Chapter 11 Strategic International HRM

Key Challenges Influencing HR Practices and Processes within an International Context
When entering new markets, organizations are confronted with a wide range of challenges mostly related to socio-economic, political and technological aspects.

Workforce Diversity
Canada's workforce diversity also produces a wide range of HR-related challenges, including:
  • The Integration and accommodation of an increased number of older workers and employees with disabilities
  • Gender issues
  • Aspects related to ethnic and cultural differences amongst employees
The complexity of the current workforce diversity will grow with each foreign market Canadian organizations decide to enter.

Employment Legislation
A wide range of home and host-country employment legislations represent a key challenge to HR managers and the development and implementation of employment policies, processes, and practices in Canadian organizations operating internationally.

The Role of the HR Function
Employment legislation, socio-economic, and technological differences in local markets demand sophisticated IHRM systems. It is also critical that HR managers responsible for the development and implementation of such systems are equipped with the necessary staff, and are integrated in the organizational strategic decision-making process and the development of organizational goals and objectives.

IHRM systems need to be flexible to quickly adjust their policies and practices to respond to the changes.
Flexibility is defined as a firm's ability to respond to various demands from a dynamic competitive environment.
Advance IHRM systems can obtain a high level of fit and flexibility by developing a strategic approach toward the management of international workforces.

Strategic International HR Planning- projecting global competence supply, forecasting global competence needs, and developing a blueprint to extablish global competence pools with companies.

Strategic International HR Management- human resource management issues, functions, policies, and practices that result from the strategic activities of multinational enterprises and that affect the international concerns and goals of those enterprises.

Fitthe degree to which the needs, demands, goals, objectives, and/or structure of one component are consistent with the need, demands, goals, objectives, and/or structure of another component
Internal Fit-Focus on organization
External Fit- Focus on local environment

The Domestic Stage
Domestic strategyinternationalizing by exporting goods abroad as a means of seeking new markets

The Multidomestic Stage
Multidomestic strategya strategy that concentrates on the development of foreign markets by selling to foreign nationals
Adaptive IHRM approachHRM systems for foreign subsidiaries that will be consistent with the local economic, political, and legal environment

The Multinational Stage
Multinational strategystandardizing the products and services around the world to gain efficiency
Exportive IHRM approachtransferring home HRM systems to foreign subsidiaries without modifying or adapting to the local environment

The Global Stage
Global strategyintroducing culturally sensitive products in chosen countries with the least amount of cost
Integrative IHRM approachcombining home HR practices with local practices and selecting the most qualified people for the appropriate positions no matter where these candidates come from
Adaptive IHRM Approach- HRM systems that will be consistent with the local, economic, political, and legal environment.

Key HR Practices and Processes Within an International Context

One of the key strategic decisions in recruitment is the internal recruitment versus external recruitment. This two-option decision has a three-option parallel in the international domain and includes:
Home-Country Nationals (HCNs): Individuals from the subsidiary country who know the foreign cultural environment well.
Parent-Country Nationals (PCNs): Individuals from headquarters who are highly familiar with the firm's products and services, as well as its corporate culture.
Third-Country Nationals: (TCNs): Individuals from a third country who have intensive international experience and know the corporate culture from previous working experience with corporate branches in a third country.

Strategic IHRM Flexibility= the ability to respond to vatio demands for a dynamic competitive environment. In an international context, the changes are dramatic and fast paced. though they are different from country to country. In such a dynamic global competitive environment, IHRM systems need to be flexible to quickly adjust their polices and practices to respond to change.
Advantages(A) and Disadvantages(D) of Key Recuritment Options:
PCNs: *well versed in company's needs and norms (A) * potential unfamiliarity with the cultura norms of the host country (D) * potential blocking of HCNs career progression within the firm
HCNs: *familiarity with the host-country culture (A) * limited familiarity with firms own operations (D)
TCNs: *greater familiarity with the host country culture than PCN's (A) * some cross-cultural preparation may still be required (D) * potentially suffering from a lack of knowledge of the corporate culture (D)
Using the five-factor personality model helps to identify those who will probably adjust well to overseas assignments. The five factors are:
1. emotional stability - High scorers usually reflect calm, even-temper, relaxed individuals, and are able to face stressful situations.
2. extraversion - High scorers are sociable, like people, and prefer large groups and gatherings. They are also assertive, active, talkative; like excitement and stimulation. Tend to be cheerful in disposition and are upbeat, energetic and optimistic.
3. openness -High scorers are curious about both inner and outer worlds. Willing to entertain novel ideas and unconventional values. Experience both positive and negative emotions more keenly than closed individuals.
4.agreeableness -High scorers are fundamentally altruistic, sympathetic to others and eager to help them. Believe that others will be equally helpful in return.
5.conscientiousness -High scorers are purposeful, strong-willed and determined.

Repatriation-the process of PCNs, TCNs, or even HCNs returning to their home headquarters or home subsidiaries.

Career Development after Repatriation:
-An international assignment should be seen as only one step in career development
-Managers should make sure that candidate's KSA's developed during assignment are used:
- They can serve as a mentor or trainer to potential expatriates
-They can serve as a long distance supervisor to other expatriate
-Another option is to remain a global manager and to move amongst subsidiaries for the remainder of career

No matter where you are, it's important to help employees integrate in the culture of organizations and the society they are living and working in. Very interesting article from Deloitte, shares the experiences and pros/cons of working abroad. Worth the read.

Trainability --> an individuals ability to acquire certain skills to a desired level of performance

Other Personal Characteristics:
Other antecedent factors of cross-cultural adjustment are:
- Self-maintenance competancies, which refer tot the capability to substitue sources of reinforcement when necessary and deal with alienation and isolation;
- Relationship competencies, which refer to the capability to develop and maintain relationships with HCNs; and
- Perceptual competencies, which refer to the capacity to understand why foreigners behave the way they do, to make correct attributions about the reasons or causes of HCNs' behaviour, and to correct those attributions when they prove to be incorrect.

Pre-Assignment Training:
Cross-cultural training positively influences expatriate self-development, interpersonal skills, and cross-cultural perception. Training was also found to have a major impact on the adjustment and effectiveness of expatriate managers. Effective training should emphasize five points:
- assess and evaluate the needs of training for expatriates
- clarify the purpose and goals of training that are relevant and applicable to participants' daily activities
- plan and design the traiing programs to meet training goals
- implement the training plan
- use several techniques to increase the effectiveness of training programs

Reverse Culture Shock --> feelings of anxiety, uncertainty and disorientation upon re-integretation into ones home country and culture

Other Issues in Strategic IHRM
- career development --> how best to benefit from the international experience and plan for future assignments
- performance appraisals --> 1. Technical/staff specialist 2. Managerial
- compensation includes
1. Goods and services
2. Housing
3. Income taxes
4. Reserve
5. Shipment and storage

Number of Hiring Companies Doubles

Hiring expectations have almost doubled since 2010, with 44% of companies planning on hiring in 2012 compared to 28% two years ago. The survey from the Canadian Employee Relocation Council also found that employee relocations are expected to increase, both domestically, cross border, and internationally. At the same time, companies reported recruiting challenges are on the rise across multiple industries and provinces.

Canadian Employee Relocation Council - Feb. 9, 2012