Ch. 11: Global Human Resources

Learning outcomes

By the end of this chapter you can: outline the political, social, economic and technological sides of global HR; set out the differences between domestic and global HR and the ways recruitment and selection, training, compensation and performance management overlap and differ; describe how international companies are organized; explain what culture shock is and how people cope with it; and discuss what training expatriates need to do well on an assignment abroad.

11.1 International environments: PEST analysis

A PEST analysis is useful because it:

• helps the company plan for risks and draw up risk management plans;
• reveals changes at the global level so the company can adjust;
• opens a view on new or different markets, so decisions rest on facts;
• signals opportunities in advance (a "heads up") and warns of threats.

11.2 Types of structures of global companies

Companies in the global market are similar in many ways but differ in how they work with local regions and integrate into local communities. The key tension is global standardization versus local responsiveness.

11.3 Defining the countries: overview of international projects

International companies differ from domestic ones because of cultural, regulatory, social, geographical, reporting and infrastructural diversity. HR managers must know best practices and think about communication, legal and political issues; managers of international projects need special skills and competencies. Some only manage international employees; others move abroad themselves, leaving home, family and friends, learning a foreign language, following a different culture and laws, and travelling extensively.

Defining the countries

HR in focus: domestic versus international HR (IHRM)

International HR works closely with subsidiaries, managers and employees and has more activities and responsibilities than domestic HR. Both cover the same core functions: HR planning, recruitment and selection, performance management, training and development, compensation, and industrial/employee relations. International HR adds:

• relocating employees abroad and orienting them;
• help with travel and immigration;
• taxation of pay across countries;
• human relations in a foreign country;
• language training and translation;
• training arranged before, during and after the assignment;
• administrative services for expatriates;
• a wider view of the world;
• greater involvement in employees' lives;
• risks that employees face;
• shifting attitudes toward expatriates (workers from the home country) compared with local workers.

HR specialists work at the strategic level for international projects or are assigned to the subsidiary. Everyone involved must understand the environmental factors.

Environmental factors affecting international projects

HR in focus: HR and environmental factors

HR is involved at the strategic level together with stakeholders to review these factors before a project is selected. Stakeholders are the people involved in the project with a stake in its outcome and authority or influence over it: presidents, executive teams, financial staff, project managers, team members, the customer, resource managers and HR. HR may train stakeholders on the environmental factors before selection and, once the team is hired, conveys the factors to the team (usually through training). The same applies when the HR team itself moves abroad.

11.4 Culture shock and coping

Triggers include another way of greeting (bowing instead of shaking hands), unfamiliar food and language, getting around a new city, or not observing local customs. People experience frustration, anxiety and confusion, and many miss home. How well someone copes depends on the individual, the situation and the surroundings; many turn to social, physical and spiritual or religious activities.

The four phases of culture shock

The culture shock curve (Lysgaard, 1955) shows these phases. Some add a fifth stage, re-entry shock: readjusting after returning to the home country.

Dealing with culture shock: the role of HR

• The first step: make the team acknowledge that they will experience culture shock, then help them modify their behaviour.
• Help set goals such as physical exercise, meditation and journaling.
• Plan to alternate immersion in the culture with familiar things for stability (for Canadians in Mexico: a Spanish-only cinema a few times, then an English one; authentic Mexican restaurants, then one serving Canadian food).
• Lower expectations of "fitting in" too soon; focus on priorities first and reward small achievements. Most people move on to adjustment and acceptance.
• Explain that performance may initially be less efficient; teach stress management; reassure people that the whole team feels the same; run group workshops, individual support or both.
• When a person fails to reach adjustment or acceptance, provide professional counselling through wellness programs. Look out for warning signs like drug abuse, emotional breakdowns or drinking more, and stay in touch all the time with regular talks and meetings.

On return: some people feel the same shock at home. Returnees may get less responsibility, become bored, have no job to return to, struggle with organizational changes, or lose the financial perks of the assignment and have to adjust to a lower standard of living. HR works with them until they are effective in their job again.

11.5 Selection of employees (expatriates)

HR in focus: selection of expatriates. Poor selection is very costly: the company can run into problems and its reputation suffers. HR therefore develops special screening processes. Candidates are sometimes chosen for prior foreign assignments, overseas travel, good emotional, mental and physical health, knowledge of the language, or a heritage connection. Often, however, the best people are highly skilled, competent and experienced employees with none of these characteristics.

HR first identifies the staffing criteria:

HR must understand the four phases and support people through them so they have an enriched experience.

Family moving with the project team

For longer assignments the family often moves along. The spouse or partner carries a heavy load: leaving family, friends, a job and colleagues, while children's education is interrupted. The family is therefore a significant factor in expatriate success. HR supports the family by helping the partner find a job, finding comparable housing, finding suitable schools and providing transportation. This is time-consuming but critical.

11.6 Cross-cultural conditions and their meaning for HR

Examples of cultural differences from the book:

National cultures are a keystone for HR to understand values, habits, customs and etiquette. Employees must not only be aware of cultural differences but also adjust to them. Ethical dilemmas can arise in some cultures; HR serves as a sounding board and should study international cultures to support the team. Cultural diversity leads to higher productivity and performance and offers personal and professional growth.

It is almost impossible to understand every country's differences, but the gap must be bridged. HR can offer cultural briefings, cross-cultural training, trainers who have lived in the country, and pre-assignment visits. The assignment must honour the host country's customs, traditions and values.

11.7 Training international project teams

Failure abroad is a huge cost, so training is vital for the team's health and the assignment's success. Its scope depends on the length of the project.

The needed depth of training increases with:

• the length of the assignment (longer stay, longer and deeper training), and
• the cultural distance between host and home country (a Canadian needs less cultural fluency for a project in Australia than in China).

Types of training for international project teams

HR plans an orientation for returnees: reflecting on the experience, re-introduction to the organization and its changes, and next steps. Individual and group counselling (by HR or repatriation consultants) serves as debriefing, a reality check on where people stand financially, emotionally, mentally and physically.

Fundamental repatriation logistics:

1. Relocation to the old home or a new home
2. Financial and tax assistance (loss of bonuses and perks, tax changes)
3. Help with building or rebuilding professional and social networks
4. Career counselling
5. Help with reverse culture shock (re-entry shock) for the team and families
6. Help finding schools for children
7. Workshops on organizational changes
8. Stress management training

Teams on multinational projects that move on to another country start the training cycle again. Training and development are crucial for retaining these high performers.

Key terms

Ability to adjust to foreign country, acceptance, adjustment, competence, culture, cultural fluency, culture shock, expatriates, frustration, home country (nationals), honeymoon, host country (nationals), international projects, pre-departure training, re-entry shock, repatriates, soft skills, technical skills, third country national. All are explained above.

Summary

Because of the cultural diversity involved, assignments abroad differ from domestic ones, and HR is more heavily involved. Stakeholders need to understand the six environmental factors. Staffing criteria are fixed before anyone is hired, families help determine success, and cross-cultural awareness and training are indispensable. To some extent everyone passes through the four stages of culture shock, which HR keeps an eye on. Training takes place before leaving, during the assignment and after coming back, when re-entry shock can occur. A carefully planned strategy makes the assignment a success and gives the employee a richer experience.