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Chapter

13

Managing Human Resources in an International Business
Learning Outcomes

Chapter Outline
The Internationalization of Business How Intercountry Differences Affect HRM Improving International Assignments Through Selection Training and Maintaining International Employees International Labour Relations Safety Abroad Repatriation: Problems and Solutions

After studying this chapter, you should be able to: Explain how to improve international assignments through employee selection. Answer the question, “What sort of special training do overseas candidates need?” Discuss the major considerations in formulating a compensation plan for overseas employees. Describe the main considerations in repatriating employees from abroad.

Managing Human Resources in an International Business

2

The Internationalization of Business
More and more Canadian-based companies are conducting their business in other countries. Huge global companies like Noranda, Labatt’s, and Molson’s have long had extensive overseas operations. Global changes such as the rapid development of demand in the Pacific Rim and other areas of the world means that business success depends on the ability to market and manage overseas. Of course, to foreign companies like Toyota, Canada is “overseas,” and thousands of foreign firms already have thriving operations in Canada. Increasingly, companies must be managed globally, which confronts managers with several challenges. First, the number of their employees abroad has increased. With more employees abroad, HR departments have had to tackle new global challenges. Three broad global HR challenges that have emerged are as follows:1 • Deployment. Getting the right skills to where they are needed in the organization regardless of geographical location. • Knowledge and innovation dissemination. Spreading state-of-the art knowledge and practices throughout the organization regardless of where they originate. • Identifying and developing talent on a global basis. Identifying who has the ability to function effectively in a global organization and developing these abilities.2 Dealing with such challenges means that most employers have had to develop HR policies and procedures just for handling global assignments. From a practical point of view, one has to address issues such as:3 1. Candidate identification, assessment, and selection. In addition to the required technical and business skills, key traits to consider for global assignments include, for instance: cultural sensitivity, interpersonal skills, and flexibility. 2. Cost projections. The average cost of sending an employee and family on an overseas assignment is reportedly between three and five times the employee’s pre-departure salary; as a result, quantifying total costs for a global assignment and deciding whether to use an expatriate or a local employee are essential in the budgeting process. 3. Assignment letters. The assignee’s specific job requirements and associated pay will have to be documented and formally communicated in an assignment letter. 4. Compensation, benefits, and tax programs. There are many ways in which to compensate employees who are transferred abroad, given the vast differences in living expenses around the world. 5. Relocation assistance. The assignee will probably have to be assisted with such matters as maintenance of the person’s home and automobiles, shipment and storage of household goods, and so forth. 6. Family support. Cultural orientation, educational assistance, and emergency provisions are just some of the matters to be addressed before the family is sent abroad.4

International HRM Association www.ihrim.org

Among the many changes taking place in the international business arena is the introduction of the euro, a single currency used by the European Union since 1999.

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Chapter 13

HR Links www.shrm.org/hrlinks/intl.htm

Expatriate Information About Living Abroad...
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