Critical Thinking and Discussion Questions
1. What are the main advantages and disadvantages of the ethnocentric, polycentric, and geocentric approaches to staffing policy? When is each approach appropriate?
2. Research suggests that many expatriate employees encounter problems that limit both their effectiveness in a foreign posting and their contribution to the company when they return home. What are the main causes and consequences of these problems, and how might a firm reduce the occurrence of such problems?
3. What is the link between an international business’s strategy and its human resource management policies, particularly with regard to the use of expatriate employees and their pay scale?
4. In what ways can organized labor constrain the strategic choices of an international business? How can an international business limit these constraints?
5. Reread the Management Focus on McDonald’s global compensation practices. How does the McDonald’s approach help the company take local differences into account when reviewing the performance of different country managers and awarding bonus pay?
Research Task http://globalEDGE.msu.edu
Global Human Resource Management
Use the globalEDGE Resource Desk (http://globaledge.msu.edu/Reference-Desk) to complete the following exercises:
1. The U.S. Department of State prepares quarterly reports for living costs abroad to compensate civilian employees working for the U.S. government at various posts worldwide. Using the most current report, compare the costs of living for three posts in Europe. What is the difference between the local index and the U.S. government index? How would this help determine the living allowances for U.S. government employees at each of the three posts you chose?
2. You work in the human resources department at the headquarters of a multinational corporation. Your company is about to send several American managers to Chile as expatriates. Because mobility will be required for some of the managers sent, utilize resources available on the globalEDGE website regarding working internationally to examine issues related to driver’s licenses in Chile.
closing case AstraZeneca
AstraZeneca is one of the world’s largest pharmaceutical companies. Headquartered in London, the company has 65,000 employees, 51 percent of whom are in Europe, 32 percent in the Americas, and 17 percent in Asia, Africa, and Australia. The company is active in more than 100 nations and has sales in excess of $30 billion. A key strategic imperative for this multinational is to build a talented global workforce, led by managers who have a global perspective and are comfortable moving around the world, interacting with people from other cultures and doing business in different nations. It is not easy.
To help build international bench strength, the company moves managers to another country for up to three years. Such assignments are not cheap; the company estimates that it can cost two to four times an employee’s annual salary to cover expenses. Expenses can include a child’s school tuition, tax equalization, cultural training, and subsidized housing. Because of this expense, AstraZeneca focuses its international assignments only on its most promising “high-potential” employees—those who are scheduled for advancement and leadership positions within the company. In every case, the human resource staff will assess whether the investment in a person is worth making. Simply posting an employee to a foreign country is not enough. To get promoted, employees must also learn to work in international teams and to manage across borders. If a person is judged to lack the capability to do this, he or she will not get a foreign posting. If the employee fails to do this effectively when on the posting, advancement prospects will be reduced.
To ease the transition to another country, AstraZeneca offers employees and their spouses help with moving, locating schools for children, learning a language, and understanding cultural differences. The company also offers repatriation training for employees coming home after extended postings abroad. It does this because experience has shown that many expatriates and their families have problems readjusting to their old life after extended time in a different culture.
Another problem that the human resource function at AstraZeneca has to grapple with is how to raise the talent base of employees in emerging markets where AstraZeneca has been making big investments in recent years. An example is China, where until recently, there was very little in the way of professional management education (this is now changing rapidly). In 2003 the company had a little more than 1,000 employees in China. Now it has more than 3,500. AstraZeneca has been trying to raise the skill level of key Chinese employees as fast as possible. With regard to key managerial talent, the company has been sending them abroad to get exposure to other cultures and to acculturate them into the way in which AstraZeneca does business. It wants them to understand what it is like to be part of a global business. Each expatriate will have a host-country line manager assigned to him or her, as well as a home-country line manager who monitors the expatriate’s progress. After a period, the majority of them return to China where the most successful are targeted for future leadership positions within the Chinese subsidiary. The most talented, however, may go beyond this, and ultimately move into senior management positions at the corporate level.
Sources: S. Stern, “AstraZeneca’s Long March to China,” Daily Telegraph, September 7, 2006, p. 3; J. M. Von Bergen, “More U.S. Workers Getting Global Assignments,” Tribune News Service, August 12, 2008; and T. Mohn, “The Long Trip Home,” The New York Times, March 10, 2009, p. B6.
Case Discussion Questions
1. What international staffing policy is AstraZeneca pursuing with regard to its “high-potential” employees?
2. Why does AstraZeneca limit this policy to just high-potential employees? Can you see a drawback in doing this?
3. What staffing policy is AstraZeneca adopting with regard to its subsidiaries in places such as China? Is this an appropriate policy?
4. Do you think the company is doing enough to limit the well-known risks and costs associated with high expatriate failure rates? Is there anything else it might do?
Hill, Charles W. Global Business Today, 8th Edition. McGraw-Hill Learning Solutions, 09/2013. VitalBook file.