International Pay systems

Abstract

In this study, the internationalization of human resource management is considered. It

concerns staffing, expatriate procurement, compensation, training and development, international

labor relations, as well as performance evaluations and contributions. Likewise, international

human resource management (IHRM) in the host nation context is presented. Later, controlling

IHRM practices of host nation subcontractors is addressed. This is followed by IHRM

implication of language standardization. Moreover, the cultural host country and workplace

environment are considered. Additionally, we provide a strategic approach of IHRM. Finally,

we conclude with a discussion and contribution.

Key Words: Social Internationalization, Human Resource Management.

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The Internationalization of Human Resource Management

Human Resource Management is more complex in international businesses, where

management development, staffing, compensation activities, and performance evaluation are

complicated by differences between legal systems, cultures, and economic systems within

various labor markets, such as:

• Labor laws can prohibit union organization in one nation and mandate it in another.

• Compensation types vary from nation to nation.

International human resource management (IHRM) deals with a host of issues. It deals

with developing managers to do business in different nations, and how to compensate people in

different countries. Additionally, IHRM deals with a host of problems related to expatriate

managers. An expatriate manager is a citizen of one nation who works abroad.

Staffing

Staffing policy involves the recruitment of employees for each individual job, and

considers the skills required to do particular jobs. Staffing policies are able to support corporate

culture surrounding the organization’s value systems and norms.

We will show three types of staffing policies in international businesses: the polycentric

approach, the ethnocentric approach, and the geocentric approach.

The Polycentric Policy

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A polycentric staffing policy needs host-country nationals to be selected to manage

subsidiaries, while the parent company deals with key positions at corporate headquarters. One

advantage of applying a polycentric policy is that the company is suffers less from varying

cultural aspects. Another advantage is that a polycentric policy is less expensive concerning the

costs of value creation. Host-country managers have limited opportunities to gain experience in

foreign countries and cannot progress in senior positions in their own subsidiary. Language

barriers and national loyalties can isolate corporate headquarter staff from the various foreign

subsidiaries. For example, Unilever’s shift from a multi-domestic strategic posture to a

transnational posture was very difficult.

The Ethnocentric Policy

An ethnocentric staffing policy concerns all key management positions filled by parent-

country nationals. Companies such as Procter & Gamble, Matsushita, and Philips NV originally

followed it. In various Japanese and South Korean enterprises such as Matsushita, Toyota, and

Samsung, key positions in international operations are always held by home-country nationals.

Companies apply an ethnocentric staffing policy for various reasons. Firstly,

enterprises believe that the host country lacks qualified persons to fill senior management

positions in less developed nations. Secondly, a company looks at ethnocentric staffing policy as

the best way to maintain corporate culture. Some Japanese companies like for their foreign

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operations to be headed by expatriate Japanese managers because these managers have socialized

into the firm’s culture while employed in Japan. Thirdly, in order to create value by transferring

core competencies to a foreign operation, it is believed that the best way to do this is to transfer

parent-country nationals who have knowledge of that competency to the foreign operation. An

ethnocentric staffing policy limits advancement opportunities for host-nation nationals.

Additionally, expatriate managers are paid more than home country nationals. An ethnocentric

policy can lead to the company’s failure to understand host-country cultural differences.

The Geocentric Policy

A geocentric staffing policy finds the best workforce for key jobs throughout the

organization, regardless of nationality which offers various advantages. It can set up the

company for the best use of its human resources. Besides, it can build a cadre of international

executives in a number of cultures. Applying geocentric policy can create value from the pursuit

of experience and from the multi-directional transfer of core competencies as well as location

economies. Other issues are that some countries want foreign subsidiaries to employ their

citizens. Employers will apply for immigration to establish employment for the host-country

national if that person has adequate and necessary skills.

Expatriate Procurement

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