HRM Issues

Recruitment and Selection

Recruitment is a process of attracting a pool of qualified applicants. Selection is choosing applicants from this pool whose qualifications match the job requirements most closely. Traditionally, there are three types of employees −

  • Parent Country National − The employee’s citizenship is same with the organization.

  • Host Country National − The employee is local for the subsidiary.

  • Third Country National − The employee is from a different country, i.e., not where the organization is registered / based and also where the subsidiary of the organization is not located.

Staffing and managing approaches strongly affect the type of employee the company looks for. In Ethnocentric approach, the parent country nationals are chosen for headquarters and subsidiaries. In polycentric approach, host country nationals work in the subsidiaries, while parent country nationals are chosen for headquarters. An organization with a geocentric approach chooses employees purely based on talent, regardless of their origin type.

A balance between internal organizational consistency and local labor practices policy is a goal during recruitment. People in achievement-oriented nations consider skills, knowledge, and talents while hiring a new employee.

Development & Training

The overall aim of the development function is to provide adequately trained personnel in a company as well as to contribute to better performance and growth with their work. At the international level, human resource development function manages −

  • Training and development for global employees
  • Special training to prepare expatriates for international jobs
  • Development of globally efficient managers

Creation and transfer of international human resource development programs may be carried out in two ways −

  • In centralized approach, headquarters develop trainings and trainers travel to subsidiaries, often adapting to local situations. This fits mostly with the ethnocentric model. A geocentric approach is also centralized, but the training inputs come from both headquarters and subsidiaries staff.

  • In decentralized approach, training is carried out on a local basis, which follows a polycentric model. In decentralized training, the cultural backgrounds of employees and corporate trainers are same. Training material and techniques are usually local and for use in their own area.

Performance Evaluation

In companies, performance evaluation is most frequently carried out for administration or development purpose.

For administration purposes, performance evaluation is done when the decisions on work conditions of employees, promotions, rewards and/or layoffs are in question. Development intention is oriented to the betterment of work performance of employees, as well as to the enhancement of their abilities. It is also a way for advising employees regarding corporate behavior.

Performance evaluation can be quite challenging, especially when it carried out at an international level. The international organization must evaluate the employees from different countries. Consistency across subsidiaries for performance comparisons with contrasting cultural background makes the evaluation meaningful. As with other functions, the approach to performance evaluation depends on the organization’s overall human resource management strategy.

Management of Expatriates

Expatriates management is one of the most important issues in international business. The most important issues related to Management of Expatriates are the following −

The Reasons for Expatriate Failure

In international companies, the high failure rate of expatriates can be contributed to six factors − career blockage, culture shock, lack of cross-cultural training, an overemphasis on technical qualifications, using international assignments to get rid of problematic employees, and family problems.

Cross-Cultural Adjustment

Expatriates and their families need time to become familiar with their new environment. The culture shock occurs when after some time, the expatriates find new job conditions unattractive. It usually takes three to six months after arrival, to get out of the culture shock.

Expatriate Re-Entry

After the expatriate completes his assignment and returns home, the work, people, and general environment becomes unfamiliar. The expatriate is generally unprepared to deal with reverse culture shock.

Selection of Expatriates

The choice of employee for an international assignment is a critical decision. To choose the best employee for the job, the management should −

  • Make cultural sensitivity a selection criterion
  • Have expatriates in selection board
  • Look for international experience
  • Hire foreign-born employees as “expatriates” in future
  • Screen spouses and families too

Expatriate Training

Expatriates when trained to prepare for work abroad are more successful. Lack of training can lead to expatriate failure. Cross-cultural training (CCT) is very important. It prepares to live and work in a different culture because coping with a brand new environment can be challenging.

Expatriate Evaluation and Remuneration

There are three common aspects that determine the remuneration of expatriates. In a home-based policy, employees’ remuneration is according to their home countries. The host-based policy sets salaries according to the norms of the host country. Finally, region also effects in determining the remunerations.

Remuneration for foreign employees depends on their relocation − whether it is within their home region or in another region. With this approach, closer to home (within the region) jobs fetch lower remuneration than the away (outside the region) jobs.