Three human resource goals that fulfill the smart criteria

“International Human Resource Management, 5e by Ibraiz Tarique, Dennis Briscoe and Randall Schuler has long been regarded as one of leading resources in the field. This new edition reinforces that reputation and brings the content up to date with contemporary trends in research and practice. Written by three of the leading scholars in the area, the volume is distinguished by its combination of insights from academic research and rich insights into IHRM in practice. It is comprehensive, accessible and authoritative, and should be required reading for any student or reflective practitioner of IHRM.”

–David Collings, Dublin City University, Ireland, and Senior Editor of the Journal of World Business

“This excellent book, a leader in the field, comprehensively covers the field of International Human Resource Management and focuses on the HRM issues and challenges facing firms as they internationalise their business operations. Each chapter provides a clear exposition and critique of the specialist literature, and case studies are used to provide rich insights into current practice. The combination of sound theory and examples from practice around the globe provides an important and up to date contribution to the field. The book is well geared to students interested in the international dimensions of HRM, and the excellent links between international strategy and HRM give students an in depth knowledge of the people management challenges faced by MNC managers in a globalised business world.” –Hugh Scullion, Established Professor of International Management, Cairnes School of Business and Economics,

NUI Galway, Ireland

“This edition of the book does a wonderful job of framing IHRM issues in the evolving, strategic context of running an international business. Pedagogically, the many practical applications and graphical presentations beautifully illustrate concepts and frameworks that will help readers grasp the rich content that the book provides.”

–Wayne F. Cascio, Robert H. Reynolds Chair in Global Leadership, University of Colorado Denver, USA, and Senior Editor of the Journal of World Business

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International Human Resource Management Fifth edition

Thoroughly updated and expanded, the fifth edition of International Human Resource Management focuses on international human resource management (IHRM) within multinational enterprises (MNEs). The book has been designed to lead readers through all of the key topics of IHRM in a highly engaging and approachable way. In addition to the key topics and rich pedagogy students have come to expect, chapters have been updated, including an expanded chapter on Comparative and National Culture. Uncovering precisely why IHRM is important for success in international business, and how IHRM policies and practices function within the multinational enterprise, this comprehensive textbook provides an outstanding foundation for understanding the theory and practice of IHRM. It is essential reading for all students, instructors, and IHRM professionals.

Ibraiz Tarique is an Associate Professor of Management and Director of Global HR programs at the Lubin School of Business, at Pace University in New York City, USA. He teaches at the executive, graduate, and undergraduate levels.

Dennis Briscoe is Professor Emeritus of International Human Resource Management at the University of San Diego, USA, and owner/consultant at International Management and Personnel Systems (IMAPS).

Randall Schuler is Distinguished Professor of Strategic International Human Resources at the School of Management and Labor Relations at Rutgers University, USA, and Research Professor at the Lancaster University School of Management, UK, as well as the University of Zurich, Switzerland.

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Routledge Global Human Resource Management Series Edited by Randall S. Schuler, Susan E. Jackson, Paul Sparrow and Michael Poole

Routledge Global Human Resource Management is an important new series that examines human resources in its global context. The series is organized into three strands: content and issues in global human resource management (HRM); specific HR functions in a global context; and comparative HRM. Authored by some of the world’s leading authorities on HRM, each book in the series aims to give readers comprehensive, in-depth and accessible texts that combine essential theory and best practice. Topics covered include cross-border alliances, global leadership, global legal systems, HRM in Asia, Africa, and the Americas, industrial relations, and global staffing.

Managing Human Resources in Cross-Border Alliances Randall S. Schuler, Susan E. Jackson and Yadong Luo

Managing Human Resources in Africa Edited by Ken N. Kamoche, Yaw A. Debrah, Frank M. Horwitz and Gerry Nkombo Muuka

Globalizing Human Resource Management Paul Sparrow, Chris Brewster and Hilary Harris

Managing Human Resources in Asia-Pacific Edited by Pawan S. Budhwar

International Human Resource Management, Second edition Policy and practice for the global enterprise Dennis R. Briscoe and Randall S. Schuler

Managing Human Resources in Latin America An agenda for international leaders Edited by Marta M. Elvira and Anabella Davila

Global Staffing Edited by Hugh Scullion and David G. Collings

Managing Human Resources in Europe A thematic approach Edited by Henrik Holt Larsen and Wolfgang Mayrhofer

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Managing Human Resources in the Middle-East Edited by Pawan S. Budhwar and Kamel Mellahi

Managing Global Legal Systems International employment regulation and competitive advantage Gary W. Florkowski

Global Industrial Relations Edited by Michael J. Morley, Patrick Gunnigle and David G. Collings

Managing Human Resources in North America Current issues and perspectives Edited by Steve Werner

Global Leadership Research, Practice, Development Edited by Mark Mendenhall, Gary Oddou, Allan Bird and Martha Maznevski

Global Compensation Foundations and Perspectives Edited by Luis Gomez-Mejia and Steve Werner

Performance Management Systems: A Global Perspective Edited by Arup Varma, Pawan S. Budhwar and Angelo DeNisi

Managing Human Resources in Central and Eastern Europe Edited by Michael J. Morley, Noreen Heraty and Snejina Michailova

Global Careers Michael Dickmann and Yehuda Baruch

Global Leadership (2nd edition) Research, Practice, Development Mark E. Mendenhall, Joyce S. Osland, Allan Bird, Gary Oddou, Martha L. Maznevski, Michael J. Stevens, Günter K. Stahl

Manager-Subordinate Trust A Global Perspective Edited by Pablo Cardona and Michael J. Morley

Managing Human Resources in Asia-Pacific (2nd edition) Edited by Arup Varma and Pawan S. Budhwar

Human Resource Management and the Institutional Perspective Edited by Geoffrey Wood, Chris Brewster, and Michael Brookes

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International Human Resource Management (5th edition) Policies and Practices for Multinational Enterprises Ibraiz Tarique, Dennis Briscoe, and Randall Schuler

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International Human Resource Management

Policies and Practices for Multinational Enterprises

Fifth edition

Ibraiz Tarique Dennis R. Briscoe Randall S. Schuler

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First published 1995 by Prentice Hall Fifth edition published 2016 by Routledge 711 Third Avenue, New York, NY 10017

and by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN

Routledge is an imprint of the Taylor & Francis Group, an informa business

© 1995, 2004, 2008, 2012, 2016 Taylor & Francis

The right of Ibraiz Tarique, Dennis R. Briscoe, and Randall S. Schuler to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.

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.

Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

[First edition published by Prentice Hall 1995]

[Fourth edition published by Routledge 2011]

Library of Congress Cataloguing-in-Publication Data

Briscoe, Dennis R., 1945– International human resource management : policies and practices for

multinational enterprises / Ibraiz Tarique, Dennis R. Briscoe, Randall S. Schuler. — 5th edition.

pages cm Includes bibliographical references and index.

1. International business enterprises—Personnel management. I. Tarique, Ibraiz. II. Schuler, Randall S. III. Title.

HF5549.5.E45B74 2012 658.3—dc23 2015001046

ISBN: 978-0-415-71052-7 (hbk) ISBN: 978-0-415-71053-4 (pbk) ISBN: 978-1-315-88500-1 (ebk)

Typeset in Berling Roman and Futura

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by Apex CoVantage, LLC

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Contents

List of Figures List of Exhibits List of Case Studies List of IHRM in Actions List of End-of-Book Integrative Cases List of Acronyms Acknowledgments Foreword

Introduction

SECTION 1: STRATEGIC CONTEXT

Introduction to Section 1

1 The Internationalization of Human Resource Management

2 Strategic International Human Resource Management

3 Design and Structure of the Multinational Enterprise

4 International Mergers and Acquisitions, International Joint Ventures, and Alliances

SECTION 2: NATIONAL AND CULTURAL CONTEXT

Introduction to Section 2

5 Country and Company Culture and International Human Resource Management

6 International Employment Law, Labor Standards, and Ethics

7 International Employee Relations

SECTION 3: GLOBAL TALENT MANAGEMENT

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Introduction to Section 3

8 International Workforce Planning and Staffing

9 International Recruitment, International Selection, and Repatriation

10 International Training and Management Development

11 International Compensation, Benefits, and Taxes

12 International Employee Performance Management

13 Well-being of the International Workforce and International HRIS

14 Comparative IHRM: Operating in Other Regions and Countries

SECTION 4: ROLE AND FUTURE OF IHRM

Introduction to Section 4

15 The IHRM Department, Professionalism, and Future Trends

Integrative Cases Index

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Figures

I.1 Chapter Map 1.1 Who Needs International Human Resource Management? 2.1 Basic Elements of the Strategic Management Process 2.2 Evolution of the Multinational Enterprise 2.3 Auxiliary Methods of Internationalization 2.4 MNE Business Strategy 2.5 Headquarters’ International Orientation (Senior Executives) 2.6 MNE IHRM Strategy 2.7 Integrative Framework of Strategic International Human Resources

Management in MNEs 3.1 MNE Organizational Structure 3.2 Functional Structure 3.3 Product Structure 3.4 Geographic Structure 3.5 Matrix Structure 4.1 International Mergers and Acquisitions Process of Combination 4.2 HR Issues in the Three Stages of IM&As 4.3 Four Approaches to Integration in International Mergers and Acquisitions 4.4 Four-stage Model of HR Issues in International Joint Ventures 5.1 The Three Layers of Culture 5.2 Development of Cross-cultural Competence 6.1 Umbrella of CSR Programs 8.1 The International Workforce Planning and Staffing Process 8.2 Factors that Impact International Workforce Planning 9.1 Successful Expatriate Experience 9.2 Organizational Support for Repatriates 10.1 Effectiveness of Homogeneous and Heterogeneous Teams 11.1 The Balance Sheet 12.1 A Model of IPM in an MNE

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Exhibits

1.1 Drivers of Internationalization of Business 1.2 The World’s Top 20 Non-financial TNCs (Ranked by Foreign Assets) 1.3 IHRM Questions for International Strategy 3.1 Best Practices for the Effective Management of Cross-border and Virtual Teams 5.1 Geert Hofstede’s Cultural Dimensions 5.2 Trompenaar’s and Hampden-Turner’s Cultural Dimensions 5.3 Global Leadership and Organizational Behavior Effectiveness (GLOBE):

Cultural Dimensions 6.1 ILO Declaration on Fundamental Principles and Rights at Work 6.2 United Nations Global Compact Principles of Interest to IHRM 6.3 The Scope of Selected European Union Directives Affecting the Labor and

Social Policy of Businesses Operating in Member States 6.4 Protected Classes for Discrimination Prohibition in Select Countries 6.5 Guidance on How an MNE Might Design a Code of Conduct and Ensure an

Effective Implementation of Ethical Standards for Worldwide Operations 7.1 Trade Union Membership, Selected Countries 7.2 Seven Approaches to Labor/employee Relations in the Global Context 7.3 Local Union Environment Issues That MNEs Need to Consider 8.1 International Staffing Approaches 8.2 Traditional International Assignees and Local Nationals 8.3 Types of International Assignees 8.4 Questions to Better Manage a Global Workforce 9.1 Employment Options for International Transfers 9.2 The 21st-century Expatriate Manager Profile 9.3 Definition of Expatriate Failure 9.4 Reasons for Expatriate Failure 9.5 Best Practice in IA Selection 10.1 The Match of Training Techniques to Country Culture 10.2 Skills of the Transnationally Competent Manager Versus Those of the

Traditional International Manager 10.3 Five-Phase Process for Designing Effective CCT Programs 11.1 Hourly Compensation Costs for Production Workers in Manufacturing, 2011 11.2 Average Annual Hours Per Year Per Person in Employment 11.3 Paid Vacation Days and Legally Mandated Paid Holidays

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11.4 Types of Equity Compensation 11.5 The 10 Most Expensive Countries/cities in the World 11.6 Balance Sheet Example 11.7 Cost Estimate for Three-year Assignment 11.8 Average Tax Wedge 12.1 Shifts in Western PM 12.2 Globalization of Key Elements in the Design, Implementation, and Evaluation

of the PM System of an MNE 12.3 Criteria for Appraisal of International Assignees 12.4 Raters of International Assignee Performance 12.5 Use of Different Types of Rater in PAs of Expatriates 13.1 Issues to Consider When Designing Expatriate Crisis Management Programs 14.1 World’s 30 Largest Cities (2015 and 2025) 14.2 Population and Labor Force Characteristics (Europe) 14.3 Population and Labor Force Characteristics (North America) 14.4 Population and Labor Force Characteristics (Asia) 14.5 Population and Labor Force Characteristics (Latin America and Caribbean) 14.6 Population and Labor Force Characteristics (Africa) 15.1 International Relocation Services 15.2 The Datafication of HR

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Case Studies

1.1 Yarn Paradise: World’s Biggest Online Yarn Store (Turkey) 2.1 The Early Evolution of Manufacturing Firms: Ford Motor Company Goes

International* (USA) 3.1 Capgemini: A Transnational Organization (France) 4.1 BCE’s Acquisition of Teleglobe International (Canada) 5.1 Internationalization and Cross-cultural Expansion of a Local Manufacturer:

Barden (US) and FAG (Germany) 6.1 Non-Compete Agreements and Intellectual Property: Value Partners SA (Italy)

and Bain & Company (USA) Conflict in Brazil 7.1 Global Industrial Relations at Ford Motor Company (USA/Global) 8.1 Firms Woo Executives from “Third” Countries (Global) 9.1 A World Marketplace for Jobs in Project-Based Work Environment (Global) 10.1 Management Training in Africa (Malawi) 11.1 Compensation Problems with a Global Workforce (Global, Thailand,

Philippines, Japan, Bolivia) 12.1 Cross-Cultural Performance Evaluation in Thailand: The Case of Richard

Evans, Expatriate Managing Director (Switzerland/Thailand/UK) 13.1 Global Health and Safety Concerns (Global, Romania, UK, Ghana) 14.1 The Impact of HR on Innovation: A Six-Country Comparison (Global) 15.1 Becoming an HR Transnational at Germany’s OBI (Germany)

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IHRM in Actions

IHRM in Action 1.1 Creating a Global Accounting Firm IHRM in Action 1.2 CEOs’ Perspectives on Globalization IHRM in Action 1.3 Developing a Global Appetite for Fish and Chips IHRM in Action 2.1 Implementing a Global Strategy at a Japanese Pharmaceutical IHRM in Action 3.1 Moving HR from International to Global IHRM in Action 4.1 Lessons Learned by GE in Cross-Border Acquisitions IHRM in Action 5.1 Turning McDonalds into a Global Brand IHRM in Action 6.1 Developing Global Labor Standards at Levi Strauss IHRM in Action 7.1 Cross-Border Worker Representation at Hewlett-Packard IHRM in Action 8.1 Dealing with Labor Shortages in the Netherlands IHRM in Action 9.1 Locating Near the Talent with a Global Workforce IHRM in Action 9.2 Repatriation at Monsanto IHRM in Action 10.1 Global Management Development Program at Colgate

Palmolive IHRM in Action 11.1 Developing a Global Compensation Program at Colgate

Palmolive IHRM in Action 12.1 Expatriate Performance Management at Nokia IHRM in Action 13.1 The Need for Emergency Medical on Travel in Niger IHRM in Action 15.1 IHRM in a Global Mining Company

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End-of-Book Integrative Cases

Case 1 Fred Bailey: An Innocent Abroad Case 2 Bavarian Auto Works in Indonesia (Germany/Indonesia)

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Acronyms

ADA Americans with Disabilities Act ADEA Age Discrimination in Employment Act 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 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 Trade and Tariffs GEC Global Employment Company GHRIS Global Human Resource Information System

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GI Global Integration GLOBE Global Leadership and Organizational Behavior Effectiveness GPHR Global Professional in Human Resources 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 or International Assignment 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 Labor Organization ILP International Labor Organization 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 Merger and Acquisition 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 Office of European Economic Cooperation PA Performance Appraisal

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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 TCN Third-Country National T&D Training & 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

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Acknowledgments

We are grateful to many individuals who have provided valuable information, insights, cases, and assistance in completing this book. They include: Susan E. Jackson, Rutgers University; Paul Sparrow and Cary Cooper, Lancaster University Management School; Jyotsna Bhatnagar and Rakesh Sharma, Management Development Institute India; Chris Brewster, Reading University; Yadong Luo, University of Miami; Ingmar Björkman, the Swedish School of Economics; James Hayton, University of Warick; Shaun Tyson and Michael Dickmann, Cranfield School of Management; Gary Florkowski, University of Pittsburgh; Cal Reynolds, Calvin Reynolds & Associates; Hugh Scullion, National University of Ireland; Dave Collings, Dublin City University; Vlad Vaiman, California Lutheran University; Stu Youngblood, Texas Christian University; Bruno Staffelbach, University of Zurich; Bill Castellano, Rutgers University; Ed Schuler, The Schuler Group; Gerold Frick, Aalen University; Manfred Stania, Stania Management; Martin Hilb, University of St. Gallen; Christian Scholz, University of Saarlandes; Mark Saxer, Saxer Consulting; Nigel Shaw and Nadia Wicki de la Puente, Novartis; Michael Morley, University of Limerick; Charles Galunic and Isable Assureira, INSEAD; Simon Dolan, 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 & Touche; Wayne Cascio and Manuel Serapio, University of Colorado-Denver; Bob Grove, San Diego Employers’ Association (retired), Jason Exley, MSI, Denver, CO; Shaista Khilji, The George Washington University; Akram Al Ariss, Toulouse Business School; and Elaine Farndale, Pennsylvania State University.

A special thanks to Lisbeth Claus, Willamette University, for her permission to use her contributions to the fourth and fifth editions.

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, Renee Walker, for her work on the construction of his global website.

Dr. Briscoe thanks his graduate students at the University of San Diego and at the many other schools in the some 19 countries where he has taught IHRM, and particularly his most recent graduate assistant, Chanyu Miao, for her help in research into IHRM and country HR practices.

Dr. Ibraiz Tarique is indebted to his father, Dr. Asif Tarique, who passed away in January 2015, for teaching him the value of cultural diversity. Dr. Asif Tarique (an

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international marine biologist by profession) was a global citizen who had a true passion for cultural diversity developed from living in numerous countries and experiencing different cultures, people from all walks of life, poetry, and languages. Dr. Ibraiz Tarique is grateful to his father for an upbringing as a “third culture kid” (a child who grows up in a culture other than that of his or her parents).

Dr. Ibraiz Tarique gives thanks to his family for providing unwavering support to work on this book. He is thankful to both co-authors for providing the guidance, encouragement, and support to contribute to the fifth edition. For Dr. Ibraiz Tarique, working with Dr. Schuler and Dr. Briscoe has been one of the best experiences. Dr. Ibraiz Tarique is thankful to all the individuals who helped in the research for this book. He would like to thank the Lubin School of Business, Pace University, and his excellent colleagues for supporting his interests in international human resource management. Finally, he would like to thank his students (both current and past) who continuously inspire him and remind him every day that learning is a lifelong process.

And last, Dr. Briscoe acknowledges the support from his wife, Georgia, who provided inspiration and example during a particularly difficult time for her during the writing of this fifth edition as well as the example being set by his son, Forrest, who is now showing his father how the role of professor can be so fulfilling. He also acknowledges how great it has been to work with his co-authors, Ibraiz Tarique and Randall Schuler. They went above and beyond the call of duty to provide the support and effort necessary to complete the project within tight deadlines. Their contributions made the final product much better.

Finally the authors thank the many great people at Routledge for their wonderful assistance and support throughout this project, in particular, the Global HRM Series senior editor, Sharon Golan.

Thank you all!

Ibraiz Tarique Dennis Briscoe Randall Schuler

January 2016

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Foreword

Global HRM 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. This series is aimed at offering students and practitioners accessible, coordinated and comprehensive books in global HRM. To be used individually or together, these books cover the main areas in international and comparative HRM. Taking an expert look at an increasingly important and complex area of global business, it is a groundbreaking series that answers a real need for useful and affordable textbooks on global HRM.

Several books in the Global HRM 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 talent management and global labor relations. Other books address special topics that arise in multinational enterprises, such as managing HR in cross-border alliances, managing global legal systems, and the structure of the global HR function. There is also a book of global human resource management cases. Several other books in the series adopt a comparative approach to understanding human resource management. These books on comparative human resource management describe HRM topics found at the country level in selected countries. The comparative books utilize a common framework that makes it easier for the reader to systematically understand the rationale for the similarities and differences in findings across countries.

The fifth edition of International Human Resource Management, written by Ibraiz Tarique, Dennis Briscoe and Randall Schuler, serves as the foundation book 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 15 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 Global HRM series, the chapters are based upon the most recent and classic research, as well as numerous examples of what multinational enterprises are doing today. This latest edition of this foundation book contains numerous updates and revisions that make the book even more relevant and useful to the reader, whether university student or practitioner. More material has been put into tables and exhibits to help summarize a lot of information, thus making it more quickly accessible and more interesting

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for the reader. This Routledge series, Global HRM, is intended to serve the growing market of

global scholars and practitioners who are seeking a deeper and broader understanding of the role and importance of human resource management in companies that 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. Mini-company 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 companion website for this book contains additional cases and resources for students and faculty to use for greater discussions of the topics in all the chapters.

Because a significant number of scholars and practitioners throughout the world are involved in researching and practicing the topics examined in this series of books, the authorship of the books and the experiences of the companies cited in the books reflect a vast global representation. The authors in the series bring with them exceptional knowledge of the human resource management topics they address, and in many cases the authors are the pioneers for their topics. So we feel fortunate to have the involvement of such a distinguished group of academics in this series.

The publisher and editor have played a very major role in making this series possible. Routledge has provided its global production, marketing and reputation to make this series feasible and affordable to academics and practitioners throughout the world. In addition, Routledge has provided its own highly qualified professionals to make this series a reality. In particular, we want to indicate our deep appreciation for the work of our series editor, Sharon Golan. She has been very supportive of the Global HRM series and has been invaluable in providing the needed support and encouragement to us and the many authors and editors in the series. She, and the entire Routledge staff, has helped make the process of completing this series an enjoyable one. For everything they have done, we thank them all. Together we are all very excited about the Global HRM series and hope you find an opportunity to use International Human Resource Management, fifth edition, and all the other books in the series!

Randall S. Schuler, Rutgers University and the Lancaster University School of Management

Susan E. Jackson, Rutgers University and the Lancaster University School of Management

Paul Sparrow, Manchester University Management School July 2015

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Introduction

This book is about international human resource management (IHRM). That is, it is about human resource management in a global context. The conduct of business is increasingly global in scope, and managing human resources has become even more important in the successful conduct of global business. The motives for writing this book originally—to provide a professional and academic overview for an understanding of the design and implementation of IHRM policy and practice— continue in this edition. This fifth edition has also been written to update this most important but fast changing discipline. As with the previous editions, the majority of the book discusses the IHRM issues faced by multinational enterprises (MNEs) of all sizes, primarily—but not exclusively—from the perspective of the parent company or headquarters. But it also provides increasing attention to other forms of international organizations as well, such as governments, non-profits, and non- governmental organizations (NGOs). Since MNEs increasingly manage their workforces on a global basis, this edition not only examines global management of parent companies’ workforces, with globalized policies, shared services, and global centers of HR excellence, but also provides increased focus on management of workforces in subsidiaries, international joint ventures, and global partnerships.

In the previous two editions, a major effort was made to obtain relevant examples from many different countries. This effort has continued in the fifth edition. So the examples in the chapters as well as the end-of-chapter cases (in the book and on the text website) draw from many small and medium-sized companies (many of which will be new to the reader) from many countries, as well as some traditional and well-known large firms, which come from both large and small countries.

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Sections and chapters

This book is divided into four sections (see Figure I.1 to understand how the topics relate to each other) and 15 chapters. The first two sections set the scene for International Human Resource Management: Policies and Practices for Multinational Enterprises, fifth edition, and explain why IHRM is so important to the success of international business, describing the context of global business as it relates to IHRM. Section 1 “Strategic Context,” describes the key strategic components of the context within which IHRM operates. Each of these components represents a critical part of the global environment that determines the nature of IHRM. Section 2, “National and Cultural Context,” describes three important aspects of the country and/or national environments that determine the cultural and legal contexts within which IHRM operates. Then Section 3, “Global Talent Management,” describes the IHRM policies and practices that are shaped by the context described in the first two sections. These seven chapters provide a comprehensive and thorough overview of the policies and practices of IHRM. These policies and practices are described both from a centralized, headquarters- focused perspective, as well as from the local perspective of subsidiaries, joint ventures, partnerships, and contractors. Finally Section 4, “Role and Future of IHRM,” describes the nature of today’s IHRM department, the professionalization of IHRM, and takes a look at future trends in the field. Now we describe the chapters briefly.

Chapter 1 introduces the globalization of business and describes how that has changed the nature of IHRM. It describes the evolving nature of IHRM as it meets the needs of changing multinational enterprises and explains how this has led to the development of strategic IHRM in helping MNEs attain sustainable competitive advantage in the global marketplace. This chapter also describes the basic nature and development of IHRM, differentiates IHRM from domestic HRM, and discusses some of the difficulties experienced in that development.

Chapter 2 describes the various responsibilities of IHRM and links them to the pursuit of international business strategies. The strategic decision to “go international” is one of the most important components of the IHRM environment. IHRM must understand these strategic choices and should contribute input to them in order to contribute to their successful achievement. This chapter also examines IHRM strategy and its relation to overall MNE business strategy, focusing on how varying approaches to MNE business strategy affect the nature of IHRM strategy. Finally this chapter explains how IHRM changes and contributes to the development of those various MNE strategies.

Chapter 3 discusses the growing complexities in designing the structure of multinational firms and the important role that IHRM plays in those design

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decisions. The conduct of international business is increasingly complex, involving the need to—at the same time—focus on central control and influence and local adaptation to customers and culture. Too often these efforts fail, at least partially because of inadequate attention to issues within the responsibility of IHRM. This chapter describes the contributions that IHRM can and should make to the success of these organizational choices.

Chapter 4 describes the role of IHRM in cross-border mergers and acquisitions, international joint ventures, and international alliances. Cross-border acquisitions, joint ventures, teams, and alliances of various sorts are increasingly the means by which firms choose to go international and thus they constitute one of the most important components of the context for IHRM. Much of the chapter describes the role of IHRM and the IHR professional in designing, facilitating, and implementing these four specific types of cross-border

Figure I.1 Chapter Map International Human Resource Management, 5th ed. Tarique, Briscoe, Schuler.

combinations. All four types of these combinations are increasingly used and

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IHRM can and should play a major role in helping ensure the success of their design and implementation.

Chapter 5, starting Section II, expands the theme that is revisited frequently throughout the text: the critical importance of country and corporate culture. Cultural differences impact everything that is done in international business and are, if possible, even more important to everything that IHR managers do. Success in international business requires a thorough understanding of cultural factors, and IHRM is involved both with helping provide that expertise to the firm as well as having to incorporate such understanding in its own global activities. Thus this introduction to IB and IHRM, by necessity, includes an introduction to the concepts of country and corporate culture. The chapter also discusses the importance of culture in both the conduct and the interpretation of IHRM research, explaining how culture affects both our understanding of IHRM and its impact. Like everything else, culture influences what we know and what we think we know about IHR.

Chapter 6 describes international aspects of the legal and regulatory environment, another of the key components in the context of IHRM. Just as is true for HRM in a domestic context, there are many aspects of law that impact the practice of human resource management when working in the global arena. This chapter discusses five of these aspects:

■ international employment law and the institutions that develop and apply it;

■ major legal systems and their key differences; ■ goals of the various international trade agreements ■ major issues international employment issues impacting HR; ■ immigration/visas, personal, data protection, anti-discrimination,

harassment, ethical standards, CSR, and corporate governance.

All of these areas of the legal and regulatory environment related to the conduct of IHRM are increasingly important to the successful contribution of IHR managers and all have a growing impact on IHR and firms operating in the global business environment.

Chapter 7 examines the broad nature of international labor standards, global employment law and regulations, and international ethics and social responsibility. First, this chapter looks at the institutional context of international business. International organizations have promulgated labor standards for MNEs. Next, this chapter looks at the global legal environment in which the MNE operates. It focuses on compliance with national and supranational laws. Further, a number of comparative regulatory issues are discussed that affect the MNE such as immigration controls, data protection, anti-discrimination and harassment,

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termination and reduction in force, and intellectual property. Finally, this chapter looks at international ethics, its relation to culture, and how ethical dilemmas must be solved

Chapter 8 provides an introduction to the overall concern with planning, forecasting, and staffing the global enterprise. Chapter 8 begins by providing a description of the constantly changing labor markets around the world and discusses how MNEs plan for creating their workforces from those labor markets. The nature of those markets in various countries, in terms of their demographic characteristics, the skills and abilities of their individuals, and their accessibility and cost varies dramatically from country to country and region to region and can be a major determinant in the success of international decisions such as where to locate operations. Chapter 8 also provides an overview of the many options that MNEs have available to them for that staffing.

Chapter 9 focuses on the IHRM responsibility for staffing, but primarily on the issue of expatriation and repatriation, the movement of employees of MNE from either the parent company to a foreign subsidiary or from a foreign subsidiary to another subsidiary or to the parent firm. This chapter examines the difficulties experienced in the selection and management of expatriates and repatriates and suggests some of the approaches successful MNEs use to ensure positive experiences with those expatriates and repatriates. In addition, the chapter discusses problems that MNEs are experiencing with women and other types of non-traditional expatriates.

Chapter 10 focuses on the training and development of the MNE’s global workforce. This includes training of host-country workforces, training and preparation of international assignees, and global management development, including the nature and development of a global mindset, the competencies of global managers, and the nature of management development programs in a global context. This chapter has provided both many examples and research and writing of what firms from around the world are currently doing to offer successful global training and development programs. It is now up to IHR managers in other firms to use what was described here to develop successful global training and development programs in their own organizations.

Chapter 11 describes the complex area of compensation, benefits, and taxes for both international assignees as well as for local workforces. The chapter presents IHRM practices related to the development of compensation and benefit programs among MNEs and describes seven alternative approaches to compensation for expatriates. The chapter also discusses the many problems that MNEs confront as they try to design and implement global compensation and benefit programs throughout their global operations. Lastly, the chapter discusses many of the various approaches taken to compensation and benefits, such as vacation and pension practices, in a number of different countries.

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Chapter 12 addresses the crucial issue of performance evaluation and performance management for international assignees and managers in foreign operations. It describes the many difficulties encountered in trying to implement an effective PM system in the international arena, not the least of which is figuring out how to accommodate in the evaluation process factors stemming from the nature of the local cultural environment. It is clear that it is inadequate to simply apply a PM process designed at the home-country level for domestic use to the international setting. The chapter ends with a discussion of a number of suggestions and guidelines for improving the process of implementing an effective IPM system.

Chapter 13 describes topics of importance to the IHR manager: employee health and safety in the context of the foreign subsidiary and joint venture, and health, safety, and security for global business travelers and employees on international assignments and their families. Often, because health and safety practices differ so much from country to country, responsibility for them is left in the hands of subsidiary (local) HR managers. Nevertheless, MNEs must understand and cope with local and international health and safety regulations, the widely variable practices faced in different countries, and strategic business decisions that may influence workforces and employee relations in multiple locations. This chapter also discusses the important topic of HRIS.

Chapter 14 provides an overview of the wide variances in HR practices from country to country and region to region. International enterprises have the necessity to understand local HR policies and practices so as to make intelligent decisions as to the practical fit of headquarters’ policies with tradition and law in local jurisdictions. This chapter focuses on five specific regions: Europe, North America, Asia, Latin America, and Africa. Within each region, key HRM issues are examined with implications for HRM policies and practices. In addition, this chapter discusses various HRM issues that converge among regions and countries, including managing two generations of employees including older workers, discrimination and the glass ceiling, and gaps in talent supply and demand.