Human Resource Management Third Edition Policies and practices for multinational enterprises Dennis R. Briscoe

International Human Resource Management Third Edition Policies and practices for multinational enterprises Dennis R. Briscoe Randall S. Schuler Lisbeth Claus First published 1995 by Prentice Hall Second edition 2004 by Routledge Third edition 2009 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Avenue, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2009 Dennis R. Briscoe, Randall S. Schuler and Lisbeth Claus All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Briscoe, Dennis R., 1945– International human resource management: policy and practice for multinational enterprises/Dennis R. Briscoe, Randall S. Schuler, Lisbeth Claus. – 3rd ed. p. cm. – (Routledge global human resource management series) 1. International business enterprises – Personnel management. I. Schuler, Randall S. II. Claus, Lisbeth M. III. Title. HF5549.5.E45B74 2007 658.3 – dc22 4 ISBN10: 0–415–77350–4 (hbk) ISBN10: 0–415–77351–2 (pbk) ISBN13: 978–0–415–77350–8 (hbk) ISBN13: 978–0–415–77351–5 (pbk) This edition published in the Taylor & Francis e-Library, 2009. To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eB. ISBN 0-203-86696-7 Master e-book ISBN Contents List of illustrations viii List of tables ix List of boxes x IHRM in Action xi List of vignettes xii Foreword xiii Acknowledgments xv List of acronyms xvii Introduction 1 PART I INTRODUCTION TO INTERNATIONAL HUMAN RESOURCE MANAGEMENT: THE CONTEXT 1 The globalization of human resource management 9 The internationalization of business 10 The internationalization of human resource management 20 Strategic international human resource management 29 The evolving international human resource function 32 Conclusion 34 2 Creating the international organization: strategy and structure 40 Global organizational structure 42 Choice of method for entry into international business 53 Organizational structure and design 65 International human resource management and global organizational design 68 Research on the structure and performance of the multinational enterprise 69 The global learning organization: the tie that binds 70 Conclusion 71 3 International human resource management and culture 75 The nature and importance of culture 77 Country culture versus company culture 85 Cultural convergence and/or divergence 86 Research in international human resource management 87 Impact of culture on international human resource management 92 Conclusion 93 4 Global employment law, industrial relations, and international ethics 96 The institutional context of international business 98 The global legal and regulatory context of the multinational enterprise 105 International labor relations 121 The international framework of ethics 136 Conclusion 148 PART II INTERNATIONAL HUMAN RESOURCE MANAGEMENT IN THE MULTINATIONAL ENTERPRISE: POLICIES AND PRACTICES 5 Global talent management and staffifing 155 Global work force planning and forecasting 156 Staffing the multinational enterprise: an introduction 165 Staffing with international assignees 170 Host country nationals 190 Third country nationals 192 Immigration law 194 Conclusion 194 6 Training and management development in the multinational enterprise 198 Training in the multinational enterprise 199 Issues related to global training and development 200 Virtual and global teams 208 Global leadership development 211 Development of a global mind-set 214 Cross-cultural preparation for international assignees 220 Knowledge management in the multinational enterprise 230 Conclusion 230 vi • Contents 7 Global compensation, benefifits, and taxes 236 Global remuneration in the multinational enterprise 238 Compensation and benefits for international assignees 254 Global compensation and benefits management in the multinational enterprise 279 Conclusion 281 8 International employee performance management 286 The concept of performance management 287 Performance management in the multinational enterprise 288 Performance management of international assignees 297 Conclusion 308 9 The well-being of the global work force, global human resource information systems, and the structure of today’s international human resource management 312 The well-being of the global work force 313 Global human resource support services and information systems 324 Structure of global human resources 329 Conclusion 337 Notes 342 Author index 378 Subject index 387 Contents • vii List of illustrations 1 Chapter map 2 1.1 International human resource management 21 3.1 The three layers of culture 79 3.2 Development of cross-cultural competence 81 4.1 Umbrella of CSR programs 146 5.1 Successful international expatriate experience 174 6.1 Effectiveness of homogeneous and heterogeneous teams 210 7.1 Balance sheet 263 8.1 Model of international performance management in a multinational enterprise 293 9.1 Pliva’s human resource strategy map 341 List of tables 7.1 Hourly compensation costs for production workers in manufacturing, 2004 241 7.2 Hours per year per person in employment, 1994 and 2004 246 7.3 Vacations, holidays, and working hours, 2000 248 7.4 The ten most expensive cities in the world, 2007 264 7.5 Impact of exchange rate fluctuations on the differential in the balance sheet 271 7.6 Impact of inflation on the differential in the balance sheet 272 7.7 Taxation of wage income, 2006 275 8.1 Raters of international assignee performance 302 8.2 Use of different types of rater in the performance assessment of expatriates 303 List of boxes 4.1 Equivalent employment standards as stated by various international organizations 99 4.2 The scope of selected EU directives affecting the labor and social policy of businesses operating in member states 108 4.3 European Union data protection principles 116 5.1 Twenty-first-century expatriate manager profile 175 5.2 Definition of expatriate failure 180 5.3 Reasons for expatriate failure 181 5.4 Best practice in international assignee selection 191 6.1 The match of training techniques to country culture 204 6.2 Skills of the transnationally competent manager versus those of the traditional international manager 215 6.3 Preparation and training for international assignees 223 7.1 Types of equity compensation 251 8.1 Shifts in Western performance measurement 288 8.2 Glocalization of key elements in the design, implementation, and evaluation of the performance measurement system of a multinational enterprise 295 8.3 Criteria for appraisal of international assignees 300 IHRM in Action 1.1 Harry Ramsden’s goes international 12 1.2 International expansion for a local US accounting firm 24 2.1 A Mexican firm goes international: Comex 43 2.2 Ford Motor Company goes international 47 2.3 A transnational organization: Cap Gemini–Sogeti 51 2.4 A global partnership: links between Mumbai and Manhattan firms open doors for two architects 60 2.5 Acquisition integration: GE Capital lessons learned 63 3.1 McDonald’s in global action 86 4.1 Sexual harassment lawsuit at Toyota North America 118 4.2 Ford Motor Company’s global industrial relations 129 4.3 Doing business in China: a creative way to bribe 141 5.1 Global recruiting in action: scouting talent at Google 159 5.2 Location, location, location 161 5.3 What some countries do to find needed talent 162 6.1 Training managers in Malawi 205 6.2 Building on field experience: the International Federation of Red Cross and Crescent Societies 231 7.1 Salary disparity between Chinese locals and international assignees 256 8.1 Nokia tackles expatriate performance management 307 9.1 Work–life balance for young professionals in emerging markets 318 9.2 Truth and consequences: expatriate health abroad 322 List of vignettes 1.1 Global integration in action: career development at IBM 35 1.2 From StarUSA to StarGlobal 36 2.1 Integrated recruitment strategy in action: internationalization of human resources at OBI 72 3.1 “Glue technology” in action: post-merger integration at Teva Pharmaceuticals 93 4.1 Sustainability in action: people and planet management at New Belgium Brewing Company 149 5.1 Talent management in emerging markets: global talent management at Standard Chartered Bank 195 6.1 Nordic and Scandinavian management cultures in action: globalization at TietoEnator 233 7.1 Explaining the worksheet to potential assignees: international assignment compensation worksheet 283 8.1 Global performance management in action: “open exchange” at dmg world media 309 9.1 HR strategy implementation in action: balanced scorecard at Pliva 339 Foreword Global Human Resource Management is a series of books edited and authored by some of the best and most well known researchers in the field of human resource management. The series is aimed at offering students and practitioners accessible, coordinated and comprehensive books in global human resource management. To be used individually or together, these books cover the main bases of comparative and international human resource management. Taking an expert look at an increasingly important and complex area of global business, this is a groundbreaking new series that answers a real need for serious textbooks on global HRM. Several books in this series are devoted to human resource management policies and practices in multinational enterprises. Some books focus on specific areas of global HRM policies and practices, such as global leadership, global compensation, global staffing and global labour relations. Other books address special topics that arise in multinational enterprises, such as managing HR in cross-border alliances, developing strategies and structures, and managing legal systems for multinational enterprises. This third edition serves as the foundation text for all the other books that focus on specific areas of global HRM policies and practices, and for the books that address special topics such as alliances, strategies and structures, and legal systems. As such its nine chapters provide the broadest possible base for an overview of all the major areas in the field of international human resource management. As with all the books in the series, the chapters are based upon the most recent and classic research, as well as numerous examples of what multinational enterprises are doing today. In addition to books on various HRM topics in multinational enterprises, several other books in the series adopt a comparative approach to understanding human resource management. These books on comparative human resource management describe the HRM policies and practices found at the local level in selected countries in several regions of the world. The comparative books utilize a common framework that makes it easier for the reader to systematically understand the rationale for the existence of various HRM activities in different countries and easier to compare these activities across countries. This series is intended to serve the growing market of global scholars and professionals who are seeking a deeper and broader understanding of the role and importance of human resource management in companies as they operate throughout the world. With this in mind, all books in the series provide a thorough review of existing research and numerous examples of companies around the world. Minicompany stories and examples are found throughout the chapters. In addition, many of the books in the series include at least one detailed case description that serves as convenient practical illustrations of topics discussed in the book. The internet site for this volume contains additional cases and resources for students and faculty to use for greater discussion of the topics in all the chapters. Because a significant number of scholars and professionals throughout the world are involved in researching and practicing the topics examined in this series of books, the authorship of the books and the experience of companies cited in the books reflect a vast global representation. The authors in the series bring with them exceptional knowledge of the HRM topics they address, and in many cases the authors have been the pioneers of their topics. So we feel fortunate to have the involvement of such a distinguished group of academics in the series. The publisher and editor also have played a major role in making this series possible. Routledge has provided its global production, marketing and reputation to make the series feasible and affordable to academics and practitioners throughout the world. In addition, Routledge has provided its own highly qualified professionals to make the series a reality. In particular we want to indicate our deep appreciation of the work of our series editor, Francesca Heslop. She has been very supportive from the very beginning and has been invaluable in providing support and encouragement to us and to the many authors in the series. Francesca, along with other Routledge staff, including Simon Whitmore, Russell George, Victoria Lincoln, Jacqueline Curthoys, Lindsie Court, Simon Alexander, Gemma Anderson, Dan Wadsworth and Asha Pearse, have helped make the process of completing the series an enjoyable one. For everything they have done, we thank them all. Randall S. Schuler, Rutgers University and GBSA Zurich Paul Sparrow, Lancaster University Susan E. Jackson, Rutgers University and GSBA Zurich Michael Poole, Cardiff University xiv • Foreword Acknowledgments There are many individuals who have provided valuable information, insights, and assistance in completing this book. They include: Susan Jackson, Rutgers University; Paul Sparrow, Lancaster Business School; Michael Poole, Cardiff University; Chris Brewster, Reading University; Paul Evans, INSEAD; Vlado Pucik, IMD; Yadong Luo, University of Miami; Ingmar Björkman, the Swedish School of Economics; Wes Harry, Lancashire University, Shaun Tyson and Michael Dickmann, Cranfield School of Management; Gary Florkowski, University of Pittsburgh; Cal Reynolds, Calvin Reynolds and Associates; Hugh Scullion, National University of Ireland; Stu Youngblood, Texas Christian University; Bruno Staffelbach, University of Zurich; Martin Hilb, University of St. Gallen; Christian Scholz, University of Saarlandes; Gerold Frick, Fachhochschule, Aachen; Michael Morley, University of Limerick; Charles Galunic and Isable Assureira, INSEAD; Ibraiz Tarique, Pace University; Shimon Dolon, ESADE; Georges Bachtold, Blumer Machines Company; Darryl Weiss, Lockheed Martin Orincon, San Diego; Jerry Edge, RMC Consultants; Joann Stang, Solar Turbines (retired); Bernie Kulchin, Cubic Corporation; Ben Shaw, Bond University; Ed Watson, KPMG; Gardiner Hempel, Deloitte and Touche; Wayne Cascio and Manuel Serapio, University of Colorado–Denver; and Bob Grove, San Diego Employers’ Association (retired). Dr. Schuler thanks many students at Rutgers University in the Department of Human Resource Management for their teaching and writing suggestions, and the department’s webmaster, Joanne Mangels for her work on the construction of his global web site. Dr. Briscoe thanks his graduate students at the University of San Diego, particularly his most recent assistant, Chanyu Miao, for their help in research into IHRM and country HR practices and in development of Dr. Briscoe’s web site (), particularly Mario D’Angelo, who is now web designer for Globe3. Dr. Claus would like to thank the past board members of the SHRM Global Forum and members of the current SHRM Global Expert Panel. Special thanks to Carolyn Gould, PricewaterhouseCoopers LLP; Brian Glade and Howard Wallack, SHRM; Thomas Becker, OBI; Gerlinde Herrmann, The Herrmann Group Limited; Ian Benson, Simona Bucur, Brian Coon, Leah Daniels, Alin Hutanu, Erin Landers, and Margaret Stearns, her research associates at Willamette University; Mary Stout, faculty administrative assistant at Willamette University; her global HR students in the early career MBA at Willamette University; and the many “now GPHR-certified” global HR practitioners that she taught in the SHRM/GPHER certification preperation courses in the US, Europe, and China. Finally the authors thank the many great people at Routledge for their wonderful assistance and support throughout this project. Dr. Briscoe also acknowledges the support from his wife, Georgia, who provided the inspiration and example for “going for the summit” in completing this third edition (she’s a serious mountain climber), without whom the climb would have been much harder, and the inspiration provided by our son, Forrest, who is now making his own climb. He also acknowledges how great it was to work with his co-authors, Lisbeth Claus and Randall Schuler. They provided the support necessary to complete the project within tough deadlines, and whose contributions improved the final product beyond measure. xvi • Acknowledgements List of acronyms ADA Americans with Disabilities Act ADEA Age Discrimination in Employment Act Aka also known as APEC Asia–Pacific Economic Cooperation ASEAN Association of South East Asian Nations BOK body of knowledge BRIC Brazil, Russia, India, China BT business traveler C&B compensation and benefits CBT computer-based training CEE Central and Eastern Europe CEO chief executive officer CFO chief financial officer CIPD Chartered Institute of Personnel and Development COLA cost of living allowance CSR corporate social responsibility EEA European Economic Area EFTA European Free Trade Agreement EPI efficient purchaser index ESOP employee stock ownership plan ESPP employee stock purchase plan ETUC European Trade Union Confederation EU European Union FCN treaty Friendship, Commerce, and Navigation Treaty FCPA Foreign Corrupt Practices Act FDI foreign direct investment FTAA Free Trade Area of the Americas Fx exchange rate GATT General Agreement on Tariffs and Trade GEC global employment company GI global integration GLOBE global leadership and organizational behavior effectiveness GPHR global professional in human resources GHRIS global human resource information system GUFs global union federations HCN host country national HQ headquarters HR human resources HRCI Human Resource Certification Institute HRIS human resource information system HRM human resource management IA international assignee IB international business ICC International Chamber of Commerce ICFTU International Confederation of Free Trade Unions IE international employee IHR international human resources IHRM international human resource management IJV international joint venture ILO International Labour Organization IPM international performance management IMF International Monetary Fund INS Immigration and Naturalization Service IPM international performance management IPO Intellectual Property Office IT information technology ITUC International Trade Union Confederation JV joint venture LR local responsiveness M&A mergers and acquisitions MNE multinational enterprise NAALC North American Agreement on Labor Cooperation NAFTA North American Free Trade Agreement NGO non-governmental organization OECD Organization for Economic Cooperation and Development OEEC Organization for European Economic Co-operation PA performance appraisal PCN parent country national PCT Patent Cooperation Treaty PM performance management PRC People’s Republic of China R&D research and development SAR stock appreciation rights SEC Securities and Exchange Commission SHRM Society for Human Resource Management SIHRM strategic international human resource management SME small and medium-sized enterprises SOX Sarbanes–Oxley xviii • List of acronyms TCN third country national T&D training and development TI Transparency International TNC transnational corporation TUAC Trade Union Advisory Committee UN United Nations UNCTAD United Nations Conference on Trade and Development UK United Kingdom US United States WCL World Confederation of Labour WFTU World Federation of Trade Unions WLB Work–life balance WIPO World Industrial Property Organization WTO World Trade Organization