9 - International Human Resources and Compensation Management

Question 1

What factors have increased economic integration across countries?

Key factors such as

(1) ________
(2) _______,
(3) ________ platforms have increased the economic integration across countries and emphasized the need for human resources management (HRM) practices and systems to be more globally linked and consistent across countries.

Answer 1

free trade

service-based business

ntegrated technology

Question 2

____ member countries now comprise EU, whose goal is to facilitate the flow of goods, services, capital and human resources across national borders in Europe in a manner similar to the way they cross state lines in the United States.

A similar transition occurred within North America with the passage of ______ in 1994. It created the world’s largest _____. Since its passage, commerce between the United States, Canada and Mexico has more than tripled.

Also, many trade agreements among Asian countries have significantly facilitated commerce integration and made Asia the fastest-growing region in the world with China as the dominant trade leader.

Answer 2

Twenty-seven

NAFTA

free market

Question 3

The fact that international corporations can choose the countries in which they do business or relocate operations generally results in the selection of countries that have _______. In addition to economic factors, _______ factors are a huge consideration. Beyond the economic and political-legal issues, a country’s cultural environment (communications, religion, values and ideologies, education, and social structure) also has important implications when it comes to a company’s decision about when and how to do business

Answer 3

the most to offer

political-legal

Question 4

1. (a) An _________ is essentially a domestic firm that builds on its existing capabilities to penetrate overseas markets.
2. (b) A __________ is a firm with fully autonomous units operating in multiple countries.
3. (c) A ________ is a multinational firm that maintains control of its international units through a centralized home office.
4. (d) A ______ is a firm that attempts to obtain the local responsiveness of an MNC and the efficiencies of a global firm. It seeks this through the use of a network structure that coordinates specialized facilities positioned around the world.

Answer 4

1. international corporation
2. multinational corporation (MNC)
3. global corporation
4. transnational corporation

Question 5

International human resources management differs from domestic human resources management in several ways.

Functions and activities that are unique to international human resources management include relocation, orientation and translation services to help employees adapt to a new and different environment outside their own country.

Assistance with _______ matters, banking, investment management, home rental while on assignment and coordination of home visits is also usually provided by the human resources department.

Also, the human resources department in an overseas unit must be particularly responsive to _______, ______ and legal aspects of the external environment.

Answer 5

taxation

cultural

political

Question 6

Basically, there are three sources of managers to staff overseas units.

• The firm can send managers from the ________ or expatriates.
• It can hire host-country _____, natives of the host country, to be managers.
• Also, it can hire _______ nationals— natives of a country other than the home country or the host country.

Answer 6

home country

nationals

third-country

Question 7

In recent years, there has been a trend to send expatriates on shorter, project-based assignments (two to 12 months versus one to three years) and to shift more quickly toward hiring _______ nationals.

This has three main advantages:

• (1) Hiring local citizens is generally less _______ than relocating expatriates. Local citizens also know the cultural and political landscape of the country and are often more likely to be able to gain the support of local staff members.
• (2) Since local governments usually want good jobs for their citizens, foreign employers may be required to _______.
• (3) Most customers want to do business with companies (and people) they perceive to be ______ versus foreign.

Answer 7

host-country

1. costly
2. hire locally
3. local

Question 8

Generally describe how the recruitment and selection procedures in foreign countries differ from those used domestically.

Historically, recruitment in foreign countries has been subject to more _________ than in the United States. Virtually all countries have work permit or visa restrictions that apply to foreigners. A work permit or visa is a document issued by a government granting authority to a foreign individual to _________ in that government’s country, and there usually are laws requiring the employment of local people when available.

Answer 8

government regulation

seek employment

Question 9

How did the tragic events of 9/11/2001 impact immigration and visa granting in the United States?

Since the tragic events of 9/11/2011, there has been a backlash against immigration and a backup in the number of visas granted to foreign workers and students entering the United States. U.S. managers complain that this is making it harder for them to hire top talent. U.S. firms lament that they are experiencing a “reverse ________” as skilled foreign workers leave the United States and seek work in other countries. Some other countries have become less restrictive than the United States in granting foreign residents citizenship and work permits. For instance, the United Kingdom gives graduates of the world’s top 50 _______ an automatic right to work in the United Kingdom for a _____.

Answer 9

“brain drain”

business schools

year

Question 10

In addition to focusing on individuals, companies are increasingly using transnational teams to conduct international business.

Transnational teams are composed of members of multiple nationalities working _______ on projects that span multiple countries. These teams are especially useful for performing tasks that the firm as a whole is not yet ________ to accomplish. For example, they may be used to transcend the existing organizational structure to customize a strategy for different geographic regions, transfer technology from one part of the world to another, and communicate between headquarters and subsidiaries in different countries.

Answer 10

virtually

structured

Question 11

In selecting individuals for an international assignment, the following steps should be followed and in the sequence presented.

• Step 1: Begin with _________. This way companies can more easily avoid the problems of forcing otherwise promising employees into international assignments that are bad for them.
• Step 2: Create a _________. After employees have self-selected, organizations can build a database of candidates for international assignments.
• Step 3: Assess candidates’ ________. From the short list of potential candidates, managers can assess each candidate in terms of his or her technical and managerial readiness relative to the needs of the assignment.
• Step 4: Assess candidates’ __________ and _______. Organizations should pay attention to an individual’s ability to adapt to different environments.

Answer 11

1. self-selection
2. candidate pool
3. core skills
4. augmented skills and attributes

Question 12

There are at least five essential elements of training and development programs that prepare employees for working internationally:

• (1) _______ training,
• (2) _______ training,
• (3) assessing and tracking _______
• 4) managing ____ and _____
• (5) _______ —a final, but critical, step.

Answer 12

1. language
2. cultural
3. career development
4. personal and family life
5. repatriation

Question 13

For an international assignment, in addition to preparing often for a different language and for practical matters such as different currency, transportation, time zones, and the like, an individual should become acquainted with the following characteristics of the host country:

1. (a) Social and ______ etiquette
2. (b) History and _______
3. (c) _______, including relations between the host country and the United States
4. (d) _______ values and priorities
5. (e) ________
6. (f) Sources of ______ and great achievement of the culture
7. (g) _______ and its role in daily life
8. (h) ________ structure and current players.

Answer 13

1. business
2. folklore
3. Current affairs
4. Cultural
5. Geography
6. pride
7. Religion
8. Political

Question 14

Language and communications differ among cultures. The following list reflects this:

1. (a) In England, to table a subject means to put it on the table for ________, whereas in the United States, it means to postpone discussion.
2. (b) Information flows to managers in the United States, whereas in Europe, South Africa and other centralized cultures, managers must take the initiative to ______ information.
3. (c) Arabs, Europeans and many other cultures resent the tendency of Americans to be _____ in their communications and to get to the point.
4. (d) There are _____ ways to avoid saying “no” in Japan.
5. (e) When something is described as “inconvenient” by the Chinese, this means that it is _______.
6. (f) Expressions of anger are unacceptable in some countries, and in others public displays of anger are _______.
7. (g) In many foreign countries, silence is treated as “___________” that belongs to the message sender, whereas in the United States, it is not discourteous to interrupt or break silences.
8. (h) Gesturing with one’s _______ is acceptable in the United States, but not in many foreign countries.

Answer 14

1. present discussion
2. seek out
3. direct
4. 16
5. impossible
6. taboo
7. “communication space”
8. hands

Question 15

Employee work attitudes and motivations vary among cultures. In _______, for example, employees have tended to be highly loyal to their employer, although there are indications that this may be changing. Latin Americans tend to be loyal to their ________ rather than to their employing firm or job. In the United States, _______ has been the name of the game; in Japan, Taiwan and other Asian countries ________ is more the underlying philosophy.

Participative decision making varies among managers from different cultures, with U.S. managers somewhere in the ______ of the continuum between autocratic and highly participative.

Managers from South America and Europe, especially those from France, Germany and Italy, tend to be highly _______.

Far Eastern cultures tend to stress _______ and lean more toward group decision making.

Answer 15

• Japan
• individual managers
• competition
• cooperation
• middle
• autocratic (of or relating to a ruler who has absolute power)
• harmony

Question 16

Although international assignments provide some definite developmental and career advantages, there can sometimes also be certain career development risks. To maximize the career benefits of a managerial assignment, a candidate should ask two key questions before accepting an international post. These questions are:

(1) Do the organization’s senior executives view the firm’s international business as a _______ of their operation? Research shows that expatriates with ________ that truly need to be accomplished are likely to find their assignments more rewarding. Realizing this, fewer companies are sending expatriates abroad for career development purposes only.
(2) Within top management, how many executives have a foreign service assignment in their _______, and do they feel it important for one to have such experience?

Answer 16

critical part

clear goals

background

Question 17

_________ —a disorientation that causes perpetual stress—may be experienced by people who settle overseas for extended periods.

The stress is caused by many types of jarring and disorienting incidents such as not being able to _______, being unable to read street signs and a myriad of other everyday matters that are no problem at home. Soon minor frustrations become catastrophic events; and one feels helpless and drained, emotionally and physically.

Answer 17

Cultural shock

communicate

Question 18

Employee compensation practices of firms operating internationally vary according to the practices of the host country. In industrialized countries, pay generally is by the ________, whereas in developing countries, it is by the ______. Also, piecework is quite commonly used. In some countries, seniority is an important element in determining the pay rates of employees.

Employee benefits often are much ______ in foreign countries than in the United States. Also, the benefits often are required by government legislation or order. Lump-sum payments equal to one or two months’ pay are made semiannually or annually in some countries as part of the total compensation package. Additionally, _______ is quite common in several foreign countries, too.

Compensation of managers has differed for host-country and expatriate managers. Host- country managers traditionally were paid primarily according to _______. This typically produced a lower salary than that paid to expatriate managers; however, increased competition among different companies with subsidiaries in the same country has led to a gradual upgrading of host-country managers’ salaries. Today more companies are offering their host-country employees a full range of training programs, benefits and pay comparable with their domestic employees but adjusted for local differences. These programs are known as _________ systems.

Answer 18

• hour
• day
• higher
• profit sharing
• local custom
• global compensation

Question 19

Expatriate managers generally are paid in a manner that is consistent with the overall compensation policy of the employer. This includes an incentive to accept the overseas post; the ability to maintain their American _________; a factor to facilitate ______ into the United States; consideration of the education of children abroad; and an allowance for maintaining relationships with family, friends and business associates via ______ and other communication technologies.

Additionally, expatriate compensation packages provide for ______ in countries that are politically unstable or present personal dangers, the packages include provisions for good health care, and they reimburse for additional foreign taxes and provide assistance with these tax filings.

Answer 19

standard of living

reentry

trips home

security

Question 20

The balance sheet approach is a system that is used by internationally operating firms to compensate ___________ overseas. It is designed to equalize the ________ of employees at comparable position levels living overseas and in the home country and to provide incentives to offset qualitative differences between assignment locations. It has four elements which are as follows:

• (1) _______ that is essentially equal to that of domestic managers in comparable jobs
• (2) A ________ adjustment to the base pay, differentials that are designed to offset the higher costs of overseas goods, services and housing. Typically, companies do not subtract when the international assignment has a lower cost of living.
• (3) Incentives of about ___% of base pay to compensate a person for his or her separation from family, friends and domestic support systems. Incentive premiums are also paid to compensate expatriates for hazardous duty or harsh conditions.
• (4) Company ______ programs to cover the added costs of moving and storage, automobiles and education expenses.

Answer 20

expatriate managers

purchasing power

1. Base pay
2. cost-of-living
3. 15%
4. assistance

Question 21

_______ is the term for adapting pay and other compensation benefits to match that of a particular country.

Answer 21

Localization

Question 22

One of the disadvantages of not localizing an expatriate’s pay is that in low-cost countries, this can breed resentment among local staff members if they are earning ________. This can affect the amount of _______ they are likely to give an expatriate and adversely affect the success of an assignment.

Answer 22

significantly less

cooperation

Question 23

Domestic managers who have not worked abroad are frequently unable to understand an expatriate or host-country manager’s experiences, value them or accurately measure their contribution to the organization. Geographical distances create communication problems for expatriates and home-country managers, although e-mail, and other human resources information systems technologies have begun to help close the gap. Still, local managers with daily contact with the person are more likely to have an accurate picture of his or her performance.

Host-country evaluations can sometimes be problematic.

First, _______ can influence a person’s perception of how well an individual is performing.

Second, ______ decision making may be viewed either positively or negatively, depending on the culture. Such cultural biases may not have any bearing on an individual’s true level of _______. In addition, local managers sometimes do not have enough of a perspective on the entire organization to know how well an individual is truly contributing to the firm as a whole.

Even if the formal appraisal is conducted in the home office and promotion, pay and other administrative decisions are made there, most human resources experts agree that performance evaluations should try to balance the two sources of appraisal information. Multiple sources of appraisal information can be extremely valuable for providing independent points of view.

Answer 23

local cultures

participative

effectiveness

Question 24

Individuals serving in foreign countries should provide ongoing feedback to the home office. This includes information concerning the support they are receiving, obstacles they face and suggestions for changes.

In addition, debriefing interviews are conducted with individuals upon their return to the home country for several purposes:

1. (a) To help expatriates reestablish ______ with the home organization and engage in career path reevaluations
2. (b) To address _______ issues related to the foreign job assignment itself
3. (c) To address _______ issues regarding the firm and its overseas commitments
4. (d) To document _______ of the interviewees and incorporate them into training programs for expatriates.

Answer 24

1. old ties
2. technical
3. general
4. insights

Question 25

There are major differences among industrial countries with respect to the labor environment. Wages and benefits vary dramatically across the world as do safety, child labor and other legal regulations.

In many countries, the regulation of labor contracts is profound and extensive. Labor unions around the world differ significantly as well. Differences exist not only in the collective bargaining process, but also in the political-legal conditions. For example, the _____ prohibits discrimination against workers in unions, but in many other countries, including countries in Central America and Asia, labor unions are _______.

Union strength depends on many factors, such as the level of employee _______, per capita labor income, mobility between management and labor, homogeneity of labor (racial, religious, social class), and ________ levels.

In the United States, generally a union is selected by a majority of employees and subsequently bargains only with a single employer; whereas in many European countries the unions have a great deal of political power and are often allied with a particular ________. When employers in these countries deal with unions, they are, in effect, dealing indirectly with ________.

Answer 25

• EU
• illegal
• participation
• unemployment
• political party
• governments

Question 26

In countries with nationalized industries, government involvement in the collective bargaining processes of these industries is _______.

In _________ countries, it is common for the government to have representatives present during bargaining sessions to make sure that unions are not disadvantaged in bargaining with skilled management representatives.

Answer 26

natural

developing

Question 27

International Trade Union Confederation (ITUC)

ITUC is an international union organization with headquarters in _______. ITUC is a confederation of over _____ national trade union centers, representing 175 million trade union members in about ____ countries and territories.

The ITUC’s mission is to promote worker _____ and ______ through international cooperation between trade unions, campaigning and advocacy with governments and global institutions.

Answer 27

Brussels

300

155

rights / interests

Question 28

International Labour Organization (ILO)

ILO is a specialized agency of the _________. It engages in considerable research on an international basis and endorses standards for various working conditions set forth within the International ________. This code often is used to reflect the international labor standards that employers are expected to follow. ILO has redefined its mission based on the “___________.” It promotes the idea that there is an _______ dimension of work. This dimension includes decent homes, food, education, the right to organize and social programs to protect workers when they are elderly, disabled or unemployed. Moreover, the agenda pertains to workers worldwide, including the self-employed—a situation common in agricultural-based, developing countries.

Answer 28

• United Nations
• Labor Code
• “Decent Work Agenda”
• ethical

Question 29

Provisions for employee representation are established by law in many European countries. For example, an employer may be legally required to provide for employee representation on safety and hygiene committees, worker councils or even on boards of directors.

Their responsibilities vary, but worker councils basically provide a communication channel between employers and workers. The legal codes that set forth the functions of worker councils in _______ are very detailed. Councils are generally concerned with grievances, problems of individual employees, internal regulations and matters affecting employee welfare.

In _______, representation of labor on the board of directors of a company is required by law. This arrangement is known as __________.

While sometimes puzzling to outsiders, the system is fairly simple. Company shareholders and employees are required to be represented in equal numbers on the supervisory boards of large corporations. Power is generally left with the shareholders, and shareholders are generally assured the chairmanship. Other European countries and Japan either have or are considering _______ board participation.

Answer 29

• France
• Germany
• codetermination
• minority