Instructions As an international manager, your effectiveness can be greatly influenced by your understanding of cultural differences and their impact on staff. Hofstede’s Model of National Culture an
16 GLOBAL ISSUES FOR HUMAN RESOURCE MANAGERS
Shutterstock.com/Sergey Nivens
LEARNING OBJECTIVES
After studying this chapter, you should be able to do the following:
16.1 Discuss the reasons for increasing business globalization and the stages through which companies move from local to global operations. PAGE 553
16.2 Explain the five dimensions of Hofstede’s model of culture and how the GLOBE dimensions differ from Hofstede. PAGE 561
16.3 Briefly discuss the big-five personality traits in relation to international assignments and the advantages and disadvantages of parent-country, host-country, and third-country nationals for international assignments. PAGE 567
16.4 Explain the issues involved in negotiating the assignment and the potential effects of culture shock on the expatriate employee. PAGE 573
16.5 Briefly define the options for compensation of expatriate workers. PAGE 577
16.6 Discuss trends in globalization affecting businesses around the world. PAGE 580
SHRM HR Content
See Appendix: SHRM 2018 Curriculum Guidebook for the complete list.
B. Compensation and Benefits
7. Geographic location
35. Global employee benefits
41. Outsourcing
E. Globalization
1. Cross-border HR management
a. Current issues in global HRM
c. Family concerns related to cross-border assignment
d. Host-country nationals (HCNs)
e. Managing personal and family life for expatriates
f. Parent-country nationals (PCNs)
g. Third-country nationals (TCNs)
2. Cross-cultural effectiveness
a. Cultural sensitivity
b. Cultural training
c. Hofstede’s Cultural Dimensions
3. European Union
6. Global benefits
a. Compensation (balance-sheet approach; home-based pay, host-based pay, localization)
b. Global business environment
d. Global talent shortages
7. Managing expatriates in global markets
a. Assessing and tracking career development of expatriates
b. Effective repatriation
c. Inshoring, offshoring, outsourcing
d. Repatriating employees post international assignment
9. North American Free Trade Agreement (NAFTA)
J. Managing a Diverse Workforce
4. Cultural competence
10. Language issues
GLOBALIZATION OF BUSINESS AND HRM
>> LO 16.1 Discuss the reasons for increasing business globalization and the stages through which companies move from local to global operations.
HR issues change as companies move from local to national to global. In this section, we discuss the importance of and reasons for globalization, ethnocentrism, stages of globalization, and HRM differences in global firms.
The Importance of Globalization
Globalization is one of the most vital business trends of the past 50 years,1 as large corporations have employees from everywhere and conduct business all over the globe.2 Trade between countries increases the standard of living of each country. Overall, foreign trade benefits business and countries by creating more jobs globally,3 but it does create losers as well as winners.
It’s Personal
It is important to realize that no matter where you are, you live in and are affected by the global environment. Globalization may require you to interact effectively with people from many different cultural backgrounds:4 “as an employee” with coworkers, suppliers, and customers; “as a customer” in a local store; “as a student” in college; and “as a consumer” you use and buy products from other countries.5 You may work for a foreign-owned company at home or work overseas.6 So today’s managers—and students of management—cannot afford to underestimate the importance of the global environment to business.7 (SHRM E:6-b)
Global Management
Several years ago, Peter Drucker predicted that in the future, there will be two types of managers: those who think globally and those who are unemployed. Clearly, to be successful, companies need global leaders.8 Having a global mindset is a key standard for contemporary managers,9 so global businesses are recruiting candidates with global management skills.10
Most large corporations have global strategies that require managers to make strategic decisions.11 Think about the complexity of FedEx’s environment, delivering to more than 220 countries and territories.12 In its first 30 days, Amazon.com went global, recording sales in all 50 U.S. states and 45 other countries,13 and Jeff Bezos continues to expand globally. Richard Branson, currently one of the world’s most successful CEOs, operates his Virgin Group brands on every continent except Antarctica (at least your authors were unable to find any Virgin Group businesses in Antarctica, but we wouldn’t put it past him!) and even at the edge of space.14
Capital Flows Between Countries
Capital and goods flow easily between countries. Because of the ability to communicate instantly, services can generally be performed in the location where they have the lowest cost for the most efficient (not necessarily the best—but the most efficient!) service quality. One model identifies four types of capital that flow between countries:15 (SHRM E:1-a)
Natural capital. Natural resources, such as timber, water, and minerals, are “components of nature that can be linked with human welfare.”
Social capital. This “consists of the social networks that support an efficient, cohesive society, and facilitate social and intellectual interactions among its members. Social capital refers to those stocks of social trust, norms and networks that people can draw upon to solve common problems and create social cohesion.”
Manufactured capital. This is human-made capital, like machines, tools, buildings, and other infrastructure, that is used to produce other assets.
Human capital. This “generally refers to the health, well-being and productive potential of individual people.”
If you take another look at these types of capital, there appears to be a theme throughout—humans, people, us! We need to have global human resources.16 Because every form of capital that is exchanged between countries is controlled in some way by people, we have to figure out how to manage those individuals in order to maximize organizational returns. However, there are significant cultural differences between countries and regions. In fact, in many cases, there are multiple cultures in a single country. All of this makes global business more challenging.
Reasons for Business Globalization
The world was simpler when it was difficult to move goods across borders or oceans and it was just as difficult to move people between countries. A business could work in its local environment, taking only its local customers into account as it produced the goods and services those customers wanted. However, our environment has conspired to make it easier to move both goods and people, along with abstract ideas and concrete knowledge, across borders and around the world. In turn, business must adapt to this new environment as surely as having to adapt to climate change (Chapter 15) or a threat of disease. What has happened that created this environment? There are many reasons why business continues to globalize on a scale never seen before. Let’s review major reasons now.
