HR in the Global Context Flashcards
Global crises include and affect each other
- Economies
- Climate change
- Pandemics
- Changes inglobal power
Globalization
Status of growing interconnectedness and interdependency among countries, people, markets, and organizations worldwide
Global forces require careful analysis
- Understand the globalization events, forces, and trends are significant to your organization
- Be able to tell the difference between trends and large forces (Hurricane Katrina vs. global warming)
Global forces should be viewed in how they are affecting
- The parent organization’s home office and various subsidiary or host countries
- The industry and competitive landscape
- Organization’s overall goals and strategies
- Role HR must play if parent organization is to maximize benefit and minimize the cost of the force, event or trend
Global forces have unique cultural connotations
Each culture, organization and industry may feel the impact differently
Foreign Direct Investment
- Record of a country’s income
- Investment of foreign assets into domestic structures, equipment and organizations
Global remittances
Money sent back home by migrants working in a foreign country
Diaspora
- Mass migration of a group from its homeland in multiple destinations
- Usually for global remittance
Demographic dichotomy
Population of emerging economies is disproportionately young and the workforce in developed economies is rapidly aging
Reverse innovation
- Innovations created for or by emerging economy markets and then imported to developed-economy markets.
- Not always a product
Hyperconnectivity
- Increasing digital interconnection of people—and things—anytime and anyplace.
- Created a 27/7 global workforce
- Changed the way organizations gather, store, process and access data about a broad range of human activity
Successful global organizations incorporate these structural/strategic componenets
- Physical dispersion
- Diversity of thought, people and culture that is leveraged by strategic objective
- Unified through a clear single organizational identity
- Global for a reason
HR role in global strategic management
- Participate in creating global strategy
- Align HR processes and activities with the global strategy
- Enhance communications between organization and its stakeholders
- Ensure HR function has skills, knowledge and resources to fulfill global role
- Adapt processes as needed to the cultural and legal contexts of each area
Push and pull of globalization
Organizations have either been:
- Pulled to globalization in reaction to changes in business environment
- Pulled to globalization due to the promise of better value
Push factors toward globalization
- Need for new markets
- Increased cost pressures and competition
- Shortfalls in natural resources and talent supply
- Government policies
- Trade agreements
- Globalized supply chain
Pull factors toward globalization
- Greater strategic control
- Government policies that promote outward foreign investment
- Trade agreements
How to globalize
- Creating a new entity
- By purchasing an already existing operation, building a new operation from the ground up, or by repurposing an existing disused facility
- Acquiring a subsidiary that will be wholly owned and operated through merger and acquisition.
- Entering into an alliance or partnership.
- Outsourcing all or specified tasks to a supplier or performer in the new market.
- Offshoring an existing capability to the new location.
What components affect the globalization strategy
- The enterprise’s core strategic goals.
- Its capabilities and resources, both economic and organizational.
- The distances (physical, cultural, legal, sociopolitical) that the enterprise will have to bridge.
Orientations for multinational corporations
- Ethnocentric
- Polycentric
- Regiocentric
- Geocentric
Ethnocentric
- Headquarters maintains tight control over subsidiaries
- Subsidaries are expected to follow the strategic pattern, values, policies, and practices expressed by headquarters.
- There is “one best way.”
- The term “ethnocentric” - management will usually share a common ethnic background, different from the ethnic make-up of subsidiaries.
Polycentric
- Subsidiaries are allowed a large measure of independence as long as they are profitable.
- Their own paths are based on the business and cultural contexts of their countries.
- There are “many best ways.”
Regiocentric
- Subsidiaries are grouped into regions (such as Europe, North America, or Asia-Pacific).
- Strategic coordination is high within the region but not as high between the region and headquarters.
Geocentric
- Subsidiaries do not taking orders or act independently setting their own course.
- Headquarters and subsidiaries are participants in a network, each contributing its unique expertise.
- There is essentially “a team way,” transcending national borders.
Global integration (GI)
- Globalization strategy that
- Emphasizes consistency of approach, standardization of processes, and a common corporate culture across global operations.
- Standard processes and economies of scale help achieve greater efficiency which lowers cost of operation
Local responsiveness (LR)
- Globalization strategy
- Emphasizes adapting to the needs of local markets
- Allows subsidiaries to develop unique products, structures, and systems.
Global consumer advantages
- Achieve economies of scale - central critical activities or tightly networking specialized centers around the world
- Integrate value chain activities, from R&D through delivery logistics
- Ability to serve globally integrated customers
- Global branding - increases the efficiency of advertising and merchandising resources
- Shares organizational capabilities and knowledge
- Better quality assurance through shared standards and processes
- Leverage global assets for local competition
Global integration is done through
- People
- Assignees
- Processes
- Performance
- Culture
Multinational enterprises (MNEs)
Organizations that own or control production or service facilities in one or more countries other than the home country.
Multinational enterprises (MNEs) strategies
- International
- Multidomestic
- Global
- Transnational
International strategy
- Low local responsiveness and low global integration
- Home country develops product/services, processes and strategy
- Products and services are exported into foreign countries
- Company may open production facilities or sercice centers
Multidomestic strategy
- High local responsiveness and low global integration
- Headquarters is in home country
- Subsidiaries have independents from each other and headquarters
- Goals and strategies are developed locally due to competitive demands
Global strategy
- Low local responsiveness and high global integration
- Headquarters creates strategies, ideas and processes
- Views the world as a single, global market and offers products and global products with little varience
Transnational organizational structure
- High local responsiveness and high global integration
Glocalization
Characteristic of an organization with a strong global image but an equally strong local identity.
International strategies global orientation
Ethnocentrism
Multidomestic strategies global orientation
Polycentrism
Global organizations global orientation
Regiocentrism
Transnational organizations global strategies
Geocentrism
Strategic choices in GI and LR
- Upstream
- Downstream
- Identity alignment
- Process alignment
Upstream strategies
- Decisions are made at the organization’s headquarters level
- Decisions apply to strategy, coordination and focus on standardization of processes and integration of resources.
Downstream strategies
- Decisions are made at the local level.
- Decisions are based on local responsiveness.
Identity alignment
- Diversity is embraced in managing people, products/services, and branding.
- Location differences are embraced.
- Product/service offerings and brand identity are adjusted to local cultures.
Process alignment
- The amount that operations (HR, IT Finance) integrate across locations
- Ex:
- Single technology in all locations
- Bysiness performance metrics in all locations
Outsourcing
- Also called contracting out
- Company transfers portions of work to outside suppliers rather than completing it internally.
- Used to reduce costs and free up personnel and resources for other activities.
What is considered outsourcing
- Offshoring
- Onshoring
- Near-shoring
The difference is based upon the location
Offshoring
- Relocating processes or production to another country
- Done through subsidiaries or third-party
Advantages of offshoring
- Lower costs
- Closer proximity to necessary production resources.
- More favorable economic climate for corporate taxation.
- Financial incentives (e.g., direct cash payments, low-interest loans).
- Access to talent
- Around-the-clock shifts
- Follow the sun
Risks and challenges of offshoring
- Considered unpatriotic
- Cultural differences.
- Distance issues (e.g., different time zones and getting remote teams to work together).
- High turnover rates.
- Problems in quality control.
- Technical degrees that do not reliably indicate actual technical skills.
- Language issues.
- Intellectual property loss.
- Impaired productivity due to political instability.
- Loss of reputation from unethical behavior or practices of local management.
Onshoring
- Also called home shorting
- Relocation of business processes or production to a lower-cost location inside the same country as the business.
- Can also include WFH
Near-shoring
- Contracting a part of business processes or production to an external company in a country that is relatively close (e.g., within the same own region).
- Financial, legal and trade agreements are typically the same
- Cultural values and mindset are similar
- Cost of travel is cheaper
- Time difference is less
Considerations when moving work
- Cost and quality
- Sociopolitical environment
- Risk levels
- Talent pool
Strategic-Systematic Approach to Global Assignments
- Global assignments are seen as long-term investments
- Develop future executives with global perspectives and experiences to formulate and implement competitive strategies.
- Increase the effectiveness of critical coordination and control functions between and among the home office and foreign operations.
- Effectively communicate information, technology, and values throughout the worldwide organization.
Tactical-Reactive Approach to Global Assignments
- Seen as a short-term expense
- Focus on a quick-fix approach to a short-term problem in a foreign operation.
- Randomly and haphazardly perform some functions of assignments and focus attention as problems arise.
- Fail to systematically integrate the worldwide organization in terms of values, technology, products, and brand.
International Assignee (IA)
An employees who is being reassigned to an international jurisdiction
Expat
Types of global assignments
- Globalists
- Local hires
- Short-term assignees
- International assignees
- Commuters
- Just-in time expatriates
Globalists
Spend their entire careers in international assignments, moving from one locale to another
Local hires
- Also called HCs, host-country nationals
- Hired locally in subsidiary countries
Short-term assignees
- On assignment for less than a year but more than a few weeks
- Usally moving without the family
International assignees
- Traditional expatriates on full relocation assignments
- Lasting from one to three years
Commuters
Travel across a country border for work regularly
Just-in-time expatriates
Ad hoc or contract workers hired for a single assignment
Managers of global assignees should know as much as possible
- The country or countries to which they are sending assignees.
- Essential developmental assignments and experiences.
- The specific job function and assignment objectives and what effects the assignment location will have on these factors.
- The cross-cultural adjustment and feelings the assignee may experience.
- Cultural dimensions and the effect these dimensions have on the way different cultures look at life.
- Potential problem areas associated with the assignment.
Global assignment process steps
- Assessment and selection
- Management and assignee decision
- Pre-departure preparation
- On assignment
- Completing the assignment
Either redeployed and starts at one or repatriation
Assessment and selection step of global assignment
- Develop the selection criteria
- Involve the right people
- Choose the best selection method and tools
- Complete the assessment/make a recommendation
Management and assignee decision step of the assignment process
- Analysis of the costs and benefits of the assignment
- Preparation of the assignment plan
- Canidate asseptance or rejection of the assignment offer
Global letter of assignment
- Memorandum of understanding (MoU) stipulating the business aspects of the assignment
- Includes compensation, benefits and local work rules
Candidate should accept or reject an assignment offer based on
- ong-term career advantages.
- Adequate financial incentives.
- Opportunities for growth and learning.
- Family support and opportunities to balance interruption of children’s education and spouse’s career.
- Desirability of the location.
Pre-Departure Preparation Step of Global Assignment
- At the end assignee and family have knowledge and survival skills for first months in host country
- Typically done by third party
- Visas and work permits
- Security brefings
- Cross cultural counseling
Security breifings for global assignments
- Personal and family safety abroad
- Business aspects of security
- Physical and intangible threats to the organization’s employees, assets, and intellectual property
Cross-cultural counseling
- Done before and during global assignment
- Includes
- A preliminary situation and needs assessment.
- A country overview and information on everyday life.
- A business overview.
- Personal cultural awareness activities.
- Discussion of family and international relocation issues.
- Country-specific case studies.
- A customized and detailed support and settling-in program.
On assignment step of global assignment includes these phases
- Honeymoon
- Culture shock
- Adjustment
- Mastery
Honeymoon stage of global assignment
- Everything is new and exciting, and everyone is pleased that they made the decision to come abroad.
- Usually, there is ample support from the home and host countries during the early stages of the assignment.
Culture shock stage of assignment
- Novelty and enjoyment turn, into disillusionment and dissatisfaction, as the challenges of living and working abroad become clear.
- Support structures recede, and the assignee and family must increasingly fend for themselves.
Adjustment stage on assignment
- Working and living in the host country gets easier and more familiar.
- Assignees are unlocking the code, learning the norms and patterns of host-country behavior and how to get things done.
- This does not occur naturally but takes interest and motivation.
Mastery stage on assignment
- Biculturalism stage
- After several years of adjustment and continual learning
- Assignees are able to participate fully and comfortably in the host culture.
HR Support During an International Assignment
- Assist assignees in obtaining a host-country tax ID number.
- Assist assignees in obtaining a driver’s license.
- Coordinate assistance with bank accounts and credit cards in the host country.
- Perform host-country orientation.
- Review and approve host-country housing leases and issue security deposits.
- Update allowances and deductions as conditions change in the host country.
- Process and track required tax payments.
- Collect compensation and tax data that is needed for home-country reports.
- Coordinate emergency leaves and visits to the home country.
- Communicate regularly with the assignee’s home-country mentor(s).
- Begin active repatriation efforts at least six months before the assignment ends.
- Process visa and work permit renewals and extensions.
Completing the assignment step in global assignment
Either employees go through repatriation or redeployment
Repatriation
- Employees return from international assignments reintegrate into their home country’s culture, conditions, and employment.
- Their international experience allows them to contribute knowledge of gobal mindset
To help repatriation provide
- Adequate notice that assignment is ending
- A clear repatriation plan
- Assurance that the skills and experience the assignee got during the assignment will be used effecively in their new assignment
- Repatriation support services
