At the same time, companies based in other countries are investing and establishing operations in the United States. A GM employee who was born in the United States and works at GM headquarters or one of its American subsidiaries.
Political-Legal System
In any case, since the amount of pay a worker receives after taxes can vary from country to country, in an organization that pays two managers in two countries $100,000 each, the manager in one country may take home more than manager in the other country. Such changes make salary structures more complicated when they cross national borders and can affect the recruitment of candidates from more than one country.
Human Resource Planning in a Global Economy
Before long, the employee's mood drops as he or she notices more uncomfortable differences and experiences feelings of isolation, criticism, stereotyping, and even hostility. As the disposition reaches its bottom, the employee is experiencing culture shock, frustration, and discomfort that occur during the process of adjusting to a new culture and its norms, values, and perspectives. As the employee's language skills and comfort increase, the employee's mood should improve as well.
Eventually, the employee reaches a stage of adjustment where he or she accepts and enjoys the culture of the host country.
Training and Developing a Global Workforce
Training Programs for an International Workforce
Cross-Cultural Preparation
Global Employee Development
Performance Management across National Boundaries
TRAINING PROGRAMS IN OTHER COUNTRIES
Differences may include what behavior is assessed, how and the extent to which performance is measured, who conducts the assessment, and how feedback is provided. In Japan, culturally defined norms for polite behavior include bow angle, proper spine alignment, and eye contact. In Ghana and many other African countries, appropriate measures include behavior that reflects loyalty and repayment of obligations, as well as behavior related to following rules and procedures.
The extent to which managers measure performance can also vary from one country to another.
Compensating an International Workforce
In rapidly changing regions, such as Southeast Asia, the organization may need to update its performance plans more frequently than once a year.
Pay Structure
Dilemmas like these make a global compensation strategy important as a way to show employees that the pay structure is designed to be fair and tied to the value employees bring to the organization. Average hourly labor costs in industrialized countries such as the United States, Germany, and Japan are much higher than these costs in newly industrialized countries such as Mexico, Hong Kong, and Brazil. In addition, if the organization has many positions that require highly skilled workers, it may need to operate in (or hire immigrants from) a country with a strong education system, regardless of labor costs.
Finally, labor costs may be outweighed by other factors, such as transportation costs or access to resources or customers.
Incentive Pay
This became evident in the recent recession, when companies in many parts of the world, including the United States, were cutting payrolls. Fast-growing India also saw some downsizing, but many of the cuts came from US-based companies.
Employee Benefits
So when business slowed, Indian companies were more likely to restructure, hold back on wage increases and institute hiring freezes than to take actions such as laying off workers or even reducing their working hours. Pension schemes are more widespread in parts of Western Europe than in the US and Japan. Paid vacation, discussed in Chapter 13, tends to be more generous in Western Europe than in the United States.
International Labor Relations
Managing Expatriates
Selecting Expatriate Managers
Preparing Expatriates
Determine if any medical problems of the candidate or his or her family may be critical to the success of the assignment. How many moves the family has made in the past among different cities or parts of the United States. The "extrovert" personality style so valued in the US can seem quite rude in other parts of the world.
Some employers try to select managers who speak the language of the host country, and a few provide language training.
Managing Expatriates’ Performance
52 Employees need the opportunity to discuss their experiences with other expats so that they can learn from their failures and successes. The organization may provide a host country mentor or executive coach with in-country experience to help expats understand their experiences. Successful expats tend to develop a bicultural or multicultural viewpoint, so as they spend more time in the host country, the value of their connections with other expats can actually increase.
53 Measures such as productivity should take into account local factors that may cause expected performance in the host country to be different from that in the company's home country.
Compensating Expatriates
In Figure 15.6, the larger size of the second column means that the cost for a similar standard of living abroad is much higher in every category except the reserve amount. Benefits — Most benefits issues have to do with whether an employee can use the same benefits in the foreign country. While the person is abroad, the same health plan covers services received abroad.
Housing allowances ensure that immigrants can maintain the same standard of living as in the United States.
Helping Expatriates Return Home
Tax Equalization Allowance —Companies have different systems for taxing income, and in many countries tax rates are much higher than in the United States. Typically, an expat's employer withholds the amount of tax payable in the parent country, and then pays any taxes due in the country where the expat works. For example, if an expat contributed to a pension plan in the United States, will this person have a new pension abroad?
In one case, it would actually have cost less to fly an executive back to the United States for certain procedures than to have the procedures performed in the country where the person worked.
SUMMARY
Another influence on international HRM is the political-legal system of the foreign country - its government, laws and regulations. These employees can more easily understand the values and customs of the local workforce, and hiring locally tends to be less expensive than moving employees to new locations. In intercultural training, the expatriate soon learns about the foreign culture to which he or she is moving and studies its or his own country's culture as well as knowledge.
Along with cross-cultural training, expatriate preparation should include career development activities to help the individual acquire valuable career skills during the expatriate assignment and at the end of the assignment to successfully handle repatriation.
KEY TERMS
The intern is given a detailed briefing on how to behave in the business environment in the new country. Identify the home country, host country(s), and third country(s) in the following example: A global soft drink company called Cold Cola is headquartered in Atlanta, Georgia. For an organization that operates in three different countries, what are some advantages and disadvantages of determining compensation according to the labor markets of the countries where employees live and work.
What are some advantages and disadvantages of setting compensation according to the labor market in the company headquarters.
REVIEW AND DISCUSSION QUESTIONS
Besides cultural differences, what other factors influence human resource management in an organization with international activities. Suppose you work in the HR department of a company that is expanding into a country where legislation and culture make it difficult to fire employees. Would the best arrangement be different for the company's top managers and its production workers.
Historically, a large proportion of expatriates from the United States returned home before successfully completing their assignments abroad.
For example, both Prague and Budapest fell off the ORC list, reflecting the improved quality of life in former Soviet bloc cities over the past decade. What would be the advantages of sending managers from headquarters to run operations in a "difficult country". Knowing the workday by hours is critical for a company that has a lot of interaction between coworkers in the United States and Japan.
Based on the description in the case and the definitions in the text, would you characterize Roche Diagnostics as an international, multinational or global organization.
IT’S A WRAP!
Although this increases the cost of the program, it helps ensure that the participant will successfully complete the rotation. One way Roche has lowered managers' resistance to losing top employees is by arranging swaps in which a manager who brings a key employee into the rotation can be on the receiving end and a top employee from another part of the world can get. When one participant recently returned from a rotation in Japan, he was able to easily identify what aspect of the experience had made him a better businessman.
He said he learned to understand the typical decision-making process in Japan, which involves careful discussion in the office.
NOTES
Employment Rights and the Organization of Work: Health, Hygiene and Safety at Work, http://europa.eu, last updated 24 July 2007; and PriceWaterhouseCoopers, Key Trends in Human Capital: A Global Perspective, 2006, Publications, www.pwc.co.uk, accessed March 19, 2008. Stephens, “Spousal Influence on US Expatriate Adjustment and Intention to Remain in Pacific Rim Overseas Assignments,” . A Theory-Based Framework for Selecting Cross-Cultural Training Methods,” in Readings and Cases in International Human Resource Management, ed.
Chee, "Singapore Airlines: Strategic Human Resource Initiatives," in International Human Resources Management: Think Globally, Act Locally, red.
