M20_DANI8421_13_SE_C20.QXD 1/11/10 9:45 PM Page 747 twenty Objectives ½ To discuss the importance of human resource management Human Resource ½ To proﬁle the stafﬁng frameworks used by MNEs Management ½ To explain the types and competencies of expatriates ½ To examine how MNEs select, prepare, compensate, and retain expatriates ½ To proﬁle MNEs’ relations with organized labor Excellent people are honored wherever they go. —Tibetan proverb 747 M20_DANI8421_13_SE_C20.QXD 1/11/10 9:46 PM Page 748 C A S E Globalizing Your Career1 International companies have been moving people around for cross-cultural skills and prescribes training paths that deal centuries, seeking to capture the benefits that follow from with possible points of culture shock. Manfred Fiedler, vice putting the right person into the right job at the right place at president of human resources, describes the process: “We the right time at the right pay. Now, more than ever, compa- give them a horizon, a perspective and, gradually, we tell nies engaged in international business must do so. them they are potentially on an international path. . . . We Globalization, by spurring trade, capital, and investment ﬂows want them to develop a cross-cultural intellect, what we call across nations, created many operating units worldwide. An ‘strategic accountability.’” To this end, Honeywell might interconnected market means economic patterns and busi- advise an executive to network with people who have already ness practices in one area inﬂuence the fate of a company in worked abroad, study another language, or explore areas another. Collectively, they indicate that if you are going to be where he or she might struggle while living abroad. The pace successful, you have to be global. of globalization accelerates this process; companies begin Increasingly, being a corporate leader demands an inter- slotting people for international assignments early on in their national background. “You have to have an intuitive sense of careers. Sanjay Joshi, chief executive of global programs at how the world works and how people behave. . . . There is no Wipro Technologies, an Indian MNE, notes that “A big part of substitute for personal experience,” says Paul Laudicina, vice our recruiting is telling people that they will get a chance to president of A.T. Kearney. Daniel Meiland, executive chairper- work abroad.” This appoach, he believes, improves the qual- son of Egon Zehender International, a large international ity of new hires as well as fortiﬁes the company’s growing executive search ﬁrm, offers this assessment: cadre of expatriates.2 [T]he world is getting smaller, and markets are getting Building Skills, Finding Opportunities bigger. In my more than 25 years in the executive search profession, we’ve always talked about the global execu- Laying the foundation for an international business career tive, but the need to ﬁnd managers who can be effective takes time. One must considers many factors, from developing in many different settings is growing ever more urgent. the best skills, managing career progression, and preparing for In addition to looking for intelligence, speciﬁc skills, and the Regarding the latter, for example, living outside one’s com- technical insights, companies are also looking for exec- fort zone. People who have worked overseas note that chal- utives who are comfortable on the world stage. lenges spur them to look at situations differently. Explained Galina Naumenko of PricewaterhouseCoopers Russia, interna- tional assignment “spurs global networking among employees, The Expatriate Manager gives them an understanding of different cultures and gets International companies often use expatriates (employees them thinking about alternative ways of approaching problems sent by their companies from the employees’ home countries and solving them.” Similarly, “You get very different thinking if to live and work in other countries) to run their foreign opera- you sit in Shanghai or São Paulo or Dubai than if you sit in New tions. Some MNEs, such as FedEx and Johnson & Johnson, York,” noted Michael Cannon-Brookes, head of strategy for use few expatriates; others, like Royal Dutch Shell and Wipro, IBM’s “growth markets” division.3 use many. Unfortunately, little guidance is available for MNEs must deal with a multitude of human resource management Which Skills Where? Working internationally compels issues. The most fundamental of these are why, when, and employees to develop richer management repertoires. where we should use expatriates. Others include selecting Consider Joan Pattle, a Microsoft marketing manager who the right expatriate, making sure the employee gets the right worked at headquarters in Seattle before accepting a post as predeparture preparation, designing the right compensation product manager in Britain. Her U.K. job came with much package to motivate performance, and moving people wider responsibilities: “At home, my job was very strictly upward and onward when done overseas. deﬁned. I basically had to know everything about managing a The benefits of overseas success and the costs of database. But when I got to London, I was also in charge of overseas failure move companies like Honeywell to identify direct marketing and press relations. I was exposed to a much and develop potential candidates years before their possible broader set of experiences.” Similarly, Laura Anderson, a assignment. Honeywell briefs candidates on their spokesperson for Intel Corp., explained that her assignments M20_DANI8421_13_SE_C20.QXD 1/11/10 9:46 PM Page 749 CHAPTER 20 Human Resource Management 749 in Hong Kong exposed her to a side of the company’s business she had never experienced. In China, a ﬂashy fashion show helped highlight Intel technology, and the press responded with strong coverage. That, and several other Asian media relations encounters, opened Anderson’s eyes during her short-term Hong Kong assignments. “For me,” she says, “it was a tremendous growth experience.” Mindsets and Sightlines Along these lines, McKinsey & Company, a global management consult- ing ﬁrm, found that an expatriate who has technical competence is now a given but [g]lobal market pioneers must have a particular mind-set. . . . When you look behind the success stories of leading globalizers, you ﬁnd companies that have learned how to think differently from the herd. They seek out different information, process it in a different way, come to different con- clusions, and make different decisions. Where others see threats and complexity, they see oppor- tunity. Where others see a barren landscape, they see a cornucopia of choices. An international assignment is risky for managers. For many executives, cultural clashes, language dif- ﬁculties, murky business practices, and harsh environments rule out anything beyond a short-term assign- ment. Other problems arise when a company asks an executive to transfer to second- or third-tier cities in less preferred countries. The gap between life at home versus “over there” can create professional, family, and personal problems. Well-paid foreigners often produce jealousy in their local colleagues. Despite their best intentions, many people assigned to work in foreign companies struggle with foreign cultures. This difﬁculty can lead to the expensive problem of expatriate failure. Coming Home Eventually, most managers return home. One would think this would be a snap—pack the bags, bid adieu to colleagues, board the plane, and return to a hero’s welcome. In many cases, every- thing but the hero’s welcome happens. Tom Schiro of Deloitte & Touche observed, “some companies just send somebody overseas and forget about them for two years.” Communication with the home unit is essential to preempt this problem. Likewise, careful career planning can make a world of difference when it is time to return home. For example, following a four-year assignment in Tokyo, Bryan Krueger returned to a promotion to president of Baxter Fenwal North America. When he had left for Tokyo, his company did not guarantee him a promotion upon his return. So, while away, he kept up-to-date with the goings-on at headquarters. Krueger credited his smooth return to his intensive networking. During his stint in Tokyo, he returned to the United States four to ﬁve times a year to visit colleagues. As he explains, “I was deﬁnitely proactive. Anyone who is not is doing himself a disservice. I made a conscious effort to stay in touch, and it paid off.” On the other hand, companies may be unable to entice some expatriates to return home. While overseas, an expatriate can achieve remarkable levels of compensation, responsibility, and prestige. A penchant for living abroad creates global nomads who travel from one country to the next for their com- pany. For example, after stints in Singapore and London, a Morgan Stanley expatriate in India muses, “I still don’t want to go back to the United States. It’s a big world—lots of things to see.” Nevertheless, he goes on to say that international business travel “is perhaps the most dangerous form of travel. Tourists would- n’t consider ﬂying into a Colombian war zone for a week, yet folks from oil, computer, pharmaceutical, agricultural and telecom companies do it regularly.” Once there, just frequenting good hotels and restau- rants with colleagues can make one a prime targets. INTERNATIONAL EXPERIENCE AND YOUR CAREER TRAJECTORY The impact of an overseas assignment on one’s career trajectory may be positive, neutral, or negative. Companies tout foreign assignments as meaningful development experiences that prepare managers for greater responsibilities. An international assignment accelerates career progression, improves skills and expertise, fosters cultural awareness, increases confidence in overcoming challenges, and enhances creativity through exposure to new ways of doing things. Historically, however, the odds have been on a neutral or negative career outcome. Notwithstanding the rhetoric, companies were slow to reward a man- ager’s successful international experience with expanded leadership responsibilities. M20_DANI8421_13_SE_C20.QXD 1/11/10 9:46 PM Page 750 750 PART 6 Managing International Operations Today, globalization has changed this situation. Already, globalization has led to shortages of talented executives. Companies worldwide report difﬁculty ﬁnding skilled candidates, signiﬁcant time and effort spent on interviewing and hiring, and escalating anxiety about losing top talent to rivals. Globalization also changes the standards of evaluation. More CEOs assert that international experience is an essential fea- ture of a high-performance career. At Procter & Gamble, for example, 39 of the company’s top 44 global officers have had an international assignment, and 22 were born outside the United States. Giorgio Siracusa, HR director at Procter & Gamble, believes that global awareness and experience are “ingredi- ent[s] you must have if you aspire to be a global player in the long term.” Globalization has spurred MNEs like Samsung, Infosys, AstraZeneca, Wipro, and Dow Chemical to see multinational experience as being just as essential as multifunctional and multiproduct experiences in reaching the upper echelons of the company. Data conﬁrm this trend; for example, 80 percent of FTSE 100 CEOs reported inter- CRN national assignments.4 Case Review Note Introduction People manage organizations. Granted, successful companies have insightful strategies, efﬁcient supply chains, sharp ﬁnancial systems, and the like. Ultimately, though, success is a function of the people who start and sustain the organization. The challenge of put- ting the right person into the right job in the right place at the right time for the right compensation takes us to the front lines of international business. From opening markets to returning home, international business careers take any number of directions. At the center is the individual facing challenges that often lead to surprising opportunities. Indeed, the contest between challenges and opportunities is the spirit of a career in inter- national business.5 This chapter looks at the role of the individual in international busi- ness, proﬁling key facets of human resource management in the MNE. WHAT IS HRM? Human resource management Human resource management (HRM) is the approach a company take to manage most refers to activities that staff the valued assets—the people who implement its strategy. Opening and operating a busi- organization. ness, no matter if it is a micronational or multinational, requires planning human resource needs, ﬁnding people to meet those needs, motivating them to perform well, upgrading their skills so they can move on to more challenging tasks, and, ultimately, retaining them.6 This chapter builds on the themes introduced in Chapter 11 and applied since to var- ious value-chain activities. That is, it looks at HRM from the perspective that the success- ful company staffs its operations with people who leverage its core competencies while resolving pressures for local responsiveness and global integration. This perspective emphasizes that HRM activities, perform best when managers link them to the strategy of the ﬁrm (see Figure 20.1). HRM and the Global Company HRM is more difﬁcult for the international company than for its domestic counterparts. The international company, besides dealing with situations in its home market, adjusts HRM practices for the political, cultural, legal, and economic differences between countries. For example, leadership styles and management practices vary from country to country.7 These differences can cause difﬁculties between people at different units—say, headquarters Beijing and a local subsidiary in Paris. These differences can turn great managers at home into ineffective ones in foreign markets, as the struggle to adapt erodes the effectiveness of performance. Similarly, labor markets vary in the mix of workers, costs, and productivity. Local labor laws often require a company change its workplace standards and hiring practices.