjadi

didalam regional;• Perpindahan staff antar regional sangat

langka.

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Ethnocentric Approach

Advantages: To ensure new subsidiary

complies with overall corporate objectives and policies

Has the required level of competence

Assignments as control

Disadvantages:Limits the promotion opportunities of HCNs, leading to reduced productivity and increased turnover among the HCNsLonger time for PCNs to adapt to host countries, leading to errors and poor decisions being madeHigh costConsiderable income gap, high authority, and increased standard of living may relate to lack of sensitivity


Polycentric ApproachAdvantages:

Employment of HCNs eliminates language barriers, avoids adaptation of PCNs, reduces the need for cultural awareness training programsEmployment of HCNs allows a multinational company to take a lower profile in sensitive political situationsEmployment of HCNs is less expensiveEmployment of HCNs gives continuity to the management of foreign subsidiaries (lower turnover of key managers)


Polycentric ApproachDisadvantages:

Difficult to bridge the gap between HCN subsidiary managers and PCN managers at headquarters ( language barriers, conflicting national loyalties, cultural differences)HCN managers have limited opportunities to gain experience outside their own countryPCN managers have limited opportunities to gain international experienceResource allocation and strategic decision making will be constrained when headquarter is filled only by PCNs who have limited exposure to international assignment


Geocentric Approach

Advantages: Ability of the firm to

develop an international executive team

Overcomes the federation drawback of the polycentric approach

Support cooperation and resource sharing across units

Disadvantage:Host government may use immigration controls in order to increase HCNs employmentExpensive to implement due to increased training and relocation costsLarge numbers of PCNs, HCNs, and TCNs need to be sent across bordersReduced independence of subsidiary management


Regiocentric Approach• Advantages:

Allow interaction between executives transferred to regional headquarters from subsidiaries in the region and PCNs posted to the regional headquartersProvide some sensitivity to local conditionsHelp the firm to move from a purely ethnocentric or polycentric approach to a geocentric approach

• Disadvantages:Produce federalism at a regional rather than a country basis and constrain the firm from taking a global stanceStaff’s career advancement still limited to regional headquarters, not the parent country headquarters


Parent-Country Nationals

Advantages• Organizational control and

coordination is maintained.• Rising stars are given

international experience.• PCNs may be the best people

for the specific job due to special skills and experience.

• An assurance that the subsidiary will comply with company objectives & policies.

Advantages• Organizational control and

coordination is maintained.• Rising stars are given

international experience.• PCNs may be the best people

for the specific job due to special skills and experience.

• An assurance that the subsidiary will comply with company objectives & policies.

Disadvantages• Promotional opportunities of

HCNs are limited.• Time and performance costs

associated with adaptation to the host country.

• PCNs may impose an inappropriate HQ style.

• Compensation for PCNs and HCNs may differ.

Disadvantages• Promotional opportunities of

HCNs are limited.• Time and performance costs

associated with adaptation to the host country.

• PCNs may impose an inappropriate HQ style.

• Compensation for PCNs and HCNs may differ.


Host-Country Nationals

Advantages• Language and other barrier

eliminated• Reduced hiring costs• Continuity of management• Government policy may

require hiring HCNs• Possible increased morale

because of increased career potential

Advantages• Language and other barrier

eliminated• Reduced hiring costs• Continuity of management• Government policy may

require hiring HCNs• Possible increased morale

because of increased career potential

Disadvantages• Hiring of HCNs may encourage

a federation of national rather than global units

• HCNs have limited career opportunity outside the subsidiary

• Control and coordination of HQ may be impeded

• Hiring HCNs limits opportunities for PCNs to gain foreign experience

Disadvantages• Hiring of HCNs may encourage

a federation of national rather than global units

• HCNs have limited career opportunity outside the subsidiary

• Control and coordination of HQ may be impeded

• Hiring HCNs limits opportunities for PCNs to gain foreign experience


Third-Country Nationals

Advantages• Salary and benefit

requirements may be lower than for PCNs.

• TCNs may be better informed than PCNs about host-country environment.

Advantages• Salary and benefit

requirements may be lower than for PCNs.

• TCNs may be better informed than PCNs about host-country environment.

Disadvantages• Transfers must consider

national animosities.• Host government may

resent hiring TCNs.• TCNs may not want to

return to their own countries after assignment.

Disadvantages• Transfers must consider

national animosities.• Host government may

resent hiring TCNs.• TCNs may not want to

return to their own countries after assignment.


Determinants of IHRM Approaches and Activities


Reasons for International Assignments

• Position filling, e.g. – Skills gap, launch of new endeavor, 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


Types of International Assignments

• Short term: up to 3 months– Troubleshooting– Project supervision– A stopgap until a permanent arrangement is found

• Extended: up to 1 year– May involve similar activities as short-term assignments

• Long term– Varies from 1 to 5 years– The traditional expatriate assignment


Non-standard Assignments

Commuter assignmentsRotational assignmentsContractual assignmentsVirtual 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.

Some of these arrangements assist in overcoming the high cost of international assignments but are not always effective substitutes for the traditional expatriate assignment.


Factors Influencing Virtual Assignments


Roles of an Expatriate

• Agent of direct control• Agent of socialization• Network builder• Boundary spanner• Language node• Transfer of competence

and knowledge

A Simple Management Network

GB

C D

A F

E

Informal contacts between managers within a MNE

Informal contacts between managers within a MNE


Peran Non-expatriates

• Orang yang belum bepergian keluar negeri tidak dapat dianggap sebagai expatriat karena mereka belum pernah menetap dinegara lain– Road warriors, globetrotters, frequent fliers

• Much of international business involves visits to foreign locations, e.g. – Sales staff attending trade fairs– Periodic visits to foreign operations


Kehidupan Glamor

• Pelaku bisnis internasional menyebutkan sisi positif dari kegiatan mereka:– Sesuatu yang luar biasa ketika mengadakan

perjanjian bisnis ditempat asing– Life style (hotel berkelas, bebas berbelanja,

travel kelas bisnis)– Pemandangan alam eksotis


Tingginya Angka Stres

• Persoalan rumah dan keluarga– Sering absen

• Work arrangements– Domestic side of position still has to be attended to

• Transportasi dan logistik– kemacetan, dll.

• Kesehatan– Tidak cocok dengan makanan lokal, kurang tidur, dll.

• Masalah budaya setempat– Pelatihan kebudayaan terbatas


Centralized HR Companies

Decentralized HR Companies

Transition HR Companies

Large well-resourced HR departments

Small HR departments

Medium-sized HR departments

Key role: Managing all high-grade management positions worldwide

Key role: Managing elite corporate managers

Key role: Management and development of senior managers and expatriates

Key activities: Planning international assignments and performance management globally, identifying high-potential staff

Key activities: Influencing operating units to support international assignments, supporting decentralized HR

Key activities: Persuading divisional managers to release key staff using informal and subtle methods, strategic staffing.

Source: Based on H. Scullion and K. Starkey, in Search of the Changing Role of the Corporate Human Resource Function in the International Firms, International Journal of Human Resource Management, V 11, N 6 (2000) pp. 1061-1081.

Various Roles of Corporate HR


The Role of the Corporate HR Function

• Dapatkah kita me-manage orang seperti produk global, e.g., kemungkinan yang bisa dilakukan adalah:– The concept of a global internal labor

market– Standardization of work practices and HR

activities• What HR matters require central control

and what can be decentralized?


Chapter Summary

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.)

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.)

This chapter has expanded on the role of IHRM in sustaining international business operations. We have:


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 organization’s perspective. (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 organization’s perspective. (cont.)


Chapter Summary (cont.)

Recognized that non-expatriates are also critical to international business operations. International business travellers 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.

Recognized that non-expatriates are also critical to international business operations. International business travellers 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.

Documents

IHRM.pptx