Global Human Resource
Sully Taylor and Berrin Erdogan
Week 2, Global Human Resource
The Global Labor Pool: Coloplast and the
expansion into Hungary and China
The potential and problems of offshoring
The Quest for Global Talent: Peter Hanson
and offshoring to China
Career Management and the Role of
Effective Expatriation: Celtic Tiger
The Human Side of Globalizing a Company
The Global Work Force and Offshoring
Adapting the organization to globalization
The Global Labor Pool
What does a company need to consider
when thinking about offshoring or
outsourcing employment (or any
corporate value chain activity)?
How do you determine the suitability of a
labor pool in another country?
Outsourcing….is part of analyzing a business
process to identify those activities that can be
done external to the firm. A source can be either
domestic or international.
Offshoring….is placing a part of a business
activity in a foreign location. If kept within the
firm, it can be called international in-house
Offshore outsourcing is using a supplier based in
a foreign country on a recurrent basis.
Offshoring (in-house production)
Full control over quality of products
Leveraging of best practices across
High short-term flexibility, allows
adjustments to changing market (e.g.,
changes in import tax)
Know-how protection (IP)
Stable pricing and lower supply risk
Outsourcing to a Third Party
Lower lead time due to use of existing
Specialized outsourcing companies
Exploit the advantages of using a subcontractor
more focused on a particular task
High long-term flexibility because fewer asset-
specific investments have been made
Lower investment costs – tend to be variable
Often cheaper production
Integrating binds (human and capital) resources
and distracts managerial focus from other
activities (such as marketing and branding)
The outsourcing decision
Decision depends on vulnerability & costs of outsourcing.
Four factors that make an activity a target for outsourcing
b. Is not tacitly specialized
c. Is measurable
d. Is stand-alone activity
Also must consider outsourcing costs (high/low) around:
Adapted from Ungson & Wong, 2008; Weidenbaum, 2005.
Peter Hanson case….
Offshoring to increase the talent pool
Peter Hanson case presents us with
What is the goal of the PDC, and what will
it take to make it successful? What
strategic imperatives does it have to
What are the cultural and institutional
forces it must take into account?
How can it reconcile (bridge) the
conflicting cultural and institutional forces?
How can the differences be bridged?
Once you know whether you are
going to look locally or globally,
internally or externally for the
people you need, then what?
Talent Management and Global Career
Selecting People for Overseas Positions
How, and based on what criteria, was Peter
Hanson selected for the PDC post in China?
Gather information about the people in the
pool of qualified recruits:
Evaluate the qualifications of each
Make the decision about which to hire
Key question: what criteria will you use, and
why? How do you know that the person meets
Typical Selection Criteria
Education & experience
Skills and abilities (often subjective)
Personal characteristics – including the Big
5 personality traits (neuroticism,
extraversion, openness to experience,
Hiring for fit (personal values or
What techniques can you use to select
candidates for global positions? What are
the strengths and weaknesses of each?
Major Selection Instruments used in
Selection for all Jobs
Application blanks and resumes
Selection tests: e.g. mental or cognitive
ability, psychomotor ability, work samples,
Interviews – structured/unstructured;
situational (or behavioral)
References and background checks
Two important concepts in Selection
Reliability: the consistency of a measurement.
Will you get about the same results if you use
this instrument again with this person? E.g. test-
Validity: how well does the instrument really tell
you whether the person will do well in the job?
Deals with the issues of (1) whether the test is
an adequate measure of the characteristic it
supposedly measures and (2) whether inferences
and actions based on test scores are appropriate.
E.g. predictive or concurrent validation.
One method of recruitment ….that is also a kind
of selection tool….
Realistic job previews……. What do they
get you? Why do they work?
Common errors in interviews
Making the final determination of who
Use multiple indicators – allows you to
counterbalance the measurement error in
any one selection technique
Expatriates and Global Staffing of
Managerial positions in Global Companies
Broadly speaking, there are two
categories of expatriates:
“Agents” – the agency motive for using
expatriates is to fix a problem, or to
control, or to transfer knowledge or
“Learners” – the reason for this is to
develop the professional capabilities of
managers, often at younger ages.
Three Key Roles of Expatriates
Alignment (helps to decentralize decisions while keeping
the global perspective; WHO makes the decisions, not
Standardization (global standardization of practice, e.g.
focus on operating procedures, or education and
Socialization – (inculcating the cultural code of the
company in others, e.g., in Intel, have to be able to
argue your point forcefully; in HP, teamwork is
In other words, using expatriates:
Permits decisions to be made locally but
with the global perspective in mind.
Permits the transfer abroad of the
standards of the parent company.
Permits the diffusion abroad of shared
values – a key element in global
Selecting people for global positions: the case
What approach does the company have towards
staffing in its affiliates overall?
What criteria does it use or should it use?
What instruments should it use to select among
different candidates? E.g. assessment centers,
past performance, interviews, psychological tests.
An examination of the reliability and validity of
Four general approaches to staffing
Ethnocentric approach to staffing
All key positions filled by parent country
Advantages: easy communication with HQs;
overcomes a lack of good local managers; good
in early stages of internationalization.
Disadvantages: limits promotion opportunities of
host country nationals; there is low productivity
while the expatriate adjusts; often leads to
inequitable pay packages.
All key positions in parent country operations filled by
parent country people; all key positions in host country
affiliate by host country nationals.
Advantages: eliminates language barriers and adjustment
problems; lowers the political profile of the affiliate; less
expensive (usually); provides continuity of management.
Disadvantages; communication gap between host country
and HQs; limits host country nationals’; career paths
because can’t get necessary experience to go to highest
reaches of the firm; limits international experience among
top HQ executives.
A geocentric approach:
The best people are sought for key jobs throughout the
organization, regardless of nationality.
Advantages: develops an international cadre of executives;
deploys best talent for a particular situation; reduces
identification with local unit.
Disadvantages: most host countries want foreign affiliates
to employ their citizens; increases the training and
relocation expenses; creates a need for standardized
compensation structure; requires longer lead times and
more centralized control of the staffing process.
Is a modified geocentric approach, based
on regional selection and deployment.
Assessment centers for international
Used to determine managerial potential of
employees that evaluates individuals as they take
part in a large number of activities conducted in a
relatively isolated environment. It is also useful
for identifying potential training needs.
(e.g. tasks such as dealing with a sudden disruption to
supply chain; conflict between employees; government
representative with a beef with the company; team work
with others on a problem).
Criteria for Selecting Expatriates
Depends on the role the expatriate is expected
E.g. for agency-type assignments, clear managerial
qualifications and the relevant professional skills are
key. Also the ability to improvise, impart confidence
and motivate. (agency = control or knowledge transfer)
In learning-oriented assignments, relationship abilities
and cultural awareness may be more key as they open
access to new knowledge. (career enhancement,
development of young people)
The decision to take a global position….
The Celtic Tiger case….