A303 Q04

Q4: HOW ARE STAFFING, PERFORMANCE MANAGEMENT, TRAINING AND COMPENSATION OF EXPATRIATE MANAGERS INTERRELATED? Presented by: Miss. Qunyao Miss. Jann Miss. Jac Zhang Ruixian

WHATS THE IHRM ABOUT? Aims to promote: productivity, commitment, flexibility and quality of product/services.  HRM is strategic, like all other managerial functions.  The component of HRM: 

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Staffing

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Training and development

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Performance management

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Compensation management

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Employee relations

IRHM refers to HRM in global context  HRM is meant to promote efficiency, it seeks to lower costs and increase output 

PCNS STRENGTH AND WEAKNESSES Ethnocentric MNCs tend to use PCNs  Strength: familiarity with home office goals, cmpetence and control  Weaknesses: difficulties adapting to new culture, cost, resistance from subsidiary and family adjustment  Example: 76.5% Japanese MNCs have a PCN director. 

WHY USE EXPATS (PCNS)? Knowledge transfer  Management development (gain broader experience)  Organization development  Strengthen HQ abilities of control and coordination  Indoctrinate company value to the local workforce  Ensure common practices  Monitor potential corruption  As communication link 

EXPATRIATE MANAGEMENT IN MNC  High

cost of placing expatriate managers  Failure is all too common and has considerable financial cost  MNCs staffing is influenced by a series of factors, e.g culture shoking, family adjustment and repatriation etc.

SELECTION OF EXPATRIATES: TECHNICAL COMPETENCE Technical competence is universal for all selection in any work context.  The manager/worker must be well trained in the technical aspects of the job.  The technical competence is important since Expatriates often must act independently.  There may not be a large pool of superiors to consult on problems. 

SELECTION OF EXPATRIATES: TECHNICAL COMPETENCE 

When making international assignments, they focus on knowledge creation and global leadership development.

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Example: A Canadian company that wants to open a telephonemaking plant in Vietnam. It will send a manager who knows how to manufacture phones and how to get a green field facility up and running quickly. Once the plant was established, he would be expected to transfer his knowledge to local professionals and to learn from them too, Together , they would be expected to generated innovative ideas.

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Nokia is a good example of a company that effectively uses international assignments to generate knowledge. Senior Executives scan their global workforce for engineers and designers who are likely to generate new ideas when combined into a team. They bring these people together in an R & D center for assignments with the explicit objective of inventing new products. Such as the Nokia 6100 series mobile telephones that have quickly captured a leading position in markets around the world.

SELECTION OF EXPATRIATES: PERSONAL TRAITS Expatriate managers should possess outstanding interpersonal skills  They should be able to deal effectively with people from another culture.  An open Personality facilitates success  Expatriate managers should be flexible and able to cope with new environments 

SELECTION OF EXPATRIATES: PERSONAL TRAITS  They

must be able to deal effectively with the unique constraints of operating abroad. (i.e., foreign governments, trade unions, competitors, customers)  They must be able to handle new and unexpected challenges.  They assign international posts to Individuals who not only have the necessary technical skills but also have indicated that they would be likely to live comfortably in different cultures.

TRAINING AND DEVELOPEMENT 

The 4 are interrelated bcos:

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Managing international staff involves the 4 of them

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There are internal and external variables that influence them INTERNAL

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Goal orientation

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Capacity to pay

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Competitive strategy

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Organizational culture

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Internal workforce composition

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Labor relations

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Subsidiary role

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EXTERNAL

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Parent nationality

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Labor market

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Local culture

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Home and host country governments’ roles

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Industry type

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Competitor’s strategies

TRAINING AND DEVELOPEMENT International compensation: It is an organization’s usual means by which employee rewards are planned and administered. It includes base salary, benefits, perquisites, long and short term incentives, valued by employers in accordance with their relative contributions to MNC performance. Increasingly, the importance of international compensation strategy in the implementation of org strategy is beng acknowledged. The purpose is to attract, retain, and motivate those personnel required throughout the MNC. Compensation is one of the most visible aspects of strategic IHRM. In practice, international compensation strategy must facilitate equity and the movement of staff throughout the MNC.

TRAINING AND DEVELOPEMENT 

Performance management is a term used to describe an integrate set of techniques which have had an independent existence under their own names. It could be considered to comprise any HRM activity, or bundle of HRM activities, designed to improve employee performance.

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Performance management emphasizes employee development and rewards as outcomes of performance evaluation.

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At the optimum level, that of its strategic integration with other management systems, performance management involves: links to org strategy, setting individual performance goals, providing regular feedback on progress towards those goals, providing opportunities for improving and linking rewards and results.

TRAINING AND DEVELOPEMENT 

MNCS recognize that human resources play impt role in developing and sustaining a competitive advantage in biz environment. As a result, uses expatriates on shortterm and long term international job assignments for a variety of purposes.

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An expatriate’s success in the host country is largely determined by his r her crosscultural adjustment to the host country.

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Cross cultural training is defined as any planned intervention designed to increase the knowledge and skills of expatriates to live and work effectively and achieve general life satisfaction in an unfamiliar host culture.

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A CCT program that is linked with an organization’s HR practices has a greater chance of success than CCT programs that are not linked by an overall HR strategy. For e.g when expatriates acquire new cross-cultural knowledge and skills and apply them on the assignment, the way in which their assignment performance is accessed must reflect these changes. The more critical global assignments should be emphasized within the organization’s total performance management system., in a similar fashion, expatriate compensation should reflect the outcomes of CCT. If expatriates have acquired new cross cultural knowledge and skills an are able to enhance their performance, then they should be compensated accordingly. Cross cultural training should also link with selection and assessment. Some personality traits, such as openess, may influence CCT success and could be incorporated into the assessment phase of the expatriate process. Therefore, selection of ppl to join in CCT and ultimately go on an a global assignment willl play a key role in the outcome of the effectiveness of a well designed CCT program.

TRAINING AND DEVELOPEMENT How to effectively integrate? CCT Design process 5. 6. 7. 8. 9. 10.

Identification of employee type/ identify the type of global environment Conduct a cross cultural training needs analysis Establish CCT goals and measures Develop and deliver the CCT program Evaluate CCT Link CCT with other HR practices

It is believed that the key to improving the process for developing, delivering, and evaluating CCT Programs from expatriates lies in new training technologies. BAsed on the current instructional technology research, new training technologies such as the internet and web based technologies are developing at an enormous pace and are providing cost effective alternatives to traditional training design processes. Using new technology to its best advantage is a major challenge facing CCT trainers and HR specialists. In our opinion, it seems that making the most of this tech is critical to designing effective CCT interventions now and in the future. e.g A 2-wk program is provided by firms like British Petroleum in UK and Olivetti in Italy.. These programs focus on issues like preparing global managers to examine environmental constraints and meet worldwide challenges, as well as to manage corporate cultures and human interfaces.

PERFORMANCE MANAGEMENT A process that involves: goal setting, appraisal(performance evaluation), Training and development, Performance Related Pay(Compensation/rewards)  The objective is to achieve continuous improvement in employ performance.  Improved employee performance benefits organizational performance in turn. 

THE COMPONENTS OF PERFORMANCE MANAGEMENT Communication of Company vision  Role/job clarification  Goal setting/planning/alignment  Development/coaching/support  Monitoring performance  Feedback  Compensation/rewards 

GOAL SETTING IN FIVE TYPES OF EXPATRIATE GROUPS AT NTC Top Manager: To a great extent self developed goals that are agreed with managers located in another country, Emphasis on clear, financial goals.  Middle Manager: The manager in a host locations sets the goals, yet many expatriates also have a manager at HQ, Goals vary from fairly specific to very specific.  Business Establisher:Goals are agreed upon with the primary manager, located in the host or home country, Relatively few, broad goals. 

GOAL SETTING IN FIVE TYPES OF EXPATRIATE GROUPS AT NTC Customer Project: No formal, work-related goal setting.  R & D Project: The manager in the host location sets the goals, goals vary from vague to specific. 

IN FIVE TYPES OF EXPATRIATE GROUPS AT NTC Top Manager: By the manager located in another country  Middle Manager:When actually done, performed by a manager in the host location, Satisfactory amount of ongoing performance feedback for most  Business Establisher: by the primary manager(s), satisfactory amount of ongoing performance feedback for some. 

COMPENSATION OF EXPATRIATE MANAGERS

Types of Expatriates 1. Temporaries Expatriates Short term assignments typically less than 6 months 2. Young and Inexperienced Expatriates Local hires 3. Older and Experienced Expatriates Larger compensation packages 4. International Cadre Expatriates Move from firm to firm and require global salary and benefits 5. Permanent Expatriates Becomes locals Approaches 1. Negotiation/Ad Hoc Expatriates negotiates a unique compensation package tailored to the environment 2. Balance Sheet Uses a standardized formula to ensure the expatriates are not worse off by accepting an international assignment 3. Localization

INTERNATIONAL COMPENSATION STRATEGY The provision of monetary and non-monetary rewards, including base salary, benefits, perquisites, long and short term incentives, valued by employees in accordance with their relative contributions to MNC performance. HRM purpose To attract, retain and motivate those personnel required throughout the MNC currently and in the future. Risk 1. Increased by the complexities of operating within multiple diverse economic, employment and taxation regimes. 2. Increased through direct and indirect cost inefficiencies associated with international staff transfers and also with the implementation of the strategy for global consistency in an urgent manner. Eg. Failure of international compensation to meet its objectives and cost inefficiencies through in appropriately over-rewarding some employees will be faced if MNC do not adapt to local conditions and result in employee dissatisfaction.

INTERNATIONAL COMPENSATION STRATEGY Allowances comprise 1. Foreign Service Premiums Most common for employees on long-term assignments (over one year) as an incentive to take the assignment. 2. Hardship In consideration of isolation, crime, natural hazards, political violence, based on government data upon which rates can be provided by consulting organizations. 3. Relocation Compensation for costs such as transport, storage, temporary accommodation, purchases of appliances and vehicles, associated with moving to host country. 4. Education For assignees’ children. 5. Home Leave Provision for the assignee and family to return home

PERFORMANCE MANAGEMENT An integrated set of techniques which have had an independent existence under their own names. E.g. Performance appraisal Purpose To improve employee performance Characteristics of integrated performance management to specific HRM functions 1. Links to the MNC strategy = HR Planning, Job Design and Analysis 2. Setting individual performance goals = Job Analysis 3. Providing regular feedback on progress towards those goals = Performance Appraisal 4. Providing opportunities for improving = Performance Appraisal, Training and Development 5. Linking results and rewards = Performance Appraisal, Compensation

PROCESS OF USING EXPATRIATES  Selection  Preparation  Monitoring/Supporting  Repatriation

PROCESS OF USING EXPATRIATES  Selection

refers to the staffing function, as discussed in the earlier parts  Following selection, the expatriates should be prepared, often involves, training such as language skills, cultural skills etc  Monitor refers to the Performance management.  Also monitor upon arrival, identify culture shock etc problem, morale of the expat and family etc.  Support in the form of training should be offered.  Repatriation: career development, new skills

CONCLUSION Selection

Staffing

Preparation

Traning/ Development

Monitor/ Support

Performance Management

Repatriation

Compensation