Global Dimensions of HR Mgmt. Final

HR activity #1

planning

HR activity #2

staffing

HR activity #3

compenstion/benefits

HR activity #4

training/development

HR activity #5

performance management

HR activity #6

industrial relations

Compensation

total direct monetary payments from various sources (ex. bonuses, interests, and dividends) that employers give employees in exchange for the work they do for the business

Wage

the type of compensation including fixed pay per hour

Salary

the type of compensation including fixed pay per pay period (ex. annually)

Benefits

the type of compensation including non-monetary/indirect compensation offered to employees in addition to wage (ex. health insurance, disability, retirement, paid time off, etc.)

Compensation package =

compensation (wage & salary) + benefits

Objectives of international compensation

(1) consistent with structure, (2) improves retention rate, (3) cost effective, (4) equitable and simple

Consistent with structure (international compensation)

compensation package should be consistent with the overall strategy/business needs of the MNE

Improves retention rate (international compensation)

compensation package should attract AND retain staff in areas where the MNE has the greatest needs/opportunities

Cost effective (international compensation)

compensation package should facilitate the transfer of international employees in the most cost-effective way for the firm WHILE being attractive to/enough for employees

Equitable and simple (international compensation)

compensation package should give due consideration to equity and easy of administration

Equity

distribution of resources/opportunities based on individual needs to achieve fair and impartial outcomes

Equality

providing everyone with the same exact resources/opportunities

Key components of international compensation

(1) base salary, (2) benefits

Benefits from international compensation include

(1) foreign service inducement, (2) hardship premium, (3) allowances (ex. COLA, housing, home leave, education, relocation, spousal assistance, etc.)

3 approaches to compensation

(1) going rate (host-based) approach, (2) balance sheet approach, (3) local plus approach

Going rate (host-based) approach to compensation is ___ popular, and only ___% of long-term MNEs use it

not; 14%

Reference point for going rate (host-based) approach is the

host country

Going rate (host-based) approach relies on survey comparison among

(1) local nationals (HCNs), (2) expatriates of the same country, (3) expatriates of all nationals

Advantages of going rate (host-based) approach

(1) equality with local nationals, (2) equity among different nationalities, (3) identification with host country, (4) simple to use

Disadvantages of going rate (host-based) approach

(1) variation between assignments for same employee, (2) variation between expatriates of same nationality in different countries, (3) potential re-entry problems

Balance sheet approach to compensation is ___ popular between MNEs

most

Step 1 of balance sheet approach

determine the base salary in home country

Step 2 of balance sheet approach

break down how the salary is being spent into four categories (goods/services, housing, income taxes, and reserve [ex. savings, education, SS, etc.])

Step 3 of balance sheet approach

adjust the package by adding/reducing the benefits, allowance, and hardship premiums based on the previous steps

Advantages of balance sheet approach

(1) equity between assignments and expatriates of the same nationality, (2) facilitates efficient expatriate re-entry, (3) easy to communicate

Disadvantages of balance sheet approach

(1) can result in disparities between expatriates of different nationalities and expatriates/local nationals, (2) can end up being very complicated

Local plus approach to compensation is ___ popular among mostly ___

very; TCNs

Local plus approach is characterized by the

base salary of the home country PLUS expatriate benefits (ex. transportation, housing, etc.)

Local plus approach only includes ___ benefits

one-time (ex. relocation costs RATHER THAN hardship allowances/home leave)

Advantages of local plus approach

(1) very cost-effective, (2) appropriate for long-term expatriation

Disadvantages of local plus approach

(1) can cause legal/benefits issues, (2) may not be enough for certain expatriates

The U.S. and North Korea are the only two countries in the world that require you to

pay their taxes in ADDITION to the taxes of the host country in which you are working

4 approaches to international taxation

(1) tax equalization, (2) tax protection, (3) ad hoc, (4) laissez-faire

Tax equalization

MNE pays all HOST COUNTRY taxes for the expatriate (expatriate only owes parent country taxes)

Tax protection

expatriate pays the taxes of the country with the lower tax rate

Ad hoc

each expatriate pays taxes differently based upon their personal circumstances

Laissez-faire

each expatriate is on their own to pay their taxes

Talent management

holistic process for recruiting, developing, and retaining talents that involves finding talents with specific skills that make them stand out from the crowd

Talent

an employee who possesses the unique potential to significantly impact organizational goals

3 approaches to talent identification

(1) acquired, (2) innate, (3) mix

Pygmalion effect

the idea that what we expect of others actually impacts their behavior, whether our expectations are positive or negative

Pygmalion effect process

(1) your beliefs (2) influence the other person (3) then impact the other person (4) then cause their actions back towards you, (5) all reinforcing your initial beliefs

2 approaches to talent management

(1) exclusive (elite group of talents in MNEs), (2) inclusive (all employees are talents in SMEs)

Advantages of exclusive talent management

(1) high performers w/ high potentials, (2) key positioning with a lot of mobility, (3) country-specific criteria + procedures, (4) focus on above-average performers that contribute a high degree of value creation for company, (5) best financially

Disadvantages of exclusive talent management

(1) for non-talents = exclusion + work segregation, (2) for talents = reduction of work-life balance + danger of biased decisions

Advantages of inclusive talent management

(1) everyone has talent in this strength-based approach, (2) country specific criteria only, (3) allocation of resources + team performance is overall better, (4) creates a dynamic range of strengths useful in unpredictable environments

Disadvantages of inclusive talent management

(1) missing differentiation between inclusive + strategic HR management, (2) worst financially

2 talent attraction strategies

(1) talent-pool strategy: what talent pools do we NEED?, (2) highly selective hiring: who will do the BEST?

3 talent development strategies

(1) structure programs (trips, formal training, learning modules), (2) relationship-based development (mentoring, shadowing, coaching), (3) experiential learning (international job rotation, global work/staffing project assignments)

3 talent retention strategies

(1) having highly competitive compensation, (2) offering personalized career plans/broad assignments, (3) flexible working arrangements being available + work-life balance practices

Switching cost

cost generated from an employee leaving one organization and joining another

3 talent management strategies

(1) usage of digital HR analytics to manage talent performance (but can be complex), (2) recognizing diversity in attraction/development/selection, (3) virtual talents/virtual assignments/virtual teams

Strategic HR management involves

(1) external factors, (2) organizational factors, (3) HR function, (4) MNE performance

External factors of strategic HR management

(1) PESTLE, (2) organizational links w/ other MNEs, (3) national governments, (4) asymmetric events, (5) environmental dynamics

PESTLE

political, economic, social, technological, legal, and environmental impacts on business operations

Organizational factors of strategic HR management

(1) MNE balance of global integration + responsiveness, (2) MNE structure/strategy, (3) firm size + maturity, (4) corporate governance, (5) HQ's international orientation/MNE culture

HR function of of strategic HR management

(1) global corporate HR role, (2) HR practices, (3) crisis management/coordination

MNE performance of strategic HR management

(1) financial, (2) social, (3) enterprise

Some companies prefer to call themselves nonprofit in order to

avoid taxes

Environmental challenges for IHRM

(1) international business ethics, (2) safety/security (ex. dealing with terrorism), (3) NGOs

Organizational challenge for IHRM

modes of operation

Ethics (environmental international business ethics)

way of living that explains human conducts/behaviors ("right vs. wrong")

3 forms of ethics

(1) relativism, (2) absolutism, (3) universalism

Relativism

NO universal/international rights or wrongs (expatriates follow the ethical rules of the HOST COUNTRY)

Absolutism

rights or wrongs are objective/independent of opinions (expatriates follow the ethical rules of the PARENT COUNTRY)

Universalism

universal international rights or wrongs (ex. most people in modern societies think that eating cats and dogs is wrong)

Bribery/corruption

offering, giving, or receiving something of value to influence a person's actions or decisions in a way that is unethical, illegal, or a breach of trust

Bribery does NOT involve

"facilitated" or "grease" payments

Risk management (environmental safety/security)

identifying, evaluating, and prioritizing risks and planning for mitigating the impacts

NGO effect (environmental NGOs)

impacts the policies and procedures of MNEs through (1) advocacy/awareness, (2) research/reporting, (3) pressure for policy change, (4) engagement/dialogue, (5) boycotts/divestment/selling, (6) partnerships/certifications, (7) litigation/legal action, (8) global standards, (9) supply chain scrutiny, and (10) media influence

Modes of operation (operational)

(1) subsidiaries, (2) joint ventures, (3) mergers, (4) acquisitions

Subsidiary

a company that is completely controlled by another company

Joint venture

a partnership in which two or more companies (often from different countries) join to undertake a major project together

Merger

a combination of two or more businesses to form a single firm

Acquistion

a transaction in which one company purchases most or all of another company's shares to gain control of that company

Lower power in operational control =

lower control over business conducts

Planning/selection solutions to IHRM challenges

(1) HCN, PCN, or TCN for best fit?, (2) open to hiring new cultures/experienced expatriates

Performance management solutions to IHRM challenges

(1) regular/effective performance management, (2) anti-corruption policies

Training/development solutions to IHRM challenges

(1) pre-departure training about ethics, (2) on-assignment training reinforcement programs

Compensation/benefits solution to IHRM challenges

having a focus on not tying compensation/benefits to absolute good results

Industrial relations solutions to IHRM challenges

(1) making close/healthy connections w/ NGOs + unions, (2) considering corporate social responsibility (CSR) 24/7

3 future challenges of IHRM

(1) going mobile causing confusion, (2) virtual teams slacking off, (3) higher levels of age diversity, etc.

Digital nomads

these people come from going mobile, and they live nomadic lives while desiring to travel often while working remotely using technology/the internet (very anti-9 to 5)