GLOBAL HUMAN RESOURCE

MANAGEMENT
Human resource is the only intangible asset which will
bring an unimaginable quantum of tangible output provided
the asset is identified, nurtured and groomed to shoulder
global business responsibilities.

Learning Values:

1. Discuss the role culture that plays in determining the effective

use of human resource management.
2. Identify critical HRM issues faced by multinational and global
organizations.
3. Discuss human resources as core competent tools for Global
organizations
4. Define Global HR planning and process.
5. Specify four important HR benchmarking measures.
6. Evaluate human resource information system (HRIS).

Human Resources as a Prime Mover

Strategic Human Resources Management deals with Organizational use

of employees to gain or keep a competitive advantage against
competitors.
Core Competency is a unique capability in the organization that creates
high value and that differentiates the organization from its competition.
Possible HR Areas for Core Competencies in Global Market

Outstanding
Outstanding
Service
Service

Unusual
Unusual
Innovation
Innovation Quality
Quality
GLOBAL
GLOBAL
HRM
HRM

Special
Special
Productivity
Productivity Skills
Skills
HR-Based Competencies

1. Organizational Culture
a. The shared values and beliefs of the workforce
2. Productivity
a. A measure of the quantity and quality of work done,
considering the cost of the resources used.
b. A ratio of the inputs and outputs that indicates the value
added by an organization.
3. Quality Products and Services
a. High quality products and services are the results of HR-
enhancements to organizational performance.

Global Customer Service Dimensions

Service
Excellence

Physical Facilities and

Equipment

Care and Concern

Confidence in Employees
Knowledge

Dependable and Accurate

Performance

Timely Assistance
Key Terms in Global Human Resource Management

Culture shock
The feelings of frustration and confusion that result from being
constantly subjected to strange and unfamiliar cues about what to do
and how to get it done when trying to live in a new culture. Many
MNCs struggle hard at operational level due to their inability to
overcome cultural shocks, especially in developing countries.

Ethnocentric HRM Perspective

A view of HRM whereby an organization thinks that the way of doing
things in the parent country is the best way, no matter where business is
done. Imposing ethnic or parent company’s norms and operation styles
will lead to detriments.

Expatriate manager
A manager who is on assignment in a country other than the parent
country of the organization. This person is also called a parent country
national (PCN). Such a manager has to be so quick in adopting the
culture of his working domain if he wants to be an effective manager.

Foreign Corrupt Practices Act of 1977 (FCPA)

A law that makes it illegal for an American organization to pay bribes
to foreign officials for the purpose of getting a competitive advantage in
doing business.

Geocentric HRM Perspective

A view of HRM whereby nationality is ignored and managers are hired
on the basis of qualifications. Merit and performance are the key criteria
for HRM. They are highly respectable and capable of handling any
turbulent situation.

Global Corporation (GC)

A corporation with a geocentric HRM perspective. National boundaries
are ignored and HRM is viewed as a way of integrating operations all
over the world.
 Global Human Resource
The policies and practices related to managing people in management
an internationally oriented business.

Host Country National (HCN)

An employee of an international organization who is from the local
workforce rather than being from the parent country of the organization.

Parent Country National (PCN)

An employee from the corporation’s home country is on assignment in
another country. Generally the investing companies are prone to such a
syndrome to bring key human resources from home country which may
enkindle hatred amongst the people in the country of operation.

Sullivan Principles
Reverend Sullivan was the first African-American to serve on the
Board of General Motors. The tenets of his principles were designed to
eventually eliminate oppressive racism in South African business.

Third Country National (TCN)

An employee working for an international organization who is from a
country other than the parent country of the organization or the host
country in which the assignment is located.

Global organizational move Challenges

1. Foreign direct investment (FDI) flows
Driving force for globalization 2. Cross-border inter-firm agreements

1. Satisfied employees
2. Competitive products and services
3. Searching for new or broader markets
Organizations expand beyond domestic
4. Acquiring new, more efficient
boundaries to achieve
manufacturing technology
5. Large, inexpensive labor forces

Global human resource management 1. “people challenge” the most difficult for
(GHRM) includes the same functions as firms becoming international
domestic HRM, plus several aspects 2. Most critical to success, acquiring a
 competent workforce (survey of top
unique to international management execs.)

1. Finding suitable candidates

2. Intercultural understanding
3. Career management
4. Employee retention
The top HR challenges include
5. Adjusting to environment
6. Partner dissatisfaction
7. Relocation reluctance

1. Individualism versus collectivism

The cultural nature of global human 2. Power distance
resource management 3. Uncertainty avoidance
cultural differences 4. Masculinity versus femininity

1. Fit (congruence among HR policies,

firm’s plan & values of foreign culture)
2. Internal fit (HR policies that allow for
The concept of "fit" in global human
smooth work flow: HQ & local)
resource management
3. External fit (HR to consider the local
cultural/socioeconomic environment)

1. Early stages of internationalization

strategy
Multinational Corporation (MNC) - HRM 2. Ethnocentric orientation - PCN hires
Philosophy 3. Adapting products and services to local
markets

1. National boundaries disappear

2. Geocentric orientation – TCN hires
Global Corporation (GC) - HRM
3. The world is the market for its products &
Philosophy
services

1. Finding competent expatriate managers

2. To capitalize on the diversity of a global
workforce without suppressing each
The real challenge
nation’s desire to maintain its cultural
identity
 1. Host Country Nationals (HCNs)
Three sources of employees for 2. Parent Country Nationals (PCNs)
international assignments include 3. Third Country Nationals (TCNs)

1. Complex & sensitive task

2. Technical competence
3. Self image: self-confidence, self-esteem,
stress coping
Selecting the expatriate manager 4. Interaction skills: interpersonal style,
sensitivity to nonverbal communication
perceptual orientation: open-mindedness,
tolerate uncertainty accept cultural
differences
1. Fascination
2. Culture shock
Stages of reaction to foreign experience
3. Adaptation

1. Select managers who desire/want foreign

assignments (where possible)
Effective measures to deal with culture
2. Language fluency
shock
3. Preparation for cultural differences

1. Provide intercultural training – improves

chances for success
2. How much & type of training depends on
level of contact with host culture
3. Degree of dissimilarity between home &
Training the expatriate manager host cultures
4. Training to differ/vary at different phases
of expatriate’s assignment
(ex. pre-departure, overseas assignment,
repatriation)

Compensating the expatriate manager 1. Expensive proposition

2. Pay expatriate premium, COLAs,
allowances
3. Financial (education, home leave)
4. Social adjustment (language, cross
cultural training, locate home)
5. Family support (child care, trailing
 spouse, schools)

1. Less expensive
2. Have distinct advantages in cultural
sensitivity, understanding local employee
needs/motivation strong reservations exist
in using HCNs:
3. Concern that locals will not adopt PC
culture & management system
4. Level of commitment to organization may
Host Country Nationals and the Global
not be high
Corporation
5. Don’t have the expertise or requisite skills
that PCNs/expatriates possess
6. Communication between HQ and host
offices will be less effective
7. Most problems can be eliminated by
careful recruitment, selection, and
training of HCNs

When recruiting try to use the same recruitment

methods as local businesses &
HCNs - Recruitment other successful GCs

1. Foreign Corrupt Practices Act – (1977)

forbids in conducting to give the firm an
unfair advantage
2. There exists varying degrees of
employment discrimination in other
The legal and ethical climate of global
countries which may cause
human resource management
problems/dilemmas for PCNs managers
3. Civil Rights Act of 1991 applies to US
firms’ operations overseas
4. Sullivan Principles

FACTORS AFFECTING GLOBAL HR PLANNING

 Strategy of Culture of Competitive / Current
the the Financial Organization
Environment
organization organization Situation

Need for Human Available

resources: Financial
Quantity and Resources
Skill Levels

HR policies and Plans for:

• Recruiting
• Selection
• HR development
• Compensation
• Performance
Management
• Staffing Adjustments

Linkage of Organizational and HR Strategies

Global HR Planning Process

Benefits of Global HR Planning

 1. Better view of the HR dimensions of business decisions abroad
2. Lower HR costs through better HR management.
3. More timely recruitment for anticipate HR needs
4. More inclusion of protected groups through planned increases in
workforce diversity.
5. Better development of managerial talent

Scanning the External Environment

1. Environmental Scanning
a. The process of studying the environment of the
organization to pinpoint opportunities and threats.
2. Environment Changes Impacting HR
a. Governmental regulations
b. Economic conditions
c. Geographic and competitive concerns
d. Workforce composition

Internal Assessment of the Organizational Workforce

1. Auditing Jobs and Skills

a. What jobs exist now?
b. How many individuals are performing each job?
c. How essential is each job?
d. What jobs will be needed to implement future
organizational strategies?
e. What are the characteristics of anticipated jobs?
2. Organizational Capabilities Inventory
a. HRIS databases—sources of information about employees’
knowledge, skills, and abilities (KSAs)
b. Components of an organizational capabilities inventory
• Workforce and individual demographics
• Individual employee career progression
• Individual job performance data

Assessing HR Effectiveness
1. Diagnostic Measures of HR Effectiveness
a. HR expense per employee
b. Compensation as a percent of expenses
c. HR department expense as a percent of total expenses
d. Cost of hires
e. Turnover rates
f. Absenteeism rates
g. Worker’s compensation per employee

1. HR Audit
a. A formal research effort that evaluates the current state of
HR management in an organization
b. Audit areas:
i. Legal compliance (e.g., EEO, OSHA, ERISA, and
FMLA)
ii. Current job specifications and descriptions
iii. Valid recruiting and selection process
iv. Formal wage and salary system • Benefits
v. Employee handbook
vi. Absenteeism and turnover control
vii. Grievance resolution process
viii. Orientation program
ix. Training and development
x. Performance management system