University of Washington
Geography 349, Geography of International Business
Professor Harrington
International Human Resource Management
 

Among the reasons for and challenges of multinational operations is the availability of employees in other countries:  their local expertise, technical capabilities, and local base of operations can save a MNC mistakes in making local marketing decisions and political judgments, provide needed skills, and are less expensive than shuttling home-country personnel back and forth.  On the other hand, managing with people from multiple cultures is difficult.  This lecture views simple guidelines for selecting managerial personnel for international operations, and for relations with production labor in foreign settings.
 


MANAGERIAL  PERSONNEL

Local or expatriate?
Most managerial employees in a typical international subsidiary will be local nationals, for reasons of cost, logistical ease, and political sensitivities.  What about the top management of the subsidiary:  local, home-country expatriates, or third-country expatriates?
 

Reasons for selecting local versus expatriate top managers
LOCAL
EXPATRIATE
to satisfy corporate need for managers with greatest expedience to satisfy the need for highly qualified senior managers where none are available locally
to oversee very distinct local production or distribution to oversee internationally uniform production and management;  to oversee critical implementation of the company's worldwide assets
to motivate local managers by promoting from among that group to develop internationally seasoned senior managers for the overall corporation
familiarity with national politics and political elites, in situations where this is especially important
to lower the company's international profile within the host country
familiarity with local culture and language
to satisfy legal requirements that local nationals have the top positions in inward FDI
to save the expense of international transfers
Note that companies that are trying to build a unified global operation, perhaps because part of the corporate advantage is corporate uniformity around the world, find it more important to use expatriate (though not necessarily home-country) managers as a training and a control mechanism.

Criteria for selecting among individual candidates

Study the OEC case at the end of Chapter 21.
 


RELATIONS  WITH   NON-MANAGERIAL  LABOR

Compensation and pay increases

  • Follow local norms, with a slight premium to attract good workers.
  • Pay attention to  unit labor costs = (wage + benefits)  X  productivity   when considering pay increases or when comparing labor costs across locations.


    • Labor representation and negotiation
    Note differences in national institutions and norms:

    Sources of MNC and labor advantage in labor negotiations
    MNC
    Labor
    The MNC is internationally mobile. The MNC does have a fixed investment in place. 
    There is the (unlikely) possibility of simultaneous labor negotiation and labor action in multiple countries.
    In the event of a strike or other disruption, the MNC can allocate production to other countries. If the MNC is vertically integrated and/or with a unique world product mandate at each production facility, continued production from the given facility is very important.
    The MNC has access to its own and to externally generated information about labor costs, conditions, regulations, and negotiations worldwide. Labor organizations are (at least potentially) able to share information internationally.

     

    revised 3 March 1999