Welcome to class ofInternational Human Resource

Management

byDr. Satyendra Singh

University of WinnipegCanada

Learning Objectives

Creating a company “global mindset” International HRM approaches Recruitment selection and training Expatriates Compensation Allowances Bonus Challenges

Objectives:

The Global Mindset

Expatriate A person living outside citizenship country

Global Mind-set A mind-set that combines an openness to and an

awareness of diversity across markets and cultures with a propensity and ability to synthesize across this diversity

International HRM Approaches… Ethnocentric

Hiring and promoting employees on the basis of parent company’s home country frame of reference

Bias of the home country Top executives get foreign experience

Polycentric Hiring and promoting employees on the basis of specific local context of the subsidiary Movement between home and host country uncommon Must give locals to elevated position revoke permit Local supplier preferred Managers unwilling to take promotion Local managers may have their own agenda

International HRM Approaches

Regiocentric Hiring and promoting employees on the basis of the specific regional context

of the subsidiary

Hiring can be from both countries– home or host Problem with third country employees

Geocentric Hiring and promoting employees on the basis of ability and experience without

considering race or citizenship Best Practices

Recruitment, Selection and Training…

Parent Country National (PCNs) or Home Country National Study of language and culture

Host Country National (HCN) Hired in the host country

Third Country National

Recruitment, Selection and Training Third Country National (TCN) May accept lower wages and benefits than will employees from the home

country May also come from a culture similar to that of the host country May have worked for another unit of the IC and be familiar with policies,

procedures and people Common approach in developing countries May not be welcome by host country May come from an international agency Greater use as companies take geocentric view

Expatriates

Family Nine of ten expatriate failures family-related

Unhappy spouses major reason for early return

Company losing a “million-dollar corporate-training investment” in executive

Language Training

Language Trap International business person speaks only

home language English language has become lingua franca Chinese new “hot” language to know

Expatriate Services…

• Health care programs to assist companies and expatriates with – Claims administration– Language– Translations– Currency conversions– Service standardization– www.ExpatExpert.com

Expatriate Services

Banking services Online, 24-hour assistance

Training Culture and language House hunting, utilities hook up, grocery and hardware

shopping, long-distance care for relatives, schools, organizations, and cultural items

Compensation example

Compensation

Salaries Paying home country nationals the same salaries as

their domestic counterparts permits worldwide consistency bonuses

Increasing use of third country nationals- often treated like PCNs

Trend to pay HCNs same base

Allowances…

Housing Allowance Permits executive to live at same standard as at home

Cost-of-Living Allowance Based on differences in price of food, utilities,

transportation, entertainment, clothing, personal services, and medical expenses as compared to home

Allowances for Tax Differentials Ensures expatriates will not have less after-tax pay at

home

Allowances

Education Allowances Insures children receive education equal to that at home

Moving and Orientation Allowances Household effects and language instruction

Bonuses

• Bonuses Expatriate employee compensation payments in

addition to base salary and allowances because of hardship, inconvenience, or danger

Bonuses include Overseas premiums Contract termination payments Home leave reimbursement

Compensation Packages

For expatriate employees, packages incorporate many types of payments or reimbursements and must take into consideration exchange rates and inflation

Compensation Packages Can Be Complicated

Allowances and percentage of base salary are usually paid in host country currency Percentage usually 65 to 75 percent, with remainder

banked where employee directs

What Exchange Rate? Must be chosen More difficult in countries with exchange controls and

nonconvertible currencies

Compensation of Third Country Nationals

Trend toward applying the same compensation plan to third country nationals as home country expatriates

Problems can arise in The calculation of income tax differential when American

expatriate compared with expatriate from another country Home leave bonus

International Status

Entitles expatriate employee to allowances and bonuses applicable to the place of residence and employment

Perks Compensate executives while minimizing taxes

Private pension plan Retirement payment Life Insurance Hidden slush funds (can be illegal) Club membership Company house Foreign affiliate directorship