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					Global Human Resource
             MIM 564
           Spring, 2010
 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?
An application….
   Coloplast A/S
   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
   a. Fungibility
   b. Is not tacitly specialized
  c. Is measurable
  d. Is stand-alone activity
 Also must consider outsourcing costs (high/low) around:
      Product/service delivery
      Coordination
      Control
      Enforcement
             Adapted from Ungson & Wong, 2008; Weidenbaum, 2005.
Peter Hanson case….
   Offshoring to increase the talent pool
Peter Hanson case presents us with
several questions:
 What is the goal of the PDC, and what will
  it take to make it successful? What
  strategic imperatives does it have to
  contend with?
 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?
Selection process
 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
        that criteria?
Typical Selection Criteria
 Education & experience
 Skills and abilities (often subjective)
 Personal characteristics – including the Big
  5 personality traits (neuroticism,
  extraversion, openness to experience,
  agreeableness, conscientiousness)
 Hiring for fit (personal values or
  personality fit)
   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,
  personality, etc.
 Interviews – structured/unstructured;
  situational (or behavioral)
 Physical examinations
 References and background checks
 Assessment centers
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
 First impression
 Similarity error
 Contrast error
 Halo error
 Non-relevancy error
Making the final determination of who
to hire
   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
  corporate culture.
 “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
of expatriation
   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
of affiliates:
 Ethnocentric
 Polycentric
 Geocentric
 Regiocentric
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.
Polycentric approach:
   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.
Regiocentric Approach:
   Is a modified geocentric approach, based
    on regional selection and deployment.
Assessment centers for international
postings are:
   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
    to assume.
       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….

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