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 International Human Resource
Management
International Human Resource Management offers a contemporary and
multilayered introduction to international and comparative human resource
management for university study. It critically analyses the core issues and
emerging trends in the field, with a consistent emphasis on real-world
scenarios and concerns.
At the macro level, the book examines how IHRM fits within and adapts
to the ever-changing environment of international relations and global
development. At the firm level, it elucidates the strategic goals served by
IHRM, and the processes used to achieve them. At the individual level, the
analysis extends beyond the traditional focus on expatriates to encompass
the various IHRM actors and their motivations.
With contributors drawn from universities across four continents, this
book presents a genuinely international perspective on IHRM. Each
chapter features a case study, tutorial activities and discussion questions.
The book concludes with three extended case studies, each based on a
specific region, to help students consolidate their understanding.
Comprehensive online resources, including an instructor’s manual and
review material for students, are available at
www.cambridge.edu.au/academic/IHRM.
MUSTAFA F. ÖZBILGIN holds professorships at Brunel Business
School, Brunel University in London, Université Paris-Dauphine and Koç
University in Istanbul.
DIMITRIA GROUTSIS is Senior Lecturer in Work and Organisational
Studies, University of Sydney.
WILLIAM S. HARVEY is Senior Lecturer at the University of Exeter
Business School and Associate Fellow in the Centre for Corporate
Reputation at the University of Oxford.

2
International Human Resource
Management

Edited by

Mustafa F. Özbilgin

Dimitria Groutsis

William S. Harvey

3
477 Williamstown Road, Port Melbourne, VIC 3207, Australia

Published in the United States of America by Cambridge University Press,

New York

Cambridge University Press is part of the University of Cambridge.

It furthers the University’s mission by disseminating knowledge in the
pursuit of education, learning, and research at the highest international
levels of excellence.
www.cambridge.org
Information on this title: www.cambridge.org/9781107669543
© Cambridge University Press 2014
This publication is copyright. Subject to statutory exception and to the
provisions of relevant collective licensing agreements, no reproduction of
any part may take place without the written permission of Cambridge
University Press.

First published 2014

Cover designed by Kerry Cooke, eggplant communications
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A catalogue record for this publication is available from the British
Library
A Cataloguing-in-Publication entry is available from the catalogue of the
National Library of Australia at www.nla.gov.au
ISBN 978-1-107-66954-3 Paperback
Additional resources for this publication at
www.cambridge.edu.au/academic/IHRM

Reproduction and communication for educational purposes

The Australian Copyright Act 1968 (the Act) allows a maximum of one
chapter or 10% of the pages of this work, whichever is the greater, to be

4
reproduced and/or communicated by any educational institution for its
educational purposes provided that the educational institution (or the body
that administers it) has given a remuneration notice to Copyright Agency
Limited (CAL) under the Act.
For details of the CAL licence for educational institutions contact:

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Cambridge University Press has no responsibility for the persistence or

accuracy of URLs for external or third-party internet websites referred to
in this publication and does not guarantee that any content on such
websites is, or will remain, accurate or appropriate.

5
We would like to dedicate this book to all those who live or dream of
living a life elsewhere. And to some special friends who have shaped
our lives.
To Ayala Malach Pines, a boundless source of inspiration as a
colleague, friend and confidante.
To George Groutsis, the eternal storyteller. Remembered always,
never forgotten.
To the Harveys: Ruth, Robert, Pippa and George, the rocks of my
life.

6
 Contents
Contributors
Acknowledgements

Introduction: a multilevel approach to international human resource

management
Mustafa F. Özbilgin, Dimitria Groutsis and William S. Harvey
1 Global trends in international human resource management
Yasin Rofcanin, H. Pinar Imer and Matthew Zingoni
2 Cross-cultural and diversity management intersections: lessons for
attracting and retaining international assignees
Dimitria Groutsis, Eddy S. Ng and Mustafa Bilgehan Ozturk
3 Key players in international human resource management
Graham Hollinshead, Cynthia Forson, Natalia Rocha-Lawton
and Moira Calveley
4 Recruitment and selection in the international context
Kristina Potočnik, Maria Felisa Latorre Navarro, Beliz Dereli
and Blanka Tacer
5 Cross-cultural training and development for overseas assignments
Aykut Berber, Yasin Rofcanin and Yitzhak Fried
6 International reward
Glenville Jenkins
7 Employee retention
Maria Balta
8 International labour relations
Mustafa F. Özbilgin
9 Reputation in the international context
William S. Harvey
10 Expatriation and repatriation in the Asia–Pacific region
Valerie Caven, Susan Kirk and Cindy Wang-Cowham
11 Balancing inflows and outflows in the European context
Joana Vassilopoulou, Barbara Samaluk and Cathrine Seierstad
12 Self-initiated expatriation: case study lessons from Africa and the
United States
Ahu Tatli, Daphne Berry, Gulce Ipek and Kurt April
Conclusion
Mustafa F. Özbilgin, Dimitria Groutsis and William S. Harvey

7
Index

8
 Contributors
Kurt April is Sainsbury Fellow and Professor of Leadership,
Diversity and Inclusion at the Graduate School of Business of the
University of Cape Town, an Associate Fellow of Said Business
School, University of Oxford, Research Fellow of Ashridge Business
School, Faculty Member of Duke Corporate Education, Duke
University, USA, and Visiting Professor at Rotterdam School of
Management, Erasmus University, the Netherlands.
Maria Balta is Lecturer in Strategy and Work Placement Director at
Brunel Business School.
Aykut Berber is Associate Professor at Istanbul University.
Daphne Berry is Assistant Professor of Management at the Barney
School of Business, University of Hartford.
Moira Calveley is Principal Lecturer in Human Resource
Management and a member of the Work and Employment Research
Unit at Hertfordshire Business School, University of Hertfordshire.
Valerie Caven is Senior Lecturer in Human Resource Management at
Nottingham Business School.
Beliz Dereli is Associate Professor in the Faculty of Commercial
Sciences at the Istanbul Commerce University.
Cynthia Forson is Head of the Department of Management
Leadership and Organisation at the Hertfordshire Business School,
University of Hertfordshire.
Yitzhak Fried is Professor of Management, Whitman School of
Management, Syracuse University.
Dimitria Groutsis is Senior Lecturer in Work and Organisational
Studies, School of Business, University of Sydney.
William S. Harvey is Senior Lecturer at the University of Exeter
Business School and an Associate Fellow in the Centre for Corporate
Reputation at the University of Oxford.
Graham Hollinshead is Reader in International and Comparative
Human Resource Management at the Hertfordshire Business School,
University of Hertfordshire.
H. Pinar Imer works at Department of Business Administration,
Kadir Has University in Istanbul, Turkey.
Gulce Ipek is a PhD student in the School of Business and

9
Management at Queen Mary University of London.
Glenville Jenkins is Head of Postgraduate Research at Swansea
Business School, University of Wales Trinity St David. He is also the
CIPD’s Chief Examiner in Employee Reward and a CIPD External
Moderator.
Susan Jane Kirk is Senior Lecturer in Organisational Behaviour,
Organisation Theory and Human Resource Management at
Nottingham Trent University.
Maria Felisa Latorre Navarro is Associate Professor at ITAM
University of Mexico and a researcher at IDOCAL Institute,
University of Valencia.
Eddy S. Ng is Associate Professor at Dalhousie University, Canada.
Mustafa F. Özbilgin is Professor of Organisational Behaviour and
Human Resource Management at Brunel University in London. He
also holds chairs at Université Paris-Dauphine and Koç University in
Istanbul.
Mustafa Bilgehan Ozturk is Senior Lecturer at Middlesex University
Business School.
Kristina Potočnik is Lecturer in Human Resource Management at
the University of Edinburgh Business School.
Natalia Rocha-Lawton is Lecturer in Human Resource Management
and a member of the Work and Employment Research Unit at
Hertfordshire Business School, University of Hertfordshire.
Yasin Rofcanin is a PhD student in Organization and HRM at the
Warwick Business School, University of Warwick.
Barbara Samaluk is a PhD researcher at the Centre for Research in
Equality and Diversity (BUSMAN) at Queen Mary University of
London.
Cathrine Seierstad is Lecturer in International Human Resource
Management at the School of Business, Management and Economics,
University of Sussex.
Blanka Tacer is research assistant in the Department of
Entrepreneurship at the University of Primorska, Slovenia.
Ahu Tatli is is Senior Lecturer at Queen Mary University of London.
Joana Vassilopoulou is Lecturer in Organisational Behaviour and
Human Resource Management at the School of Business,
Management and Economics, University of Sussex.
Cindy Wang-Cowham is Senior Lecturer in Human Resource
Management at the Nottingham Business School, Nottingham Trent
University.
Matthew Zingoni is Assistant Professor of Human Resources at the

10
University of New Orleans.

11
 Acknowledgements
We are deeply grateful to the many authors of this book, spread throughout
the world, who came together to create this unique text about international
human resource management. We thank you all for your hard work,
dedication, patience and good humour throughout the development of the
book. We are extremely indebted to David Jackson, Jessica Pearce and
Bridget Ell at Cambridge University Press for their tireless encouragement
and support throughout. Bridget was key in initiating and proposing the
text, and David and Jessica have been particularly important in helping us
to develop and complete the manuscript. We are grateful for their efforts,
without which the book would have taken much longer to develop. We
would also like to thank Katy McDevitt AE for her outstanding
copyediting and suggestions for this book. Finally, we sincerely thank the
unnamed reviewers from academia and the human resource profession
who commented on early drafts and who provided support and
constructive suggestions, which have helped enrich the quality of the book.

12
 Introduction: a multilevel approach to
international human resource management
Mustafa F. Özbilgin, Dimitria Groutsis and William S. Harvey

International human resource management (IHRM) is a set of management

interventions and activities crafted for the effective practice of recruitment,
retention, deployment, development and use of human resources in an
international context. The study of IHRM requires attention to the
relationships that shape the dynamics of inputs, processes and outputs of
human resource management (HRM) among a set of actors at
international, national, sectoral, organisational, team and individual levels.
The multiplicity of key actors and complexity of relationships often
complicate our understanding of how IHRM policy and practice develop.
To overcome this complexity, we offer a multilevel and multidimensional
approach to the study of IHRM.

Towards a multilevel approach to IHRM

In this book, we present a novel multilevel approach to the study of IHRM,
incorporating in each chapter the macro-, meso- and micro-levels at which
IHRM policy is shaped, negotiated, refined and practised.

Macro-level concerns
At the macro-level, we explore four central concerns. First, we examine
the context of global and international relations for IHRM, guided by the
stage of a company’s internationalisation and the type of business concern
it represents. We incorporate definitions and explanations of the simple
import–export relationship, joint ventures, mergers and acquisitions as
well as expansion into foreign markets such as offshoring and outsourcing,
in exploring how macro-level drivers are operationalised in meso-level
organisational policy and practice. We also examine globalisation and
provide an in-depth assessment of what the increased mobility of financial
capital, goods, services and people means for IHRM in practice. Second,
we outline the relations between foreign markets and governments as well
as between key stakeholders in multiple business entities. Third, we assess

13
the workings of international labour standards, laws, policies and
processes in play between host, home and third countries. Fourth, we
present a substantive debate on ethical issues and dilemmas, guided by
debates on localisation versus standardisation and global convergence or
divergence.

Meso-level concerns
At the meso-level, chapters focus on implications and concerns of
organisational infrastructure, primarily examining them across two
dimensions: first, we study organisational resources (financial, human,
social and cultural) by examining short, medium and long-term agendas
and strategic versus reactive approaches. Second, we scrutinise IHRM
processes, including recruitment and selection, from the perspective of the
host-country national (HCN), the parent-country national (PCN) and the
third-country national (TCN) as well as the high-skilled migrant. We take
into account workforce planning; training and development; cross-cultural
training; cross-cultural awareness; diversity management; performance
management; remuneration; repatriation, international labour relations
(ILR), corporate social responsibility, corporate reputation and
international laws and standards.

Micro-level concerns
Our micro-level assessment of IHRM concerns focuses on the
international assignee from three dimensions. First, we examine different
types of expatriate (also known as PCNs), HCNs, TCNs, business
travellers and self-identified migrants. Second, we account for increased
demand for skills internationally (global ‘war for talent’). Third, we
identify the demographic ‘faultlines’ that international managers must
consider in the recruitment and selection process; the management of
international talent; and the expectations both of management and
international assignees themselves.

Interplay between levels

Our novel multilevel and multidimensional approach enables a focus on
the interplay between the three levels of macro, meso and micro concerns.
Recognising this, we explore a number of demographic shifts, including
changes in generational patterns, gender dynamics, work–life
arrangements and migration repertoires, as well as social, economic and
political transformations around demographic change. We illustrate how

14
organisational policies interpret such macro-level demographic changes
and change them for individual employees.
The multilevel approach to IHRM is useful in bringing together three
levels of consideration, previously treated separately in the literature: first,
international links between the home and host country; second, the
organisational expectations and requirements of the home and host
countries; and third, the individual expectations, requirements and
characteristics of the international assignees.
Our multilevel framework offers a comprehensive understanding of the
role of human resource (HR) managers in the international context. In
providing this understanding, we bridge the gap between two IHRM
literatures that have been polarised between a bird’s-eye view of IHRM
drivers in the global context and a more limited view of IHRM as merely a
set of issues for expatriate management. We do so by exploring the
interplay between organisational, team and individual-level considerations,
in the context of international and national drivers, rules and regulatory
pressures.

How is this book innovative?

This book seeks to innovate in several ways. First, we extend the literature
beyond the traditional focus on understanding HRM processes in the
international context. Second, we examine the role of HCNs and TCNs as
well as changing immigration policies, which enable the international
mobility of skilled migrants (SMs), such as ‘self-initiated expatriates’
(SIEs), who have been little-scrutinised to date. Here, we also provide
insights into the definition of expatriates by disaggregating them along
multiple identity lines. Third, we transcend the limited focus of cross-
cultural management by considering the importance of diversity
management techniques and strategies, in the context of IHRM
responsibilities within and between different spatial contexts. Fourth, we
depict regional trends, including details on labour mobility, activity in
multinational companies (MNCs) and IHRM processes in practice in
multiple geographic contexts. Fifth, we provide students with a useful
source book, linking them to the latest data and information from a variety
of sources. Finally, we engage students with the business media, as we link
chapters to current public events reported in the high-quality business
media as a way of encouraging students to interact critically with
contemporary debates in the press.

15
Accessibility
While this text is pitched at undergraduate students, it is also intended to
be accessible to postgraduates, practitioners and scholars new to the field.
Key concepts from the IHRM literature are clearly defined, helping
readers to grasp core ideas and practices from the field. We have drawn
our contributor team from a wide range of countries across four continents,
illustrating our commitment to making the book truly international. The
authors are also a diverse group of people, whether in terms of gender,
ethnicity, age, discipline or other categories. International authorship and
examples ensure that the text is highly accessible to readers from a range
of backgrounds.

Structure of the book

The text comprises 12 chapters, planned to suit a standard one-semester
course. Each chapter is packed with pedagogical and interactive features
that engage readers and encourage directed and independent study,
including concise introductions and summaries; quick ‘take-home
messages’; current, real-world case studies; questions for discussion; and
extensive recommendations for further reading. Each of the chapters is
summarised here.
Chapter 1: Global trends in international human resource management
(Rofcanin, Imer and Zingoni). The chapter discusses shifts in the global
context in terms of demographic changes, institutional arrangements and
individual values and attitudes.
Chapter 2: Cross-cultural and diversity management intersections:
lessons for attracting and retaining international assignees (Groutsis, Ng
and Ozturk). The authors bring a fresh perspective to the cross-cultural
management field by exploring how organisations need to transcend a
monolithic understanding of cultures and to move beyond prescriptive
approaches towards locally tailored solutions.
Chapter 3: Key players in international human resource management
(Hollinshead, Forson, Rocha-Lawton and Calveley). This chapter shows
that international players in the IHRM domain are changing, rendering the
old world order defunct. The authors explain how IHRM policy and
practice should capture the dynamism in shifts of power, resistance and
contestation among new and old actors in the field.
Chapter 4: Recruitment and selection in the international context

16
(Potočnik, Latorre, Dereli and Tacer). This chapter explains how
recruitment and selection practices can be improved with better job
analyses. The authors present a range of considerations and activities for
international organisations to improve their recruitment and selection
processes.
Chapter 5: Cross-cultural training and development for overseas
assignments (Berber, Rofcanin and Fried). The authors explore shifts in
the career strategies of workers as well as career management approaches
of organisations in the international context.
Chapter 6: International reward (Jenkins). This chapter provides a
review of the changing context, approaches and repertoires of reward in
the international context.
Chapter 7: Employee retention (Balta). Balta reviews strategies for
planning, choosing and implementing effective retention strategies in
international organisations.
Chapter 8: International labour relations (Özbilgin). Özbilgin reviews
ILR and international labour standards (ILS), exploring a number of
different approaches and contemporary changes.
Chapter 9: Reputation in the international context (Harvey). Harvey
focuses on how individual, group and organisational reputation is viewed,
assessed and managed in the international context.
Chapter 10: Expatriation and repatriation in the Asia–Pacific region
(Caven, Kirk and Wang-Cowham). The authors introduce the drivers for
international mobility of talent and focus in the case of the Asia–Pacific
region.
Chapter 11: Balancing inflows and outflows in the European context
(Vassilopoulou, Samaluk and Seierstad). This chapter reviews inflows and
outflows of labour and highlights relevant practice for IHRM through a
focus on the European context.
Chapter 12: Self-initiated expatriation: case study lessons from Africa
and the United States (Tatli, Berry, Ipek and April). The authors discuss
how, why and under what circumstances individuals manage their own
migration, with reference to North American and African cases.
Finally, in a conclusion by the book’s editors (Özbilgin, Groutsis and
Harvey), we summarise the book and highlight the major contributions of
each chapter.

17
18
 1 Global trends in international human
resource management
Yasin Rofcanin, H. Pinar Imer and Matthew Zingoni

Learning objectives
To identify global trends in international human resource
management (IHRM).
To offer a critical perspective on IHRM practices and trends.
To integrate conceptual arguments with practical implications.

Learning outcomes
After reading this chapter, students will be able to:

understand the strategic role of human resource practices in a

dynamic and complex global business environment
acknowledge issues that arise in human resource management when
firms internationalise
understand how firms develop and adapt their HRM strategies and
policies in response to internationalised business operations
appreciate the multinational and cross-cultural context of HRM
understand the rising importance of human capital in an international
work environment.

Introduction
Human resource management (HRM) is a management function that
covers the processes of selecting, training, appraising and compensating
employees, with respect to regulations in areas including health and safety,
labour relations and equal employment opportunity (Zheng, 2013). When
companies globalise their operations, they go through certain phases
(Mathews, 2006), moving from domestic to international, multinational
and global stages (Farndale & Paauwe, 2007).

19
 Most companies that become global begin their operations (such as
production, marketing and distribution) in a domestic context.
International companies are able to expand their presence and extend sales
and marketing strategies while retaining ethnocentric structures. At the
multinational stage, companies adapt various elements of the marketing
mix (e.g. price, place, product and promotion) in overseas markets. Here,
firms start to decentralise production and related decisions to their host-
country subsidiaries, and combine, coordinate and adapt their overall
global operations. The risks and returns increase as companies move closer
to globalised activities. Finally, the globalisation stage is characterised by
the realisation of similarities and differences between countries around the
world, and here companies benefit from economies of scale to achieve
worldwide presence.

international company An importer and/or exporter that does not have investments outside
its home country.

multinational company A company that is registered in more than one country or that has
operations in more than one country.

globalisation A process of worldwide business integration, designed to enable a

company to reach new overseas markets.

A globalising company faces diverse challenges in managing its

overseas activities (Espinoza, Ukleja & Rusch, 2010). The company has to
employ management systems appropriate to managerial control systems,
banking relationships and HRM systems all over the world. Thus, IHRM
involves combining and coordinating strategic HRM practices – including
selection, recruitment, training, development and performance
management – in response to the challenges of internationalising in home
country, host country and third countries. It is also important to
coordinate and manage corporate strategy (e.g. De Cieri, Cox & Fenwick,
2007).

home country The country of origin of self-initiated expatriates, also known as

the parent country.

host country The receiving country of self-initiated expatriates.

third country The destination country of self-initiated expatriates, which is

neither the expatriate’s home nor host country.

strategic human The integration of key HRM processes with business strategy and
resource management the corporate culture, driven by long-term vision.

20
 There are noteworthy differences between domestic and international
HRM when it comes to their policies and practices (Edwards, 2004; De
Cieri, Cox & Fenwick, 2007). One such difference, in terms of sourcing,
development, rewarding, performance management and HR planning, is
that domestic HRM is only involved with domestic employees, while
IHRM takes a broader perspective and deals with parent, host and third
countries. In the IHRM process, three aspects are especially important:

human capital: how it is procured, allocated and utilised

employee types: parent-country nationals (PCNs), host-country
nationals (HCNs) and third-country nationals (TCNs)
country types: home (or parent), host and third countries.

Context, firm, local unit specificities and IHRM practices shape the IHRM
process (Cascio & Aguinis, 2005). The defining characteristics of the
context are: cultural and institutional context; availability of staff; and the
type of industry in which the company operates. The structure and strategy
of a multinational company (MNC), its corporate governance and
organisational culture and the focal firm’s level of international
experience, define company specificities. The specificities of the local unit
include the method by which the subsidiary has been established in the
host country; the strategic role and importance of the subsidiary; the need
for local control; and the degree of autonomy in local decision-making.

parent-country nationals Employees who are citizens of the country where the headquarters
is located.

host-country nationals Employees who are citizens of the country where the MNC’s
subsidiary is located.

third-country nationals Employees who are citizens of any country other than the parent
and host countries.

focal firm A firm that initiates an international transaction with the aim of
producing goods or services for end customers.

Selection, training and development, compensation and career

management related to HR practices shape the IHRM process; importantly,
so does the company’s ethnocentric, polycentric, regiocentric or
geocentric orientation. This chapter sets out a general framework for
recent issues in IHRM processes, and emphasises some of the key trends

21
that influence IHRM.

ethnocentrism A strategic assumption in the MNC that tried-and-tested

approaches to management can be extended from the country of
origin to operating sites in other countries. Underlying this is a
wish to retain power in the country of origin.

polycentrism A strategic assumption in MNCs that local managers and

employees are best placed to formulate policies that reflect local
needs, with a preference for decentralisation and autonomy at
operating sites.

regiocentrism Customisation of human resource practices to the needs of specific

regions such as European Union, North American Free Trade
Agreement and the Association of South East Asian Nations.

geocentrism The idealised status of the truly global concern, combining local
and international strengths. Managers are able to take a global
view of the organisation, both responding flexibly to local needs
and transcending them, in the pursuit of corporate goals and
values at international level.

Trends in economic and financial environments

The interdependence of economies around the world and the increased
globalisation of today’s business environment provide opportunities for
domestic companies to extend their sales, manufacturing and other
operations into new markets (Farndale & Paauwe, 2007). Companies
expand their operations and go global for several reasons, including a drive
to access new markets and to reduce labour and other operational costs
(Edwards, 2004). The number of cross-border intercompany arrangements
– in the form of licensing, franchising, joint ventures, manufacturing,
marketing, research and development and subcontracting – has increased
dramatically in recent decades (Ivancevic, 2010).

licensing A form of international arrangement that includes franchising and

subcontracting within a certain time period in exchange for a
royalty fee.

franchising The practice of utilising another firm’s business model within a

certain time period in exchange for a royalty fee.

joint venture A form of equity-based strategic partnership that firms utilise when
they internationalise their operations.

subcontracting The practice of assigning some tasks and responsibilities to

another party under a contract.

22
 Global financial storms have become an integral part of today’s work
settings and affect almost all types of company across the globe (Veeran,
2009). The two major financial crises of the past 20 years, in 2001 and
2008, have had an immediate effect on international HR practices, mostly
in the areas of compensation and international assignee decisions (Hudson
Survey Report, 2009). When a host country experiences a crisis,
employers of expatriates may seek to reduce their commitment to covering
cost-of-living differentials (the difference between an employee’s living
costs in their home and host countries) through modified benefits and
remuneration (Veeran, 2009). International companies may also opt to
squeeze budgets allocated to employee training and development during
financial hard times. Cost cutbacks, salary freezes and layoffs are common
practice in many companies during global market crises (Schen &
D’Netto, 2011).

The growth of internationalised companies

Recent decades have witnessed the growth not only of MNCs but also of
global companies, transnational companies (TNCs) and dragon
companies (Mathews, 2006; Alon & McIntyre, 2008; Zheng, 2013).
MNCs make investments in countries outside their home country and yet
do not have coordinated product offerings in those countries. Global
companies make investments in more than one country and market their
products through coordinated elements of the marketing mix. TNCs also
operate in more than one country, but they are different from multinational
and global companies because they decentralise to local subsidiaries their
decision-making, research and development and other relevant operations
(Mathews, 2006). Dragon companies are firms that have successfully
internationalised out of home countries in the Asia–Pacific region; they
have become prominent in certain industries, including (but not limited to)
the production of building materials and contract manufacturing.

global company A company that is present in more than one country. Unlike
multinational and transnational companies, global companies
market their products and/or services through coordinated
branding across all markets.

transnational company A company that does business in more than one country.
Transnational companies do not have a national home in any
single country.

dragon company An MNC that has emerged from a home country in the Asia–Pacific

23
 region and successfully extended its operations internationally.

The emergence and predominance of different types of international

company are closely associated with foreign direct investment (FDI)
flows (Mathews, 2006; Johanson & Vahlne, 1977). FDI represents a
company or person’s investment in production or business conducted in
enterprises operating outside the investor’s own country (Levitt, 1983).
Emerging multinational companies (EMNCs) lead the global FDI flows
and help strengthen the global economy and businesses (UNCTAD, 2010).
Despite the rapid growth of EMNCs and their presence in the global arena,
few studies have investigated how these enterprises manage their global
workforce (Warner & Zhu, 2010). As a result, knowledge about the
opportunities and challenges of the global workforce is limited, although it
is clear that various types of international company do not make sufficient
effort to utilise their global human capital to the full. The strategic IHRM
framework usually applied in MNCs needs to be adapted for use in
EMNCs, in response to the context of company operations.

foreign direct investment Investment in a company or entity by a company or entity based in

another country.

emerging multinational A global company that emerges outside traditional developed

company markets (e.g. Europe, United States and the Far East).

Staffing the international organisation

In today’s dynamic, complex and changeable business environment, global
companies face recruitment and staffing challenges. Most employ a
combination of locals (citizens of the country in which they work),
expatriates (non-citizens of the country in which they work), PCNs
(citizens of the countries in which the company is headquartered) and
TCNs (citizens of neither home nor host country) depending on the
management’s mindset, which may be ethnocentric, polycentric,
regiocentric or geocentric (Wind, Douglas & Perlmutter, 1973), in line
with the company’s corporate strategy. Ethnocentric companies focus on a
centralised decision-making process at their headquarters; expatriates from
the home country coordinate an ethnocentric company’s subsidiaries most
of the time. Companies with a polycentric approach treat their subsidiaries
as distinct and unique decision-making entities; here, locals usually
manage subsidiaries. Regiocentric companies emphasise the geographical

24
strategy and structure of the related MNCs; employees might be assigned
to specific tasks only within their regions. Geocentric companies see the
world as an integrated market in which the workforce’s competencies are
more significant than its nationality.

ethnocentric staffing A company policy to fill key positions with PCNs.

polycentric staffing A company policy to staff the home office with home-country
nationals and foreign subsidiaries with HCNs.

regiocentric staffing A company policy to permit the best personnel for key management
positions to move within a specific geographic region, enjoying
regional autonomy.

geocentric staffing A company policy to select the best people for key management
jobs, regardless of their country of origin.

Competition for scarce international talent has increased as the number

of companies and locations has grown, resulting in more expatriation.
According to a report published by Mercer (2013), the number of
international positions offered to expatriates has increased by 55 per cent
between 2012 and 2013. Employing expatriates poses several challenges
for MNCs, including the need for the employees to culturally adapt and for
the employer to provide country-specific training; language barriers;
housing provision; and spousal and family support. Other options for
expatriate employment include self-initiated expatriation, short-term
assignments and offshoring. Each of these forms of international
assignment involves different career goals, work responsibilities and
performance expectations (Bjorkman, 2005). In addition, the IHRM
procedures related to selection and training tend to be rather ad hoc.
Self-initiated expatriates (SIEs) migrate to another country when they
find a position there by their own efforts (Bjorkman, 2005). SIEs are
different from other international assignees in terms of their contract, job
security, compensation and most importantly initiation support; they do
not work for a specified time period and do not receive specific training or
a compensation package from the company before they start an
international assignment. In short-term or temporary employment, an
employee works for an MNC in another country for between one and 12
months. Unlike traditional expatriates or SIEs, a short-term assignee’s
family does not accompany him or her while they are working abroad.
Offshoring refers to the process of exporting jobs from developed
countries to developing countries, where labour costs are lower, thus

25
enabling the company to reduce costs. In most cases, such positions
include (but are not limited to) labour-intensive manufacturing and
telecommunications technologies (e.g. call-centre operations and textile
production). According to a Society for Human Resource Management
report (2004), India is the most attractive country for offshoring certain
operations, in terms of reducing costs.

expatriation The process of assigning employees to international, cross-border

and cross-cultural jobs.

self-initiated expatriate A person who moves abroad for work on their own initiative.

short-term assignee An employee appointed to an international post for a short period,

usually less than one year.

offshoring Relocation of business activities (generally, manufacturing or

operational) from one country to another.

Cultural values, changing demographics and

workforce diversity
Cultures and people’s values vary from country to country and can be
markedly different. The most cited study of cross-cultural dimensions is
that by Hofstede (1980), who initially set out four cultural dimensions, to
which a fifth and sixth were subsequently added. These are discussed in
chapter 2. Such cultural values are conceived as having a strong influence
on workplace policies and practices (Hofstede, 1980), including HRM
aspects (Tosi & Greckhamer, 2004; Weech, 2001).
Research and current trends suggest that workforce demographics are
changing gradually but significantly (Tarique & Schuler, 2008), with a
resulting increase in workforce diversity. The size of the population in
developed countries is expected to stay stable or shrink in some regions.
On the other hand, the populations of developing and emerging countries
are increasing and average ages decreasing (Strack, Baier & Fahlander,
2008). Research reveals that employees born in the early 1980s are more
willing to look for international positions where they see the opportunity to
benefit from global experience and advancement opportunities (Farndale
& Paauwe, 2007; Faust, 2008). Thus, international HR managers are
challenged to balance the composition of their workforce in terms of
planning the need for older and younger employees – commonly referred
to as Generation X and Generation Y employees (Faust, 2008) – to work

26
in a dynamic, global business environment, in addition to attracting,
selecting, developing and retaining that workforce. Under these
circumstances, HR professionals and practitioners are also challenged to
develop and implement HR policies and practices to meet the needs of
employees from different generations (Marjorie, 2008; Terjesen,
Vinnicombe & Freeman, 2007).

workforce diversity Diversity among employees, in terms of their age, gender, physical
abilities and disabilities, ethnicity, religion, sex, sexual orientation,
cultural and educational background.

Generation X Generation X, popularly known as ‘Gen X’, were born between the
late 1960s and late 1970s.

Generation Y Generation Y, popularly known as ‘Gen Y’, were born in the 1980s
and 1990s.

The cross-cultural and cross-border expansion of companies has resulted

in the emergence of a new class of people, who hold global attitudes,
exhibit global behaviours and have global networks of relations (Roberson,
2006; Day & Greene, 2008). In this context, the workforce is characterised
by diversity, in terms of ability and disability, age, cultural and educational
background, ethnicity, gender, religion, sex or sexual orientation (Harding
& Peel, 2007). Diversity not only affects how people perceive themselves
but also how they perceive others. As these perceptions influence and
shape the interactions at workplace level, HR professionals have to
manage effectively the inclusion, adaptations, interactions and needs of the
diverse workforce (Tatli & Özbilgin, 2009). Accordingly, companies
operating globally must be ready to allocate resources to achieving a
diverse workforce (Tatli & Özbilgin, 2009).

Technological improvements
Improvements in technology have changed our approach to almost
everything we do. Smart phones and mobile devices have become integral
parts of our lives, helping us to plan, work and communicate. Technology
is also used in many HR practices, such as job applications, recruitment
and even training. In this respect, there has been a shift from traditional
HRM practices (Caldwell, 2010) to the use of unconventional HR
technologies (Hendrickson, 2003). For instance, companies have started
using social media as a means of recruiting new talent in the international
context (Panayotopoulou, Vakola & Galanaki, 2007). Online tools (such as

27
the professional networking site LinkedIn) have made it easier for MNCs
to access talented people with distinct competencies around the world.
Technology has also helped MNCs to enhance their work flows and
IHRM processes by using video conferencing, virtual teamwork, online
interviews and testing in the selection process, virtual training, and even
virtual performance appraisals (Schramm, 2008). The use of internet
technologies for selection, interviews and training has reduced various
costs for MNCs. E-learning technologies continue to develop and are
integrated into the international HR practices of companies around the
world (Panayotopoulou, Vakola & Galanaki, 2007). Therefore, MNC
access to and coordination of competent global talent has become not only
easier but also more effective.

Labour relations
In addition to diversity, companies with subsidiaries abroad may encounter
national and regional differences in labour laws and labour relations
practices. There are many structural differences in unions as well, as their
influence on a company’s operations varies between countries. Mexican
employers, for instance, focus much less on the details of the written
contracts of employees than do employers in the United States; in the same
way, Mexican employees tend to rely more on informal agreements with
their employers than do American employees (Greer & Stephens, 1996). In
South Korea, the nature of labour relations in giant conglomerates called
chaebols is set in line with a philosophy of controlling each aspect of
workers’ lives. In Singapore, a National Wages Council closely guides
annual wage adjustments and legislation regulates working conditions
(Wan & Ong, 2002). Co-determination, which gives employees a legal
right to take part in setting company policies, is legally guaranteed in
Germany, allowing workers to elect their representatives to the supervisory
board of their employers, depending on the issue in question (Poutsma,
Ligthart & Veersma, 2006). Thus, an IHRM professional should
investigate the national and regional labour relations climate before a
company begins to operate in a particular country or region. As companies
move through the stages of internationalisation, the risks and investments
associated with expansion into another country change. For instance,
international and global companies are required to comply differently with
overall labour relations regulations in a host country. A global company
has to directly adapt to the local labour regulations and laws of the host
country, since it invests directly in the country, most likely by establishing

28
autonomous subsidiaries.

The changing nature of careers in the

international context
With the predominance of international careers, individuals move between
jobs and companies and are not expected to commit to a single company or
a job for life (Veeran, 2009). The boundaryless career, which is
independent from the organisational career arrangements and transcends
physical and psychological boundaries, has increased the uncertainty (or,
conversely, the flexibility) of today’s work settings (Bjorkman, 2005). In
other words, companies can no longer promise lifelong employment to
their employees, and employees no longer demand lifelong job security
from their employers. The defining tenets of a boundaryless career are the
accumulation of transferable knowledge; a larger number of alternative
potential employers; and the degree of personal investment an employee
makes in pursuing a boundaryless career. Due to hypercompetition,
integrated world markets and the unpredictable business environment,
MNCs have become increasingly dependent on expatriates. Expatriates
who complete international assignments gain personal development and
career enhancement opportunities, although these may not directly benefit
the MNC. Therefore, if the MNC fails to provide a repatriation
opportunity, the expatriate who benefits from personal development or
career enhancement opportunities during the expatriate assignment will
still be likely to perceive them as valuable assets. Whether the MNC holds
an ethnocentric, polycentric, regiocentric or geocentric mindset, it is
important for IHRM professionals to align their approach to boundaryless
careers with overall company strategy, taking into account recent trends in
career development.

repatriation Voluntary and self-directed efforts of employees to develop careers

abroad. Repatriation, unlike expatriation, is initiated without
official support from the focal company.

The changing nature of jobs and work design

Globalisation, competition and technological advances have changed the
way jobs and works are designed (Morgeson & Humphrey, 2006).
Gradually, the nature of jobs has shifted to include interaction with and
feedback from co-workers and others, and new job categories (such as

29
knowledge and technology-driven jobs) have emerged (Grant, 2007).
Similarly, work designs have become more flexible to allow people to do
their jobs outside the office and from abroad (Grant, 2007). Work
arrangements such as telecommuting and job-sharing have become more
common as alternatives to traditional work arrangements, depending on
the needs of both the company and the employee. For IHRM professionals,
these trends imply an increased reliance on knowledge workers and
therefore require a greater emphasis on human capital. Moreover,
employees seek to have jobs that enable them to communicate, interact
with others and receive feedback. Successful IHRM professionals
acknowledge the importance of relational elements in designing jobs and
work tasks and providing employees with more flexibility than traditional
assignments.

relational job design Emergent forms of job and work designs that emphasise relational
elements such as feedback seeking from others, interpersonal
communication and constant feedback-seeking behaviours.

Proactive employee practices and the changing

nature of employment contracts
Proactive employee practices enable workers to shape themselves and their
environments (Grant & Ashford, 2008). In workplaces, employee
proactivity is more than simply a necessity in today’s global, diverse,
modern and dynamic organisations (Cascio & Aguinis, 2005; Den Hartog
& Belschak, 2010). Unexpected and adverse circumstances, such as budget
cuts, technological breakdowns and layoffs, constantly threaten the
progress of organisations (Finkelstein & Hambrick, 1996; Friedman,
2005). When employees engage in proactive efforts, they defend
themselves against such issues. Employees who are able to adapt globally,
and who realise that they do not always need to plan in advance, usually
succeed in these dynamic work environments (Grant & Ashford, 2008).
Some of the most observed proactive employee work practices across
organisations are job crafting (Wrzesniewski & Dutton, 2001);
idiosyncratic deals or i-deals (Rousseau, 2001); personal initiative (Frese
et al., 1997); voicing (Van Dyne, Ang & Botero, 2003); and taking charge
(Morrison & Phelps, 1999).

proactive employee Employee behaviours that proactively attempt to change the work
efforts setting and working conditions (e.g. crafting jobs and making

30
 individualised agreements).

idiosyncratic deals (‘i- Mutually beneficial, non-written and personalised individual

deals’) agreements between an employee and their supervisor.

Emerging trends at macro and organisational levels may have significant

influence on the configuration of the new employment relationships. One
increasingly common practice is the negotiation of i-deals: unique
employment agreements between a worker and their supervisor about
working conditions, which differentiate the employee from their
colleagues (Frank & Cook, 1995). For example, a valued engineer in
Microsoft might take a year of training in an area of personal interest (e.g.
underwater photography) instead of quitting his or her job (Wrzesniewski
& Dutton, 2001); an employee of Walmart might visit Japan to learn how
to manage a plant Japanese-style. I-deals are now widespread across
countries and organisations because of the need to innovate and a
dependence on high-tech jobs, knowledge work and human capital in
response to change and complexity in the business environment.
Employees’ higher levels of educational attainment, and their concerns
about training and development, make customisation of various aspects of
employment more visible and acceptable than ever before on the
employer’s side (Lawler & Finegold, 2000). Negotiations of some types of
i-deals may be limited in countries where labour markets are controlled
and strict regulations exist. Also, assertive negotiations of working
conditions may be less appropriate in countries where norms and culture
lean towards compliance with rules (e.g. China, Thailand).
Although such employee practices certainly seem relevant to domestic
HR professionals, they are actually most often seen in an international
context, especially in expatriate assignments. An expatriate who negotiates
for extra training or asks for additional compensation to cover the
expenses of his or her children in the host country is effectively arranging
an i-deal. Thus, IHRM professionals may be better able to reach
agreements if they take contextual factors into account when negotiating.

Conclusion
Most of the pressing global challenges companies now face relate to
adding global HR practices to their existing operations. IHRM
professionals and practitioners have started to acknowledge the challenges
and act to retain their best talent, in the context of demanding international

31
competition. Technological advances, changing demographics and
financial and economic hard times all affect different types of companies
in the global arena (e.g. MNCs, TNCs). A greater appreciation of diverse
workforce and labour relations is one of the most significant external
trends, encouraging companies to develop and implement their global HR
practices in line with their corporate strategies. In an effort to adapt
themselves to the unpredictable dynamics of the business environment,
employees engage in proactive efforts to shape themselves and their work
settings (including job crafting, i-deals, personal initiative and voicing),
especially in expatriate arrangements. In an era when almost all types of
company experience the challenges of internationalising, HR practices
must be managed on a global scale and must respond to the particular
needs of competent global talent.

Take-home messages
Key global trends that influence businesses in the international
context include movements in the economic and financial
environments, the existence of various types of international
companies at different stages of internationalisation, the cultural
context, labour-related regulations in different countries,
technological advancements and the diversity of the workforce.
Due to integrated markets and the globalisation of business, IHRM
professionals are exposed to different types of international
assignments.
IHRM professionals and managers face challenges due to the highly
globalised nature of businesses; alternative staffing options;
technological improvements; changes in the demographics of
workforce; the emergence of different types of global companies; the
changing nature of works and jobs; and greater acknowledgment of
the diversity of the workforce and labour relations.
Today’s employers should take all the necessary steps to compete in
the global context. Most importantly, employers, acting in a
coordinated manner, should develop career paths for individualised
needs of more diverse, global, multicultural and multinational
employees.
Considering the gradual but meaningful changes, employers should
initiate more collaborative and participative HR practices that will
keep talented global competencies with them.
In today’s fierce competitive environment, companies should develop

32
 and implement HR practices that will be globally relevant but crafted
to particular contexts and specific to the needs of employees with
diverse backgrounds.

Closing the learning loop

1. After reading this chapter, you will be aware that organisations are
utilising a more diverse workforce as they decide to go global. Part
of this diversity comes in the form of age diversity, since
individuals are working for longer time periods. So, a manager
needs to work with a wider range of age groups than before.
Further, this chapter has highlighted that organisations are
increasingly using technology. What challenges does advances in
technology and a more age diverse workforce present? What can
HR managers do to overcome these challenges?
2. This chapter has discussed both the increase in regulations around
the world and the expansion of multinational companies. The
combination of these two factors has created unique challenges
that impact many areas of HR. Discuss the impact this may have
on IHRM practices, including training and development, employee
selection, employee recruitment and employee compensation.

Case study 1.1 Krewe Marketing

Krewe Marketing, a think tank focusing on corporate branding strategies,
was established by Isaac Jackson in 2005 in New Orleans, USA. The
company specialises in assisting start-up companies to develop their own
brands and established companies to re-evaluate their existing brands
when entering new markets. Over the past eight years, Krewe Marketing
has experienced growth in its business potential. The number of company
clients has increased from seven in the southeast United States to 46 across
the United States. Recently, Isaac has agreed to the acquisition of Krewe
Marketing by Image First Marketing, a large multinational marketing firm
headquartered in Zurich, Switzerland. One of the requirements for the
acquisition is that Isaac stays on the board of directors and becomes the
vice president, being responsible for both the North and South American
client relationships. Personally, Isaac is very happy with this development
but he does have some concerns. In particular, many of his existing
employees are not happy with the idea of working for a large MNC and
many may choose to leave after the acquisition. Further, Isaac has always

33
been a hands-on manager, and he is not sure if he can continue to be an
effective manager in such a large market. Isaac currently oversees 24
employees in one country but will now manage 72 employees in four
countries. In addition, he will oversee employees from different countries,
many of which he has never visited. Overall, Isaac feels this acquisition is
the right thing to do in the long-term, yet he is worried about the short-
term transition phase.
Case study questions
1. What can Isaac do to remotely manage a large number of employees
with diverse backgrounds?
2. What steps can Isaac take to address his concerns about managing
employees from a number of different countries?
3. Before the acquisition is finalised, is there anything Isaac can ask Image
First Marketing to help ensure the success of the acquisition?
4. Given Isaac’s concerns and the stiff market competition in the business
setting, is this acquisition a good idea?

Activity
Student role-play
Overview
Break into groups, with one student playing the role of an HR manager
in a MNC and the remaining students playing the role of employees.
The students compete for a position that involves high cultural
adaptability skills (the job is briefly described below). Based on the
background information provided, the HR manager conducts initial job
interviews and tries to evaluate whether each candidate fits the vacant
position.
Objective
The objective of this role-play is to demonstrate the challenges of
conducting initial job interviews with employees who will fit in
different cultural contexts. Therefore, the activity will demonstrate how
the need for cultural diversity affects initial job interviews.
Directions
Break into groups of four. Assign one student to the role of HR
manager and the others to the employee roles described below. After
each student reads the following background information, have the
manager talk to each employee separately to conduct an initial job
interview about his or her employment relationship. The job interview

34
will be related to the job responsibilities, the match of the candidate
with the vacancy, future work arrangements or any other aspect of the
employment relationship that the manager and employee deem
relevant. After the manager completes the initial job interview with
each employee, he or she will make a decision on that candidate. In the
end, ensure that each student has shared their experiences with the
others and have the HR manager explain his or her criteria for the
employment decision.
Background
Company information: The manager and employees work for R and Z
Consulting, a leading global HRM consulting firm. R and Z Consulting
has been in business for 13 years and has clients in 14 countries across
North America, Europe and Asia. R and Z Consulting has two main
offices, one in Boston, USA and the other in Istanbul, Turkey. R and
Z’s employees fall into two broad categories: support staff and field
consultants. Most support staff are located in the two main offices.
Their job requires long working hours and has an unpredictable work
schedule, as these employees support the field consultants who are
working internationally. Although a support employee might travel
with a consultant on a large project, their international visits are
minimal (less than 20%). Field consultants live in locations around the
world and spend the majority of their time (80%) travelling. The
consultant role also requires long working hours and has a very
inconsistent schedule.
Position description: The vacant position is the account management
position for an MNC. The employee in this job will have to make
frequent visits to the client’s site, and he or she will be expected to
adapt easily to different cultural contexts.
Manager (Terry): Terry has been with R and Z Consulting since its
inception 13 years ago. Terry started as a field consultant in the Boston
office right out of graduate school and was promoted to a manager
after six years. He currently works in the Istanbul office. Due to this
long tenure with the organisation, Terry is familiar with the demands of
all the positions at R and Z Consulting.
Employee 1 (John): John is a field consultant working outside the
Istanbul office. John has been with R and Z Consulting for almost nine
years and has worked as an HR consultant for almost 25 years. John
has travelled extensively as a consultant and has been one of the most
effective consultants at R and Z Consulting. Recently, John’s first
grandchild was born but John currently lives just outside of Istanbul.
Employee 2 (Anne): Anne is in the final steps of negotiating the
details of her contract to join R and Z Consulting. She completed a
graduate degree in Boston five years ago and worked as a consultant

35
 for R and Z’s main competitor for the past three years. Anne is
considered as a rising star in the field and she is focused on her career
and building further reputation.
Employee 3 (Mark): Mark is a leading support staff member who has
been with R and Z Consulting for five years. He is the most effective
support staff member, with exclusive responsibility for supporting R
and Z consulting’s most challenging customers. Due to his
effectiveness in this role, Mark has worked more hours and has
travelled more than he initially expected when he joined the
organisation.
Discussion questions
1. After the HR manager has shared his or her recruitment decision
with the other group members, does each employee feel the decision is
fair? Why or why not?
2. What was the strongest factor in the manager’s decision about the
suitability of each employee for the role? Was this factor the same for
each employee or did it vary from one employee to another?
3. What differences in initial job interviews were found across groups,
and were there any differences between the interview of an existing
employee (John) and a new employee (Anne)?

Online resources
For instructors: answers to activities; long media article with
questions.
For students: further reading; answers to case study; IHRM in
practice.

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40
 2 Cross-cultural and diversity management
intersections: lessons for attracting and
retaining international assignees
Dimitria Groutsis, Eddy S. Ng and Mustafa Bilgehan Ozturk

Learning objectives
To explain talent mobility in a culturally diverse global context,
including issues such as attraction, retention and post-settlement
adjustment.
To describe the layers of culture and delineate their workplace
implications.
To explain cross-cultural management by focusing on cultural
dimensions.
To explain cultural diversity at individual and organisational levels.
To demonstrate the value of employing a multilevel approach to
explaining cross-cultural management and diversity management.

Learning outcomes
After reading this chapter, students will be able to:

understand diversity management more broadly than has been

presented in the literature to date
understand cross-cultural dimensions beyond the macro-level
measures presented in the dominant literature
apply the insights gained from three levels of analysis: the macro
(national culture), meso (organisation) and micro (individual and
inter- and intragroup)
address the implications of cross-cultural issues and workplaces
staffed by people from diverse backgrounds around the globe
understand how cross-cultural management and diversity
management shape staffing, post-settlement adjustment and retention
rates.

41
Introduction
Within the context of globalisation, the pursuit of new markets and
increasing labour mobility are together driving greater diversity within and
between companies, and within and between diverse groups of workers.
As such, firms conducting business internationally must be sensitive to,
and accommodate, cross-cultural issues arising from cultural and linguistic
differences (Lloyd & Hartel, 2010). A primary responsibility for
international HR managers is managing cross-cultural relations among
diverse employee groups. In this chapter, we explore some of the issues
confronting HR managers from a cross-cultural perspective, with an
emphasis on ethno-cultural and linguistic differences. Combined, these
considerations are important for managers operating in a global context
who seek to attract the best and the brightest talent from around the world.
There are both short- and long-term incentives to ensure effective cross-
cultural management of diverse employees, and the goal is to retain and
develop a workforce with a global mindset (Gupta & Govidarajan, 2002;
Levy et al., 2007).

cross-cultural A group of strategies and policies designed to minimise the

management challenges of coordination and cooperation emergent in work
environments where staff members embody a multiplicity of
(sometimes competing) behavioural norms and interpersonal
expectations.

global mindset The ability to live and work in and across cultures, and to negotiate
cross-cultural differences. An individual with a global mindset has
an understanding and appreciation of local cross-cultural
differences while maintaining the identity of their organisation and
a global view.

The Workforce 2000 report (Johnston & Packer, 1987), which heralded
the growing diversity of the American workforce, provided the impetus to
the importance of managing diversity as a means to achieve a competitive
advantage (Thomas & Ely, 1996: 79; Nkomo & Cox, 1996: 88; Edelman,
Fuller & Mara-Drita, 2001: 1612). Since then, interest in the opportunities
surrounding, and concerns about, greater cultural and linguistic diversity
has occupied scholars and practitioners alike. An Economist Intelligence
Unit report (2010: 5), based on 479 survey responses and 16 interviews
with senior executives, captured the importance of understanding and
managing diversity to suit the dynamic contours of workplaces in a global
context now and into the future:

42
 Workers will come from a greater range of backgrounds; those with
local knowledge of an emerging market, a global outlook and an
intuitive sense of the corporate culture will be particularly valued. . .
To build on this, many companies will send employees overseas more
frequently, often for short periods, on project-based assignments or to
take part in training.

While the IHRM literature focuses on the importance of cross-cultural

management and cross-cultural awareness in enhancing performance and
productivity (Shay & Baack, 2006; Kim & Slocum, 2008), this chapter
focuses on post-settlement adjustment (that is, adjustments a worker must
make on arrival in a host country) and retention of skilled workers as key
reasons it is important to manage cross-cultural relations at work. This
chapter provides a nuanced approach to understanding the implications of
cross-cultural issues and the management of ethno-culturally and
linguistically diverse groups of workers. This is important because insights
from scholars on such issues inform and guide our approach to
organisational policy and staffing arrangements.

retention The process of managing and developing organisational talent and

expertise to encourage loyalty to the organisation and commitment
to its preferred goals.

To date, the approach to understanding cross-cultural and intercultural

relations in assisting with and facilitating post-settlement adjustment has
focused on reducing people’s uncertainty in the new environment (Black,
Mendenhall & Oddou, 1991). Some authors argue that uncertain
conditions and the loss of control over one’s context that being in a foreign
environment triggers exert a significant impact on post-settlement
adjustment. Most notably, in studies of traditional expatriate adjustment, it
has been found that cultural adjustment is key to success, which includes
completion of the assignment and retention in the organisation (Bhaskar-
Shrinivas et al., 2005). Retention is defined as the process of managing
and developing organisational talent and expertise to encourage loyalty to
the organisation and commitment to its preferred goals (Bender & Fish,
2000; Stroh, 1995). This concept can also be applied to an emerging group
of workers, that of self-initiated expatriates and skilled migrants (see
discussion below).
A key facet of adjustment is the ‘cultural distance’ from, or sameness to,
one’s own cultural construct in the host country location (Black &

43
Gregersen, 1991). Cao, Hirschi and Deller (2012: 167) define cultural
distance as the ‘. . . basic differences between cultures, such as value
systems, beliefs, customs and rituals in addition to legal, political and
economic systems’. Managing this process with an understanding of cross-
cultural relations is the first step in overcoming uncertainty and its
consequences (Tung & Verbeke, 2010). To this end, this chapter provides
a descriptive and critical evaluation of the guiding principles for
understanding cross-cultural dynamics and explores the implications of
such dynamics on attracting and retaining a culturally diverse talent pool.
It is outside the scope of the chapter to construct a guide on cross-cultural
competence, but we see such skills as evolving over time, given exposure
to different situations and encounters. Here, we lay the foundations for
navigating this long-term and ongoing process of understanding cross-
cultural relations and the management of workers from diverse
backgrounds.
We begin with a brief examination of labour hypermobility in what is
described as a super-competitive era for sourcing talent (Chambers et al.,
1998; Michaels, Handfield-Jones & Axelrod, 2001; Beechler &
Woodward, 2009). We then outline how the process of attracting and,
more importantly, retaining skilled employees has changed in recent years.
To illustrate the impact of labour mobility and talent shortages as a
precursor to understanding how to effectively manage and retain the talent
pool, we present evidence of skills shortages and attrition rates drawn from
national and corporate data. In doing so, we lay the foundation for
considering cross-cultural diversity awareness as an important tool to
manage a more culturally and linguistically diverse workforce and,
relatedly, to retain and develop talented employees. We then turn to a brief
description of culture before examining the main typologies informing
IHR practice on cross-cultural management. We also critically examine
and document the limitations of the typologies in common use, and
consider the importance of understanding and managing cultural and
linguistic diversity. Finally, we synthesise the arguments and suggest
questions for consideration.

The business case for managing diversity

The landscape of international business and relatedly IHRM has
fundamentally changed with the expansion of interfirm mobility (the
traditional expatriate), host-country nationals (HCNs) and third-country
nationals (TCNs) as the main options to staff multinational companies

44
(MNCs). These groups are now joined by skilled and qualified individuals
who are immigrating for work purposes in their own right (Brewster &
Scullion, 2007; Jokinen, Brewster & Suutari, 2008; Cerdin & Pargneux,
2010). Despite the scarcity of reliable data, there seems to be a marked
trend towards increased mobility among skilled workers (Wickramasekara,
2003). To describe this mobile stock of self-initiated labour we use the
terms ‘self-initiated expatriate’ (SIE) and ‘skilled migrant’ (SM)
interchangeably (for discussion on the differences between SMs and SIEs
refer to Al Ariss et al., 2012: 94; Doherty, 2013; Howe-Walsh & Schyns,
2010). National government policies that encourage temporary and long-
term immigration lure SIEs and SMs, who are in demand in regions where
the ‘war for talent’ has generated significant competition to address key
skills shortages (Burke & Ng, 2006; ManpowerGroup, 2012a and 2012b).
In this regard, managing intranational diversity among SIEs is not
dissimilar to managing cross-national diversity among expatriates in the
host country (Tung, 1993). In addition to this (and in common with
traditional expatriates), firms, occupations and industries also demand
SIEs, who may be enticed by the prospect of higher wages, career
opportunities and the excitement of a different cultural experience (Al
Ariss et al., 2012; Harvey & Groutsis, 2012; Groutsis & Arnold, 2012).

self-initiated expatriate A person who moves abroad for work on their own initiative.

skilled migrant A well-educated individual who moves from a developing to a

developed country for work.

Skilled workers are thus encouraged to relocate for work purposes, and
this extends beyond those who travel for work purposes within the
confines of interfirm transfers. As Cecilia Malmström (2012), the EU
Minister for Migration, recently noted: ‘In order for us to remain
economically competitive, we need to attract workers, in particular high-
skilled workers, from third countries.’ With a message from policy-makers
to look to SMs to address skills gaps, and as a way of building cross-
cultural and intercultural skills and know how, employers are finding
themselves competing in a shrinking market for in-demand skills. The
reason for the lack of available local skills is simply that there is
unmatched supply fuelled by a demand-driven need for skilled workers (Al
Ariss & Özbilgin, 2010; Cerna, 2010; Chaloff & Lemaitre, 2009; Harvey
& Groutsis, 2012; Groutsis & Arnold, 2012; Beechler & Woodward, 2009;
Martin, 2003; Wickramasekara, 2003). In findings released by
ManpowerGroup, from a large-scale survey based on 38 000 phone

45
interviews across 41 different countries and territories, more than one in
three employers ‘encounter difficulties in filling skilled positions, with
employers in the Asia–Pacific region cited as experiencing the greatest
skills shortfall when compared with the Americas and Europe, the Middle
East and Africa’ (ManpowerGroup, 2012a: 4).
Skills shortages in particular sectors and industries are defining the
developed and, increasingly, developing economies. As such, it is
becoming increasingly competitive to attract and retain skilled workers
where they are needed. In this regard, having the right national and
organisational policies may serve to attract prospective SMs. For example,
Australia and Canada espouse an official multiculturalism policy that
welcomes immigrants (Ng & Metz, 2013). At the organisational level,
employers who have a diversity management policy also attract more
diverse and better qualified job applicants (Ng & Burke, 2005). However,
while attracting SMs is critical in the ‘war for talent’, retaining them post-
arrival is also becoming a challenge facing many host countries. For
example, a recent study (Finch et al., 2009: 3) examining immigrant
retention rates in the UK notes that since 1975:

[A]t least 61 000 immigrants have left the UK each year with
numbers rising steadily in the last decade to a peak of 194 000 in
2006, a population the size of the city of Portsmouth. This peak is
likely to have been exceeded in 2008 with re-migration topping
200 000.

diversity management The strategic alignment of workforce heterogeneity to include and

value each employee equally on the basis of their diverse
characteristics, and to leverage organisational diversity to enhance
organisational justice and achieve better business outcomes.

The study found that those who have left the UK include young, skilled
and qualified immigrants, who had previously formed a growing pool of
incoming immigrants (Finch et al., 2009: 4–5; see also Oishi, 2012;
Wickramasekara, 2003). In Australia and Canada, for example, highly
skilled migrants were prone to leave soon after arrival, due to adjustment
difficulties (Brenner et al., 2010; Hugo, Rudd & Harris, 2003; Productivity
Commission, 2006). The Australian Department of Immigration and
Citizenship notes that between 2006 and 2008, 40 per cent of the
professionals departing Australia permanently were born overseas, a trend
that is set to continue (Department of Immigration and Citizenship, 2008–

46
2009: 31). Ironically, for host-country labour markets, the issue of
retention is particularly pressing given severe skills shortages in certain
sectors, predicted to worsen in the coming years. Thus, host countries must
work to ensure that SMs receive proper assistance on arrival to ensure that
they adjust and will stay to contribute to the host-country organisation and,
more broadly, to the economy.
Cross-cultural awareness is therefore important in guiding managers in
the selection, post-settlement preparation and adjustment of personnel for
multinational organisations. A lack of cross-cultural awareness may have a
direct or indirect impact on the post-settlement effectiveness, performance,
assignment completion and retention of talented personnel. At a time of
global talent shortages, it makes good business sense to ensure that staff
adjust well in the post-arrival phase. We will investigate these issues in the
next section.

Beyond cross-cultural management: a multilevel

approach
Defining culture
There is no universally accepted definition of the term ‘culture’, but it is
possible to draw out some common threads. One of the earliest definitions
saw culture as ‘that complex whole which includes knowledge, belief, art,
morals, law, custom and any other capabilities and habits acquired by man
as a member of society’ (Tylor, 1871: 1). More recently, Hofstede (1984:
51), considered the ‘father’ of cultural dimensions in international
business, has defined culture as ‘the collective programming of the mind
which distinguishes the members of one category of people from another’.
Kroeber and Kluckhohn (1952: 181) captured both sets of definitions, and
incorporated the collective notion of visible and invisible dimensions of
culture, stating that:

Culture consists of patterns, explicit and implicit, of and for behavior

acquired and transmitted by symbols, constituting the distinctive
achievements of human groups, including their embodiments in
artifacts; the essential core of culture consists of traditional (i.e.
historically derived and selected) ideas and especially their attached
values; culture systems may, on the one hand, be considered as
products of action, and on the other, as conditioning elements of
further action.

47
In short, to understand culture we should observe the dynamics between
two or more people. Culture is socially constructed and historically infused
and includes both visible and invisible facets. The visible components of
culture include behaviours, language and artefacts, and the invisible
components of culture comprise norms, values, basic assumptions and
beliefs.
In business, national and corporate cultures influence management in
areas such as leadership, decision-making and motivation; approaches to
recruitment, selection, training and development and retention; and
approaches to managing diversity. It is therefore safe to assume that
working across cultures also influences HR systems, since these systems
cannot be easily transferred from one country to another. Consequently, it
is crucial to establish how cultural differences can affect the social
relations between work groups in organisations and how to coordinate
processes in organisations, such as recruiting and retaining workers, to
leverage the potential gains from cross-cultural diversity. A position paper
by the Australian Government emphasises the importance of facilitating
cultural exchanges and building cultural knowledge through capital and
labour mobility: ‘Cultural connections across a range of areas can be
powerful forces for bringing people together. Exchanges in culture build
greater understanding, foster cultural appreciation and offer commercial
opportunities’ (Australian Government, 2012: 257).

The multilevel view of cross-cultural diversity

management
Our multilevel critical examination of cross-cultural diversity management
seeks to understand culture in national, organisational and employee
(group) contexts. Klarsfeld, Ng and Tatli (2012) have documented the role
of the national context, as well as voluntary and coercive pressures from
regulators (the government), competitive pressures (the firm) and unions
(employee groups) in diversity management. For example, in France,
unions and employee groups are predominant in driving diversity
management in firms, while in Canada and the UK, both government
pressures and competitive pressures motivate firms to pursue a diverse
workforce (Cox & Blake, 1991; Ng & Tung, 1998). In the examples from
France, Canada and the UK, there is a business case for diversity. The
examples suggest that diversity management approaches are not
converging but instead require different approaches based on the national,
organisational and individual worker contexts. Thus, a multilevel approach

48
is essential to understand effective cross-cultural management. Further, the
examples from France, Canada and the UK suggest that diversity
management practices are not converging but, instead, require different
approaches based on national, organisational and employee contexts.

business case for An approach based on the principle that a properly managed
diversity diverse workforce can lead to greater financial profits and market
share, with an enhanced ability to attract and retain the best
human talents, greater creativity and innovation and improved
marketing efforts.

Macro-level dimensions
Cross-cultural management is concerned with issues that arise in the
context of relationships between individuals, groups and organisations
from differing cultural backgrounds (Adler, 1983; Holden, 2002).
Accordingly, we must recognise the potential for misunderstandings
among different groups in the workplace and across business subsidiaries,
due to their different ethno-cultural and linguistic characteristics. It is
important to understand cross-cultural relations because this allows us to
identify the characteristics of particular cultures and make comparisons
between them based on identifiable characteristics.
Cross-cultural models fall into two broad categories (Tatli & Özbilgin,
2012). In etic models, behaviour is universal. That is, behaviour must be
understood in the context of behaviour in other cultures. For example,
there are often differences between Western and East Asian cultures, and
those differences are assessed on the basis of Western cultural norms. In
emic models, behaviour is culture-specific. That is, behaviour must be
understood in the context of a particular culture. Using the same example
from East Asian cultures, a Western perspective may view Japanese,
Chinese and South Korean cultures as similar (perhaps because of their
shared collectivism, high-power distance and high uncertainty avoidance),
but the same cultures are clearly distinct when viewed from within an East
Asian subculture.

etic model A cross-cultural model that seeks to understand behaviour in one

culture in the context of other cultures.

emic model A cross-cultural model that seeks to understand behaviour in the

context of a particular culture.

49
Cultural dimensions
A number of scholars have attempted to define and devise categories for
cultural dimensions as a method of understanding cross-cultural
management (Kluckhohn & Strodtbeck, 1961; Hofstede, 1980, 2001;
Trompenaars, 1993; Brake Walker & Walker, 1995; House et al., 2004).
Just as there is no universal measure or definition of culture, there is little
agreement among cross-cultural researchers regarding ‘what constitutes
culture (that is, its key dimensions), how culture should be measured and
what culture implies for managerial practice’ (Tung & Verbeke, 2010:
1260). What do these research projects tell us? In brief, they derive
national cultural dimension scores with the aim of providing scholars and
practitioners with a means of comparing cultural differences between
nations.

Hofstede’s six cultural dimensions

Hofstede’s work has been, and continues to be, the most cited and
influential on cross-cultural research (Triandis, 2004: 89; Tung &
Verbeke, 2010: 1259). In 1968 and 1972, Hofstede examined employees at
IBM across more than 40 countries and some 116 000 employees
completed survey questionnaires; later, in 1991 and 2001, he extended his
research to include 50 countries and three regions. The survey examined
employees’ personal values, norms and approach to communication in
relation to their work situation, in each of the countries involved. Notably,
Hofstede did not embark on a study of cultural dimensions. Even so, the
information gathered produced five cultural dimensions from which to
index similarities and differences between cultures (power distance index,
individualism, masculinity, uncertainty avoidance index and long-term
orientation – see box 2.1), and in 2010 a sixth dimension was added to
include a measure of indulgence versus restraint (Hofstede et al. 2010; see
box 2.1). Figures 2.1 and 2.2 compare four countries’ scores across the
first five dimensions, while table 2.1 demonstrates how a number of
countries scored across all six dimensions.

Box 2.1 Hofstede’s six cultural dimensions

power distance index The degree of inequality of influence and
(PDI) power considered acceptable. This
dimension allows us to compare high-power
distance (greater inequality) with low-power

50
 distance (less inequality) cultures. Low-
power distance cultures do not tolerate
unequal distribution in power.

individualism (IDV) The extent to which people indicate a

preference for individual pursuits rather than
acting as members of a group. This
dimension allows us to compare
individualistic and collective cultures. More
collectivist cultures prefer group rewards and
prioritise in-group over out-group members.

masculinity (MAS) The extent to which traditionally masculine

values such as assertiveness, dominance and
achievement predominate within a culture
compared with traditionally feminine values.
This dimension allows us to compare those
cultures that display more masculine than
feminine characteristics. More feminine
cultures tend to have greater overlap in
gender roles.

uncertainty avoidance The extent to which individuals strive for

index (UAI) certainty and favour structured over
unstructured conditions and situations. This
dimension allows us to compare risk-taking
and risk-averse cultures. High-uncertainty
avoidance cultures use rules, technology and
religion to create uncertainty for themselves.

long-term orientation The extent to which people display a long-

(LTO) term as compared with a short-term outlook
on things such as work, life and other
elements of society. Societies with longer-
term orientations tend to save (thrift) and
invest, and emphasise virtues over the truth.

indulgence orientation The extent to which a society enables the

(IO) pursuit of satisfaction (as opposed to
restraint), with respect to various human
pleasures such as leisure, sex and
consumption activity. Societies with higher
indulgence scores facilitate the pursuit of
pleasurable activities and experiences, while
societies with higher restraint scores have
more restrictive normative codes, which

51
 curtail instant gratification.

Figure 2.1 The five dimensions of culture – comparison between Japan

and the United States (adapted from www.geert-hofstede.com)

52
Figure 2.2 The five dimensions of culture – comparison between the
United Kingdom and Malaysia (adapted from www.geert-hofstede.com)

Table 2.1 The ranking of national cultures (adapted from Hofstede

et al., 2010)

53
The GLOBE Project’s nine dimensions
The GLOBE Project (House et al., 2004) is based on a survey collected
from more than 17 000 middle managers, in 951 organisations, across
three industries, in 62 countries or regions. The study identifies nine
national cultural dimensions from which scores are derived (see box 2.2,
page 32):

power distance
uncertainty avoidance
institutional collectivism
in-group collectivism
gender egalitarianism
assertiveness
future orientation
performance orientation

54
 humane orientation.

Unlike Hofstede’s work, the GLOBE Project sets out to measure and
evaluate national cultural dimensions. These dimensions are divided into
two segments for the different national settings. One segment provides
measures of actual societal practices (‘As Is’ scores) and the other segment
measures the corresponding societal values (‘Should Be’ scores). As such,
there are 18 national culture dimension scores. In addition to this, House et
al. (2004) provide country cluster categories. Table 2.2 lists the countries
in each cluster, and describes the attributes of that cluster.

Box 2.2 The GLOBE Project’s nine cultural

dimensions
power distance A perceived inequity in the distribution of
power.

uncertainty avoidance The extent of group reliance on established

social norms as a means to avoid
uncertainty, including reliance on rules,
structures and laws.

institutional collectivism The degree of collective action compared

with individual action.

in-group collectivism The degree to which people show

cohesiveness in groups.

gender egalitarianism Levels of difference between gender roles in

society.

assertiveness The degree to which a culture determines

behaviour in social relationships.

future orientation The degree to which planning and investing

in the future is considered important.

performance orientation Value or reward attached to performance.

humane orientation Value attached to fairness, altruism and

generosity.

55
 Table 2.2 GLOBE Project country clusters (adapted from House et
al., 2004)

Cluster Countries Attributes

Anglo Canada, USA, Competitive and results-

Australia, Ireland, oriented; places less
England, South emphasis on family and
Africa, New close kinship ties.
Zealand

Confucian Singapore, Hong Results driven and focused

Asia Kong, China, on groups working together,
Taiwan, South with strong loyalty to family
Korea, Japan bonds.

Eastern Greece, Hungary Low on performance

Europe Albania, Slovenia, orientation, with strong
Poland, Russia, support for co-worker and
Georgia, gender equality.
Kazakhstan

Germanic Austria, Values competition; more

Europe Netherlands, results-oriented than people-
Switzerland oriented; plans and invests
(German- in the future, being
speaking), considered individualistic in
Germany this respect.

Latin Ecuador, El Loyal and devoted to family,

America Salvador, but less focused on
Columbia, Bolivia, performance and
Brazil, Guatemala, institutions.
Argentina, Costa
Rica, Venezuela,
Mexico

Latin Israel, Italy, Values individual autonomy

56
 Europe Switzerland, and places less emphasis on
(French-speaking), societal goals.
Spain, Portugal,
France

Middle Turkey, Kuwait, Places emphasis on family

East Egypt, Morocco, ties; women and ethnic
Qatar minority groups often hold
lower status.

Nordic Denmark, Finland, Emphasises the future;

Europe Sweden focuses on gender equality
and institutional and societal
collectiveness rather than
family; cooperation and
voice are central.

Southern Philippines, Focuses on humane

Asia Indonesia, orientation and collectivism,
Malaysia, India, with low levels of stress and
Thailand, Iran policy structures;
emphasises the present
rather than the future.

Sub- Zimbabwe, Devoted to a human

Saharan Namibia, Zambia, orientation and sensitive to
Africa Nigeria and South others and their families.
Africa

Hofstede and the GLOBE Project: cautionary markers

While both the Hofstede and the GLOBE typologies offer useful ways to
determine cultural differences, we should consider several points of
caution. First, they assume that cultures are stable, which raises questions
about the insights they grant to scholars and practitioners over time. Bond
and Smith (1996) and Triandis (1994) have written in support of
Hofstede’s study and its cultural stability over time; while McSweeney
(2002) and Tung (2008) are among those who have raised criticisms of
such an approach.
Second, the typologies correlate cultural dimensions at the national level

57
and apply them to derive an understanding of ‘culture’ and ‘nations’. They
also use these terms interchangeably, which raises serious concerns about
external validity. This is particularly so given that, in practice, many
national boundaries do not equate to clear cultural borders between one
country and another. Consider the case where national borders (and the
derivation of cultural dimensions) reflect colonial ties, which correspond
more to the logic of colonial politics than to complex cultural realities.
Third, they assume that their cultural scores are applicable to, and valid
for, an evaluation and understanding at the micro-level; that is, at the level
of differences between individuals (Tung, 2008). Such generalisations are
unjustified and ignore the subtleties and contradictions in many cultures.
Importantly, the macro-level dimensions set out in these typologies cannot
be used to make predictive statements about the behaviour of individuals.
Fourth, they argue that domestic cultures are homogeneous and
universal. The flow-on effect of this is that subcultural and inter- and
intragroup dynamics and differences are overlooked (Tung, 2008). It is
important to consider differences in employees’ race, religious affiliation,
socioeconomic status, educational level and languages spoken. Indeed,
differences between two countries might also be found between
subcultures within a country. For example, ‘Canadian culture’ comprises
both Anglophone and Francophone Canadians. Francophone Canadians
are said to be more formal, hierarchical, moderately relationship-focused
and more emotionally expressive than their Anglophone counterparts
(Hofstede Centre, n.d.).
Finally, in the case of Hofstede’s typology, his study has been criticised
for drawing generalised conclusions from a survey limited in scope to one
MNC; the MNC has also been seen as overwhelmingly espousing Western
cultural values (Ailon, 2008; Javidan et al., 2006). The gaps scholars have
identified in response to the cross-cultural theorists have proven fertile
ground for the development of a framework that includes consideration of
the meso- and micro-levels of analysis. On this basis, we now turn to
consider meso- and micro-level dimensions that arise from different
corporate structures and cultures, and implications for managing and
working in a culturally and linguistically diverse setting.

Meso- and micro-level dimensions

Organisational theorists, like cross-cultural theorists, have noted the
multiple layers that comprise organisational entities, describing them as
‘cultural units that have within them powerful subcultures based on

58
occupations and common histories’, with visible and invisible layers
(Schein, 2009: 3, 27, 39). While an organisation’s culture is the sum of its
members’ interactions, it is also influenced by interactions within and
between subcultural groupings and the external environment (that is, the
broader society). Hofstede and colleagues (1990: 286) expanded on this
point to define ‘the organisational/corporate culture construct’ as
indicative of a range of features including ‘1) holistic, 2) historically
determined, 3) related to anthropological concepts, 4) socially constructed,
5) soft, and 6) difficult to change’.
While these facets describe the essential components of an
organisation’s culture, it is important to note that, in an international
business setting, the organisational culture is affected and shaped by the
type of its business arrangement. We must consider the nature of the
arrangement – for example, whether it is a wholly owned subsidiary, a
joint venture, a merger or an acquisition – since these structural forms help
to shape the organisation’s culture. Structures also inform the processes
and policies employed in the staffing and management of the international
venture, which in turn shape the organisational culture. An MNC has
access to home-, host- and third-country nationals and, increasingly, to
SIEs who hold multiple professional identities and cultural values located
in a different country or company cultural setting. As such, while an
organisation’s culture is constructed over time and slow to change, the
international setting makes for a more complex and dynamic entity, which
is by nature subject to change. In this regard, we should also consider the
management of workers from diverse backgrounds.
The need for greater awareness and accommodation in managing
culturally and linguistically diverse workers is becoming increasingly clear
for managers in both domestic and international contexts. Some factors
driving this are:

increasing skill shortages – in the United Arab Emirates, for example,

expatriate labour is said to comprise more than 70 per cent of the
working population
demographic shifts – for example, an ageing population, changes in
fertility rates and standards of and access to education and training
(Al Ariss et al., 2012: 93)
the need for organisations to attend to the diverse needs of workers in
order to attract and retain their stock of talents.

The issue of cultural and linguistic diversity has been largely ignored in

59
the IHRM literature (Bell et al., 2010; Tatli, 2011), as a result of imposing
macro-level cultural dimensions on the meso- and micro-level dynamics of
the workplace. When we fail to take stock of the importance of
organisational and inter- and intragroup dynamics, we also fail to account
for managing groups from diverse backgrounds. While this chapter focuses
on diverse ethno-cultural and linguistic groups, we must also acknowledge
that ethnically and linguistically diverse employees may differ further, in
the dimensions of gender, age, sexual orientation and disability, among
others (Brook & Lucas, 2012; Holvino, 2010).
A diverse group of employees works in MNCs, which complicates the
cross-cultural issues involved. In addition to the challenge of managing a
diverse workforce, MNCs are simultaneously operating in multiple foreign
settings and under varying national norms and regulations, which may be
at odds with an inclusive diversity management ethos. Even foreign firms
with ostensibly equality-focused diversity agendas do not necessarily
provide strong safeguards against discrimination of various kinds. For
instance, in the Turkish context such policies are compromised once they
are left to be implemented at the local level (Ozturk, 2011). MNCs often
do not send expatriates who identify as lesbian, gay, bisexual, transgender
or queer on international assignments to regions deemed to have
challenging local norms (Gedro, 2010), which can in turn reduce the
effectiveness of diversity management strategies in sustaining diverse
work teams globally. While not all countries or organisations approach
diversity management in the same way, it is important that HR managers
make a coherent effort across their entire organisational network to
monitor and manage diversity. In particular, they should focus on cultural
and linguistic diversity and the inter- and intragroup dynamics that may
evolve as a result of individual differences.
Diversity management is a process that is located at the workplace level
and requires managers’ awareness and response to individual workers
(Nkomo & Cox, 1996; Dick & Cassel, 2002). As we have seen, diversity
management can be understood as the strategic alignment of workforce
heterogeneity where each employee is equally included and valued on the
basis of their diverse characteristics. It is a process that ensures
organisational diversity is leveraged to support both greater organisational
justice and better business outcomes (Sanchez & Brock, 1996; Lorbiecki
& Jack, 2000). Managing diversity emphasises inclusion at its core, with a
view towards ‘valuing each person for his or her unique combination of
skill, competencies, attributes, knowledge [and] personality traits’ (Heery
& Noon 2001: 15) and various other demographic and social

60
characteristics. These demographic characteristics, in combination, can
shape group inclusion and exclusion; that is, inter- and intragroup
dynamics and the workplace social relations that emerge as a result of
them (Taksa & Groutsis, 2012). Accordingly, to manage culturally and
linguistically diverse workers, we need to pay attention to the composition
and distribution of particular groups; to the management of intercultural
interactions; and to issues of equity and employee voice, irrespective of
demographic characteristics. This requires a case-by-case assessment,
given that cultural distance may play a significant part in the post-
settlement adjustment phase. A person’s cultural distance from the host
country’s culture may be influenced to a greater or lesser extent not only
by the host country but also, increasingly, by the assignee’s cultural
background. For example, perceptions of fairness and voice vary among
different cultural groups, based on the dimensions of individualism and
collectivism and power distance (Au, Hui & Leung, 2001; Hui & Au,
2001; Thomas, Au & Ravlin, 2003).

Lessons from the multilevel approach: cross-cultural

adjustment and retention
In an era characterised by increasing globalisation and worker mobility, it
is important to manage across and within cultures and between cultural
groups. Our multilevel approach suggests both a top-down and a bottom-
up approach, where each level of analysis (the macro, meso and micro)
informs the others. We have explored the established macro-level
approach to explaining and understanding differences across cultures to
date, which offers little insight into the meso- and micro-levels of analysis
and is therefore of little use in distinguishing between or within cultures.
Given what has overwhelmingly been a single-level approach to
understanding cultural differences, it is not surprising that we are
incapable of managing the multiple levels that constitute cultural
adjustment, especially in conditions that are culturally distant from the
worker’s home country. In an era that is defined by the ‘war for talent’, we
must consider managing adjustment and cultural differences from a
multilevel perspective.

Conclusion
Observing cultural similarities between people from particular cultures or
backgrounds may assist us in developing insights into how another
person’s cultural values and assumptions differ from our own. If our

61
insights are correct, they may help us to bridge the cultural distance
between ourselves and individuals from different cultures and to lay the
foundation for effective management and work in another culture.
However, if we make shorthand assumptions about values we think are
typical of people from a particular cultural background, we may
incorrectly categorise individuals who have different values.
Homogenising cultural difference and arriving at inappropriate cultural
stereotypes may be counterproductive and distract from understanding
cross-cultural dynamics and the management of workers from diverse
backgrounds.

Take-home messages
We need to understand cross-cultural differences to attract and retain
people from different ethno-cultural and linguistic backgrounds, and
to manage business effectively working with people from other
cultures.
Practices and processes that are effective within one cultural setting
(i.e. a national and corporate setting) may not necessarily work within
another cultural setting. While macro-level cultural dimensions may
provide us with some interesting insights, we must avoid the
temptation to make assumptions about the values and intentions of
individuals or groups based on this knowledge alone.
Cultural insights are at best a starting point in establishing and
understanding cross-cultural dynamics and managing diverse groups
in different corporate and national cultural settings.
We need to progress beyond the common approach to cross-cultural
management, which is shorthand and partial and in which national
(macro-level) cultural dimensions are applied to organisational level
(meso-level) and individual (micro-level) interactions. Such cultural
insights may misguide our understanding of organisational dynamics
in an international setting.

Closing the learning loop

1. What is the difference between cross-cultural management and
diversity management? Discuss with reference to the importance
of diversity management insights for IHRM.
2. What are the characteristics of a global mindset?
3. What is the importance of practical insights from cross-cultural

62
 management and diversity management for the attraction and
retention of global talent, and why is this so? Explain by drawing
on the examples cited in the chapter.
4. What is the difference between the etic and emic models of cross-
cultural behaviour?
5. What insights does cross-cultural theory provide, and what are the
strengths and weaknesses of the categories they offer us? Refer
particularly to Hofstede’s cultural dimensions and the GLOBE
Project.
6. Why is multilevel analysis useful in understanding cross-cultural
management in the context of IHRM?

Case studies 2.1 and 2.2 Expatriate adjustment in India

Rana Haq, Laurentian University

Talent mobility is a reality in today’s globalised world, where
organisations are competing to attract and retain skilled employees who
are moving from their home countries and crossing continents to take part
in higher education and to accept lucrative employment opportunities. This
mobility necessitates increasing cross-cultural interactions in the
workplace. Therefore, the management of diverse cultures plays a critical
role in a global employment context.
India is an important emerging market that attracts many MNCs;
however, it ranks as one of the most challenging countries for expatriate
assignments and on the ‘ease of doing business’ index (Kim & Tung,
2013). In case study 2.1, we explore an example of an employee who
moved from South Korea to India. South Korean MNCs, such as Hyundai
Motors, Samsung Electronics and LG Electronics, all entered the Indian
market in 1997, with manufacturing investments in three major Indian
cities of Chennai, Mumbai and Delhi. While there is a strong South
Korean presence in India, the two cultures are extremely different,
particularly as India is very diverse (including in terms of its people’s
ethnicity, religion and language) and South Korea relatively homogeneous
(Kim & Tung, 2013). In case study 2.2, we consider the issues involved in
relocating a female senior manager from Canada to India.
Hofstede’s (2001) comparative index of India, South Korea and Canada
is presented earlier in this chapter (see table 2.1), while the GLOBE
Project (House et al., 2004) places South Korea in the Confucian cluster,
India in the South Asian bloc and Canada in the Anglo group (see table

63
2.2). Given these cultural differences, consider the following case study
scenarios.

Case study 2.1 From South Korea to South Delhi

Yeong-jin Lee, an operations manager in a South Korean MNC, was
offered a promotion in the form of an expatriate assignment as a senior
operations manager in the company’s Indian office, which opened in 2000.
He willingly accepted the three-year offer and moved to Delhi with his
young family. His wife, Soo Kyong, quit her teaching job in Seoul and
they moved to Delhi with their two children, a daughter aged 10 and a son
aged 13. Yeong-jin was surprised by the various unanticipated challenges
he faced in India, both on family and work fronts, and wondered what he
and his home office in South Korea, as well as his host office in India,
could have done better to prepare him and his family for the overseas
assignment.
On the family front, both Yeong-jin Lee and Soo Kyong were concerned
about their children’s academic and social adjustment in their new school.
Although there was no problem with admission to a good school, since the
local education system had a significant foreigner’s quota, the children
were certain to experience cultural adjustment issues at school. In terms of
the quality of education, Yeong-jin Lee and Soo Kyong had full
confidence in the Indian education system, but were worried about
whether their children would be able to adjust to the new school
curriculum and make new friends. They were also concerned about how
the children’s time away would affect their educational opportunities on
repatriation to South Korea at the end of the three-year assignment.
Confucian philosophy makes a clear distinction between the roles of the
husband and wife, where the former provides financial support to the
family and the latter focuses on bringing up and educating children. Soo
Kyong had no regrets on quitting her teaching job in South Korea and
accompanying her family to India. She found comfort in the fact that she
would be a stay-at-home mother in India and would be able to spend more
time with the children during this period. However, she was slightly
nervous about her own personal adjustment in terms of being away from
work and feeling isolated in this new country without any family or
friends. In addition, she was overwhelmed by the many changes in her new
environment, especially the language and food challenges. She also knew
that she could not depend on Yeong-jin to help her or the children with
many of these changes because he would be occupied with many pressures

64
at work. This was consistent with the Confucian emphasis on sacrifice and
the collectivist South Korean value of loyalty to the organisation over
individual family needs (Kim & Tung, 2013).
On the work front, Yeong-jin was quite satisfied with the increased
responsibilities associated with his elevated job title and managerial status
in India. However, his home office still considered him a mid-level
manager and expected him to implement centralised directives from
headquarters; an expectation that he thought was unrealistic in the Indian
context and that caused him significant stress. In addition, having only
worked with South Korean nationals in his prior roles, Yeong-jin was ill-
prepared to work with colleagues from different cultural and linguistic
backgrounds and with diverse religious affinities.
In India, Yeong-jin was concerned with preventing misunderstandings
and unintentionally offending the HCNs, especially his lack of knowledge
regarding the nuances of the various social, religious and cultural customs
in India. Further, he felt that he could not negotiate the division of labour
on joint projects as effectively as he did with colleagues back at home and,
as a result, he felt that some projects were bound to suffer from execution
and completion problems. An example of this fear was his frustration with
Indian cultural and professional attitudes towards expectations of
commitment to time and project deadlines although, on the surface,
everything seemed agreeable for the moment.

Case study 2.2 From Montreal to South Delhi

Kathleen Simon, a senior marketing manager in the Montreal office of a
Canadian MNC, agreed to relocate to South Delhi, India for a two-year
assignment. The MNC opened its Indian operations in 2002. Kathleen was
single and had no dependants. As such, she felt that it was a good career
opportunity. She thought that getting some international management
experience would help her secure a promotion upon her return from this
expatriate assignment. However, when she arrived, she found that she was
not prepared for the many challenges she faced and wondered how best to
deal with them, given that her company’s home and host offices had not
assisted her significantly during the transition process.
As an expatriate woman relocating by herself, Kathleen was quite
concerned about her personal safety in India. She knew that, as part of her
contract, there would be no problem with housing security since her
company would provide her with a comfortable home in one of the safest
and upscale neighbourhoods in South Delhi. However, she worried about

65
how she should dress at work and during leisure time, and especially how
others (including her expatriate and local colleagues) might perceive her.
She was also concerned about her social life, leisure activities and making
new friends in India.
In the professional context, Kathleen felt that the business culture was
highly gendered, and communication was difficult when working with
subordinates and other managers, most of whom were men. Some of
Kathleen’s colleagues and external clients saw her workplace behaviour as
fastidious and demanding, while she saw it as assertive and competent. So,
Kathleen had to try hard to navigate what sometimes seemed like a cultural
minefield, to ensure that she interacted seamlessly with local colleagues
and clients.
Case study questions
1. What are some of the cultural differences between India and South
Korea, according to Hofstede and the GLOBE Project? Refer to tables 2.1
and 2.2 in this chapter.
2. What are some of the cultural differences between India and Canada,
according to Hofstede and the GLOBE Project? Refer to tables 2.1 and 2.2
in this chapter.
3. What challenges may South Korean expatriates face in India, as in the
case of Yeong-jin Lee?
4. What challenges may Canadian expatriates face in India, as in the case
of Kathleen Simon?
5. To what extent did issues of gender influence the experiences and
challenges that the two expatriate managers encountered on their
assignments?
6. What insights about India should expatriates from other countries and
regions (e.g. Australia, Europe, Mexico, the United Kingdom) consider
when offered an expatriate assignment?
7. What can MNCs do to ensure successful selection, training, adjustment
and completion of expatriate assignments in the Indian context?
8. What potential career opportunities are available to MNC managers
who accept expatriate assignments to developing countries that may be
considered ‘more exotic’ or ‘less preferred’?

Activities
Debate

66
 Present arguments for and against this proposition:
The study of cross-cultural management has historically relied on
grand theories, limiting its validity across and within different cultural
contexts and countries. We need to consider multiple theories and
perspectives, all of which can be partially legitimate and workable.
Given that these are only points of view, there is no objective version
of cross-cultural management.
Small group discussion
Break up into small groups and consider the following questions.

1. What would a United Kingdom – based organisation that

wished to expand into Japan, Malaysia and the United States
need to consider in terms of cross-cultural management?
Discuss with reference to Hofstede’s cultural dimensions.
2. How useful is Hofstede’s cultural dimensions model as a guide
for practitioners?

Online resources
For instructors: answers to activities; long media article with
questions.
For students: further reading; answers to case studies; IHRM in
practice.

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75
3 Key players in international human resource
management
Graham Hollinshead, Cynthia Forson, Natalia Rocha-Lawton and Moira
Calveley

Learning objectives
To offer a broad and nuanced view of international assignments,
drawing on principles of diversity.
To challenge questions about traditional concepts in international
business organisation (notably the familiar parent/subsidiary
paradigm) and an exploration of complex international organisational
configurations as a determinant of modern international staffing.
To demonstrate the complexities of international staffing in an
ethnically diverse organisational context, through an in-depth,
original case study.

Learning outcomes
After reading this chapter, students will be able to:

understand the contextual determinants for international staffing

examine the rationale for the use of expatriates, third-country
nationals, host-country nationals, biculturals and other international
assignees
comprehend the strategic rationale for multinational companies
devolving managerial authority to the ‘subsidiary’
examine the significance of diversity in international staffing
appreciate novel forms of international organisation, drawing on the
concepts of the international division of labour and global value
chains.

Introduction
It is increasingly recognised that contemporary global organisations are

76
characterised by unprecedented levels of complexity and variability. As
the world has become more ‘bumpy’ in relation to the geographical points
of origin of multinational companies (MNCs) – with the BRIC (Brazil,
Russia, India and China) nations beginning to rival the dominant patterns
of Western and Japanese ownership of MNCs – so stereotypical notions of
international staffing are called into question. Further, as Wadhwa (2009)
implies, the traditional definition of MNC organisation as a linear
parent/subsidiary relationship is losing credibility: major corporations
around the world in sectors such as software design, pharmaceuticals and
financial services are recognising the competitive advantages of
disaggregating operational activities and sourcing differentiated reservoirs
of available talent across geographical spaces, including from developing
and emerging countries.
In these circumstances, it may be argued that unidirectional conceptions
of international staffing are increasingly redundant, as international
networks of knowledge exchange become more pronounced across
previously remote territories. These paradigm shifts in modes of
international operation have led to a multifaceted picture of the
international mobility of people, blurring the traditional dividing line
between ‘expatriation’ and ‘migration’. It is also the case that the
traditional expatriate has most often been portrayed as relatively youthful,
Caucasian and male. While many expatriates undoubtedly do comply with
this characterisation, given the emergence of highly cosmopolitan,
multilayered and ‘flattened’ international business models, this ethnically
and gender laden human profile of the international staffing community
may be regarded as unsustainably ethnocentric and insensitively
imperialistic in the modern era.

ethnocentrism A strategic assumption in the MNC that tried-and-tested

approaches to management can be extended from the country of
origin to operating sites in other countries. Underlying this is a
wish to retain power in the country of origin.

In this chapter, we first provide an overview of the nature and rationality

of ‘traditional’ expatriation and consider alternative and emergent forms of
international assignment in a rapidly changing global business context.
Second, we ask the question ‘Who are the international assignees?’ and
observe that stereotypical notions about the identity of expatriate managers
and similar staffing categories should be opened up for review. Third, we
question the validity of the pervasive, yet rather simplistic,

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parent/subsidiary typology of MNC organisational form. We suggest that
we can gain more nuanced and sophisticated insights into the realities of
international staffing and mobility when we recognise the emergence of
web-like international business linkages that allow MNCs to source talent
from a range of widely dispersed global locations. Finally, we present an
original case study of an MNC in the process of relocating a primary
research and development (R & D) site to China. In this on-the-ground
study, we bring to the fore the complexities associated with the intimate
combination of diverse ethnic groupings within a single enterprise, an
international staffing experiment that prompted its participants to
contestation, as well as to collaborate in highly effective ways.

Key actors in international organisation

It has been recognised (Hollinshead, 2009) that the nature of the
deployment of principal managerial agents within the MNC is
fundamentally conditioned by its strategic purpose and orientation as it
straddles international boundaries. Accordingly, highly centralised or
ethnocentric (Perlmutter, 1969) organisational forms are prone to rely
heavily on managerial emissaries from headquarters in implementing
corporate mandates in the subsidiary context. Meanwhile, devolved or
polycentric configurations are associated with local managers and workers
at the level of the subsidiary being entrusted with the conduct of corporate
affairs. Undoubtedly, much of the IHRM literature to date has placed
considerable emphasis on expatriates as critical human actors in instigating
processes of control, coordination and socialisation across the MNC
(Harzing, 2001). Expatriates may typically be defined as parent-country
nationals (PCNs) engaged in international assignments for a predefined,
specified period. In the wake of the global financial crisis, the Global
Relocation Trends Survey (Brookfield Global Relocation Services, 2010:
1) reflected buoyancy in the international ‘traffic’ of expatriation,
reporting an almost 50 per cent increase in international assignments over
the previous year in its participating group of MNCs and stating that:

assignment activity outside the headquarters country location

continued to rise hitting 46%, an all-time high, and another sign that
companies are diversifying their sources for talent and looking farther
afield for new market opportunities.

In seeking to unravel the corporate rationality that underlies the

78
deployment of expatriates, Colakoglu and Caligiuri (2008) posit that a
major role of international managerial assignees is to engage in the transfer
of knowledge from headquarters to subsidiary, and to exert strategic
leadership through boundary spanning activities (Edström & Galbraith,
1977; Bonache & Brewster, 2001). The role expatriates play as cultural
carriers is significant, particularly in the startup phase of overseas
operations, because it catalyses the dissemination of corporate values and
the building of trust across organisational components, which are
embedded in institutionally and culturally diverse territories, thus serving
to minimise strategic risk (Harzing, 2001; Balgia & Jaeger, 1984;
Boyacigiller, 1990; Kogut & Zander, 2003). As Riusala and Suutari (2000)
point out, expatriates may also serve as conduits for the ‘inward’ transfer
of knowledge and locally contextualised information from subsidiary to
parent.

mandate An authoritative course of action, or strategy formulation, that the

senior managers of an MNC typically define.

polycentrism A strategic assumption in MNCs that local managers and

employees are best placed to formulate policies that reflect local
needs, with a preference for decentralisation and autonomy at
operating sites.

geocentrism The idealised status of a truly global concern, combining local and
international strengths. Managers are able to take a global view of
the organisation, both responding flexibly to local needs and
transcending them, in the pursuit of corporate goals and values at
international level.

boundary spanning The fostering of networks and linkages across diverse international
organisational units.

cultural carriers Internationally mobile individuals who diffuse the primary norms
and values of the MNC across its organisational subunits.

In their seminal work, Edström and Galbraith (1977) reinforce the

notion that international management assignees are closely involved in the
diffusion of corporate norms and values throughout the international
organisation. In this way, such assignees assist with the process of
organisational development and potentially contribute towards the growth
of the subsidiary within the corporate value chain. Edström and Galbraith
(1977) recognise the strategic significance of expatriation and suggest that
its objective may also be highly functional. Colakoglu and Caligiuri (2008)

79
concur, recognising that international assignments may be primarily
operational in their orientation; for example, in the case of carrying out an
assigned financial, marketing or HR project, or providing advice relating
to new technical systems. Edström and Galbraith (1977) also suggest that
international assignments may be instigated in order to foster management
development, as international experience augments the skill set of an
international executive who seeks career progression.
In summary, following Edström and Galbraith (1977), expatriation may
be regarded as serving three major purposes. First, it contributes to
international organisational development by facilitating the coordination
and control of corporate philosophies and practices throughout
geographically dispersed subsidiary units of MNCs (Harzing, 2004).
Second, international mobility provides expatriates themselves with
opportunities to acquire international experience and develop a global
vision. Third, expatriation can ensure the transfer of specific areas of know
how across the MNC to compensate for gaps in expertise and skill in
various operational locations.

Alternatives to expatriation, devolving to the

subsidiary and the ‘new Argonauts’
Although ‘traditional’ expatriation has occupied a pivotal position in the
IHRM literature, it is a relatively high-risk international staffing strategy,
particularly in the light of growing cultural and institutional distances
between headquarters and subsidiaries in developing countries, which
create a risk of ‘adjustment’ problems. The resourcing of international
assignments is also a relatively expensive business, as considerable time
and money (at least in theory) is needed for investment in the selection,
training and motivation of expatriates, and possibly into support for their
spouses or partners and families. In such circumstances, and given
advances in virtual forms of communication, MNCs are now able to
review critically the need for traditional expatriation and to opt for more
flexible alternatives (see table 3.1), including the use of international
commuters, employees on short- and medium-term foreign postings,
international transferees (who move from one subsidiary to another),
migrants, contract expatriates or virtual international employees in cross-
cultural project teams (Zimmerman & Sparrow, 2007). In Europe, the
deregulated airline industry has made it realistic for people – at least at
executive level – to commute regularly across the continent to work. So, a
person may pursue an international assignment with minimal disruption to

80
their home, personal life and career.

Table 3.1 Types of international assignee

Assignee
Description
category

International A person who moves on a daily or weekly basis

commuter between subsidiary units, within the same
continent.

Short- or A person who transfers within an MNC for a

medium- fixed period of time (typically between one
term foreign month and three years).
posting

International A person who undertakes temporary

transferee assignments abroad, which may occur on a serial
basis throughout their career. Such assignments
may occur to facilitate the startup of an overseas
operation.

Migrant A person who is engaged in remunerated

employment in a region to which they have
moved. The term typically refers to workers
rather than managers, and the assignment may
be for an unlimited time.

Contract A person who is posted overseas to fulfil the

expatriate requirements of a particular contract, and who is
remunerated for completion of the contract. The
posting is for a fixed term and is often seen in
fields such as construction and information
technology.

Virtual A person who remains in their home base but

international interacts frequently with international
employee counterparts through various means, such as
video conferencing and Skype.

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 Such international staffing categories may provide cost-effective and
functional alternatives to traditional expatriation, and yet an increasing
number of academics and practitioners recognise that the fundamentally
unidirectional and ‘exportative’ (Reiche, Kraimer & Harzing, 2009) model
of international staffing is outliving its usefulness, given the plethora of
organisational structures and configurations that are emerging in the global
economy, and the international reservoirs of talent and skill that are
available.
Scholars have now begun to recognise high levels of complexity in
international organisations, implying a pressing need to reframe the
existing orthodoxy which places expatriates centre stage in the discourse
and practice of IHRM. Reiche, Kraimer and Harzing (2009) argue that, in
the current era of globalisation, MNCs are seeking to capitalise on new
opportunities in developing and emerging economies. Where sites of
operation are institutionally and culturally remote from headquarters, the
use of traditional expatriation may be seen not only as a risky and
expensive staffing instrument, but also as an insensitive and inappropriate
option from the perspective of the indigenous population. As Harvey,
Novicevic and Speier (2000) argue, host-country nationals (HCNs) may
represent an invaluable source of context-specific, and frequently tacit,
knowledge at the local site, and are thereby uniquely equipped to engage
in cross-unit brokerage (Harvey & Novicevic, 2004; Kostova & Roth,
2003). Complying with Perlmutter’s (1969) notion of polycentricity,
Harzing (2004) concurs that HCNs may contribute invaluable resources to
international companies, particularly relating to socioeconomic, political
and legal circumstances and to business practices in the host environment.
As an alternative to HCNs or in combination with them, there are now
more third-country nationals (TCNs) in many MNC structures. Coming
neither from home nor host country, TCNs can nevertheless fill knowledge
and skill gaps as well as offering cultural neutrality where corporate
ethical partisanship is an issue. The pools of managerial and technical
talent emerging in India, China, Brazil and Russia may be fruitfully
sourced by MNCs seeking third-country participation in their corporate
structures. In a study of a new joint venture between Turkish and Serbian
partners in the brewing industry in Serbia, Hollinshead and Maclean
(2007) found that TCNs from Scandinavia and the Netherlands were able
to inject state-of-the-art marketing, R & D and technical knowledge in the
early stages of the merger. The intervention of the Northern European
industrial experts over a protracted period offered an impartial and modern
perspective on the introduction of new technologies and managerial

82
systems.
Various forms of bicultural engagement, associated with the ‘network’
form of international organisation (Dicken, 2011), are becoming more
common. According to Brannen and Thomas (2010), biculturals may be
defined as individuals who ‘identify with two (or more) distinct cultures
because [they have] internalised more than one set of cultural schemas’.
The following groups may be regarded as bicultural assignees or migrants.
Inpatriates are managers or workers who are seconded from the MNC
host environment to headquarters (that is, a form of ‘reverse’ expatriation)
in order to gain exposure to, and familiarity with, norms and values in the
‘parent’ locality; they are then able to disseminate to their home locale the
embedded knowledge they have gained from the MNC country of origin
(Harzing, 2004). Returnees are highly skilled knowledge or managerial
workers who have typically migrated to highly developed Western
economies from emerging nations such as India or China, and have been
tempted to return home, in a form of reverse brain drain (Wadhwa,
2009). As the case study in this chapter demonstrates, this staff resource is
vital for emerging economies because it potentially combines exposure to
state-of-the-art Western business and scientific models with cultural,
linguistic and institutional familiarity with the subsidiary milieu.

bicultural A person who identifies with two or more cultures, having

internalised more than one set of cultural schemas.

inpatriate An international assignee, usually from the less developed regions

of the world, who is an HCN. Inpatriates share their more diverse
cultural and educational backgrounds with employees in the HQ.

returnee A highly skilled knowledge or managerial worker who has typically

migrated to a highly developed Western economy from an
emerging economy such as India or China but later returns home.

reverse brain drain The trend towards a shift of human capital from
industrialised/developed to emerging/developing economies.

In a compelling work, which is perhaps emblematic of the ‘new world

order’ in international organisation, Saxenian (2006) describes the critical
role Chinese and Indian immigrants are playing at the helm of companies
engaged in high-tech operations in Silicon Valley, California. Such ‘new
Argonauts’ have compensated for deficits in the United States talent pool
by galvanising innovative activity in the ‘Golden State’ and beyond.
Similarly, Indian managers and consultants now occupy many senior
positions in the US financial services industry. Undoubtedly, such highly

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placed immigrants in the West retain an ethnically based affinity with their
home countries and, in the most recent phase of global development, have
been tempted to contribute to the ascent of India and China through
innovative and creative thinking, either directly (through reverse
migration) or indirectly (through virtual methods or networking). The
transcendent nature of these ethnically based networks of talent, which
straddle advanced and emerging economies, acts to intersect conventional
and bounded organisational configurations, and arguably makes
superfluous the ethnocentric assumptions that underpin traditional patterns
of international staffing.
In summary, simple models of expatriation predicated on the notion of
exporting experts from Western nerve centres to dispersed subsidiaries are
becoming obsolete given the growing complexity of the international
business world. Instead, a multidirectional and multifaceted pattern of
international mobility is becoming apparent and making an impact on
‘traditional’ ethnic divides.

Diversity and international mobility

Although the bulk of the literature on expatriation focuses on
organisationally assigned expatriates, other ‘subsets’ in the international
organisational community may contribute readymade capital and skills
generated through life experiences, outside of the parameters of the
‘normal’ expatriation process. For the purpose of this chapter we will
focus first on women and secondly on migrants, ethnic minorities and self-
initiated expatriates (SIEs).

Women
While there has been a discernible increase in the number of female
expatriates in recent years, with women representing some 20 per cent of
international assignees in 2009, this figure has recently declined to a mere
17 per cent (Brookfield Global Relocation Services, 2010). This decline
corresponds to a general reduction in the number of expatriates worldwide
due to recession (Brookfield Global Relocation Services, 2010).
Nonetheless, the low level of female representation within the expatriate
community is disappointing given the increasing numbers of women in
management roles within organisations, a situation that is even more
surprising because female expatriates have proven to be remarkably
successful in their assignments (Linehan, 2000). In this section, we draw
on the published literature to explore real and perceived barriers to

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women’s engagement with the expatriation process.
The reasons posited for lack of female participation in expatriation are
many and varied and tend to be in keeping with Adler’s (1984a; 1984b;
1987; 2007; 2011) widely discussed ‘myths’ that: ‘Women don’t want to
go abroad’; ‘companies do not want to send women abroad’; ‘foreigners
are so prejudiced that women would not succeed even if sent’; ‘dual-career
marriages make expatriation impossible for most women’ (Adler 2011:
511). These barriers to participation in international assignments are still
more debilitating for women in a career-development environment that
extols the virtues of global organisations and the ‘international manager’
and in which expatriation is regarded as a ‘valuable career opportunity’
(Shortland, 2011). Adler (2011) succinctly sums up the situation for
women. Situating expatriation in a context where global assignments are
increasingly associated with successful careers, she argues that for women
(Adler, 2011: 510) this means that:

what had been a nice-to-have international experience that was often

denied to them, and then became a must-have international
experience that was often denied to them, became a must-have
international experience that was becoming more open to them, but
which was still more frequently offered to men.

A significant barrier to female expatriation is the ‘glass ceiling’ that

confronts women wishing to access senior management positions,
diminishing the pool of human resources from which international
assignees are typically selected. Statistics from Germany demonstrate that,
despite the fact that the number of women in management is increasing,
such positions are at the lower levels of management (Vogel, 2012).
Clearly, if women are inadequately represented in the formal and informal
networks from which expatriates are selected, then the stereotype and
reality of the male expatriate will be further perpetuated. Of course, the
claim that women’s non-availability is a reason for the scarcity of female
expatriates would need to be challenged were the number of senior female
managers in general to grow. We argue that excuses such as this are a
covert form of discrimination, since gender stereotypes frequently
underpin lack of female representation.
The first of these stereotypes is the view that women do not want to go
abroad to work. The growth in the number of female expatriates
demonstrates that women do apparently wish to work abroad if given the
opportunity. Linehan (2006) and Adler (2011) have identified that, rather

85
than women not wanting to work abroad, they are generally not asked to
do so, meaning that women tend to initiate an international assignment
themselves. Shortland’s (2011) work identifies networking as a useful tool
for expatriates in general and women in particular. She asserts that women
utilise both formal and informal networks to raise the profile of their social
capital; however, some of the participants in her study were concerned that
women-only networks might ‘reinforce gender divisions’ (Shortland 2011:
271).
It is likely that informal selection and networking processes may prove
an even greater disadvantage for women from some cultural backgrounds,
who may not be seen as being suitable ‘Western’ expatriates. For these
women, their cultural and gender identities may intersect negatively, since
those selecting expatriates are prone to perceive a woman from a male-
dominated background as one who ‘would not wish’ or ‘would not be
allowed’ to move abroad. More pejoratively, even if selectors accept that
the woman in question might be willing to relocate, they may still assume
that her ‘dominant male’ spouse or partner would not wish to be a trailing
spouse.

trailing spouse The ‘inactive’ partner who accompanies a (typically male)

expatriate for the duration of the assignment.

A further constraint that women in general face is the perception that

they will feel ‘uncomfortable’ working in cultures that are different and
distant from their own, particularly in Middle Eastern countries. Harrison
and Michailova (2012) challenge this preconception, finding that in fact
Western expatriate women are indeed successfully living and working in
the United Arab Emirates. Confounding the expatriation ‘myths’, it would
actually appear that if women are offered the opportunity to move they
may well do so, even to some ostensibly less hospitable global territories.
The failure to involve women fully in international staffing programs is
perplexing, particularly in the light of growing multiculturalism in Western
society, which offers a wealth of potentially highly adept and flexible
international resources.

Self-initiated expatriation, migration and ethnicity

The extant literature reveals various theoretical and methodological
approaches towards the investigation of self-initiated expatriation. Studies
to date tend to focus on the areas of career development (Inkinson &

86
Arthur, 2001; Hall, 2002, 2004); the boundaryless nature of the global
career paradigm (Ikson, Pringle & Barry, 1997); and options, motivations
and opportunities as conceptualised through the dimensions of
psychological orientation and physical mobility (Briscoe, Hall & DeMuth,
2006; Sullivan & Arthur, 2006). In considering self-initiated expatriation,
it is important to establish definitions and clarify the distinctions between
SIEs and migrants. Al Ariss (2012) has explained this conceptual
distinction by suggesting that the term ‘migrant’ is often associated with
an emphasis on work or employment (rather than a career), often under
harsh conditions of employment or even unemployment. In contrast, the
career choices and outcomes available to SIEs are frequently seen as
‘boundaryless’ (Al Ariss, 2012). While an SIE is defined as a motivated
individual who has not been forced to move abroad, the concept of
migration is profoundly conditioned by institutional and organisational
barriers, which constrain physical mobility across socially constructed and
geographical territories.
The SIE and migration literature has also tended to place a primary
focus on (Caucasian) men, a discourse that subsumes women and people
of different ethnicities. Although research into women expatriates has been
ongoing for over 20 years (Izraeli, Banai & Zeira, 1980; Adler, 1984a,
1984b), much of this analysis has centred on the barriers women
confronted as spouses or partners of male expatriates (Bikos et al., 2007).
Phizacklea (2003) argues that mainstream literature has thus adopted a
‘gender-neutral’ or ‘gender-blind’ tenor, assuming women to be
dependants ‘who are following men’ in moves abroad (p. 26).
The study of SIEs who are ethnic minorities from developing countries
is a neglected area of the literature (but see Al Ariss, 2010; Harvey, 2011).
However, this apparent omission does not mean that the phenomenon does
not exist. It is therefore vital that IHRM theorists establish clearer
distinctions and connections between international migration and SIEs,
and understand the movement of SIEs from developing and emerging
economies. SIEs from the developing world may be oppressed and subject
to processes of discrimination (Berry & Bell, 2011; Nkomo, 1992), or they
may be from privileged, white ethnic groups, for whom colonialist
perceptions have also had a mobilising effect (Grimes, 2001). We must
account for the specific histories and sociopolitical contexts that affect all
demographic groupings of SIEs from developing countries, in order to
understand broader patterns and trends in national and international
mobility and migration (Al Ariss, 2010; Al Ariss & Özbilgin, 2010; Bell,
Kwesiga & Berry, 2010; Carr, 2010).

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 A further factor that provides insight into the related phenomena of
mobility and displacement is the skill level of affected individuals. In
general, knowledge workers are at an advantage because global trends
towards outsourcing and automation affect them only lightly. The
international dispersal of advanced technology tends to substitute low-
skilled jobs, while highly skilled jobs such as those in medicine,
engineering, finance and education require extensive human contact. Such
modernisation of work processes, in conjunction with rapid demographic
change in emerging economies, is increasing the role of highly skilled,
flexible and adaptable human resources such as SIEs. 2013 research by
McKinsey & Company has highlighted the global significance of the
emergence of pools of local talent in developing economies in determining
the international investment decisions of MNCs, and in facilitating
competitive advantage (Lund, Manyika & Ramansway, 2012).

Conceptual departures and notions of social

spaces in MNCs
In a welcome conceptual departure, which seeks to cast the critical
relationship between parent and subsidiary in a more nuanced theoretical
light, Edwards and Kuruvilla (2005) invoke the idea of international
division of labour as a sense-making device in unravelling contemporary
international organisation. This notion relates to the capability of the
MNC, both in manufacturing and service provision, to stratify productive
activities into discrete functional areas and to relocate each into
appropriate geographical regions. As Macionis and Plummer (2012)
describe, as people in single societies perform specialised work, so labour
functions and contributions vary across regions, with high-income
countries typically dominating ‘high-value’ or scientific activity and
utilising the most complex technologies. The concept of global
commodity chains (GCCs) (Gereffi, 1999) – also known as global value
chains (GVCs) (Gereffi & Kaplinsky, 2001) – provide valuable insights
into why certain firms ‘touch-down’ in certain localities, and, more
generally, how the internal functions of international organisations may be
both disaggregated and coordinated.

international division of The capability of the MNC, both in manufacturing and service
labour provision, to stratify productive activities into discrete functional
areas and to relocate each into appropriate geographical regions.

global commodity chain Worldwide networks of labour and production processes, which

88
 form a tightly interlocked ‘chain’ of all pivotal production
activities to yield a finished product. These networks connect a
product, from its creation out of raw materials to the final
customer purchase.

Giddens (2006: 55) has pointed out that such GCCs or GVCs are
associated with what he calls a ‘Global Production Network’ (see also
Gereffi, 1995; Hopkins & Wallerstein, 1996; Appelbaum & Christerson,
1997), which he describes as:

the worldwide networks of labour and production processes which

yield a finished product. These networks consist of all pivotal
production activities that form a tightly interlocked ‘chain’ that
extends from the raw materials needed to create the product to its
final customer.

Illustrating the concept of the GCC or GVC, Giddens refers to the

manufacture of ‘Barbie Dolls’; toys whose various features are
systematically sourced, assembled or moulded in Saudi Arabia, Taiwan,
China, India, Japan, Malaysia, China, Hong Kong and the United States.
So, for example, Barbie starts life in Saudi Arabia, where oil is used to
create her plastic body; she is assembled in various Asian regions and the
United States (the latter contributing the ‘highest value’ features to her
anatomical ‘shaping’); her hair is sourced from Japan and her clothing
from China.
GVC analysts draw attention to systems of governance in MNCs, which
coordinate and control networks of production across socially embedded
and regionally dispersed organisational units. An underlying asymmetry in
power relationships is also a facet of the geographical distribution of
productive activities within the MNC, with creative functions (often with a
higher perceived value) tending to be retained in the advanced country of
origin, and more routine operations being devolved increasingly to
subsidiaries in the developing and emerging world. The recognition that
the organisational fabric of the MNC is constructed through social
relationships inevitably brings to the fore the significance of human and
institutional agents in moulding the social contexts that MNCs occupy. In
particular, the state can play a significant role in determining the nature of
an MNC’s engagement in the countries it operates within, through making
investments and interventions in education and training. The state may
also be instrumental in providing the regulatory climate for the conduct

89
and tenor of industrial relations (Edwards & Elgar, 1999).
Building on notions of asymmetry in the construction of multinational
organisational linkages, Dörrenbächer and Geppert (2011) stress the
significance of human agency and power relationships in defining social
spaces in MNCs, emphasising that they are dynamic and negotiated, rather
than purely structural. These authors assert that we should see formal
authority and power structures in MNCs as fragmented, combining
domains of knowledge and expertise emanating from various host
contexts. In effect, as Morgan and Kristensen (2006) assert, there is a
‘federation of national companies’. Following from this, local resource-
building activities are critically significant to our understanding of how
managers (and workers) in the subsidiary environment seek to mobilise
and negotiate mandates that come from headquarters and elsewhere.
Micro-political ‘game playing’ represents a crucial dynamic within the
sociopolitical fabric of the MNC. Such political contestation typically
involves key actors from headquarters and subsidiary and may relate to
how HQ allocates budgets, mandates change, decides relocations,
benchmarks systems and makes coercive comparisons between
subsidiaries (Becker-Ritterspach & Dörrenbächer, 2009; Dörrenbächer &
Geppert, 2009; Kristensen & Zeitlin, 2001, 2005; Morgan & Kristensen,
2006). In this chapter’s case study, based on empirical research by one of
the chapter authors, we investigate issues of expatriation, biculturalism, the
implementation of GVCs, and the contestation of social spaces at
organisational and workplace levels, in a recently established R & D
subsidiary based in China.

human agency The capability of human actors to engage, in an autonomous and

self-determined fashion, with broader social, institutional and
regulative structures.

social spaces The MNC seen as a variety of cellular units, each with its own
identity, vested interests and objectives.

coercive comparisons A direct yet insidious practice, in some multinational headquarters,

of comparing performance aspects in one subsidiary with
equivalents in another.

micro-politics The use of formal or informal power by individuals or groups in

organisations in order to maintain or further their status.

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Conclusion
In focusing on key players in IHRM, our chapter has suggested that the
theatre in which the major protagonists are interacting is subject to an
ongoing program of reconstruction. While much literature in the field has
tended to assume that lead actors have emanated from Western nerve
centres and followed quite linear trajectories across international
platforms, we have suggested that the voices of actors from far-flung and
diverse territories are now being heard in the corridors of the international
enterprise. As we have suggested, host countries and TCNs are playing a
significant role in ensuring that eclectic and diverse forms of international
knowledge are contributing to the fine tuning of decision-making in
networked forms of international organisation. Moreover, given the
emergence of exemplary pools of talent in emerging economies such as
China and India, it is evident that reverse and alternative patterns of
migration are occurring with, for example, Indian engineers catalysing
innovative and entrepreneurial activity in Silicon Valley and often
returning home to assist in regenerating economic growth. Indeed, an
overall message of our chapter is that the ‘stage’ for IHRM is created by
human agents, either those who are directly involved in formulating
policies, practices and philosophies in the MNC itself, or those extraneous
to the enterprise, for example in government, who create the context for
MNC investment and local embeddedness. As the backcloth for IHRM is
painted in more detail, so we realise that the identities of the major actors
assumes paramount significance, extending to issues of ethnicity and
gender. Further, in common with interactions between people in all walks
of life, it cannot be assumed that human relations will be ordered or
predictable. Instead, the script of IHRM is punctuated with contestation,
power plays and potential misunderstandings. We would therefore assert
that MNC strategies cannot be formulated in a ‘clean’ and disembodied
fashion but rather need to acknowledge the unpredictable realities of
human behaviour across international boundaries.

Take-home messages
A variety of actors play a significant role in the conduct of the MNC,
including home-, host- and third-country nationals. Configurations
and combinations of international staffing are subject to change as
international organisation itself evolves.
The significance of gender and ethnicity in IHRM tends to have been

91
 neglected, and stereotypical views of international staffing may be
regarded as insensitive and inappropriate in the modern, diverse
world of international business.
The organisation of MNCs across regional borders is becoming
increasingly complex, more frequently taking the form of ‘global
value chains’ (GVCs), thus contributing to the level of diversity in the
international organisation and raising the significance of a range of
actors at the local level.
A micro-level picture of the realities of international staffing reveals
that combining home, host and other varieties of international staff is
highly complex and carries with it the possibility of organisational
conflict and intergroup tensions.

Closing the learning loop

1. Why may ‘traditional’ expatriation be inappropriate in the modern
era?
2. Why has the stereotype of the Caucasian male expatriate persisted
in international business circles, and how is it inappropriate?
3. What is the impact of global value chains (GVCs) on international
staffing?
4. What problems may confront individuals who are part of the
‘reverse brain drain’ to emerging economies?
5. Discuss this statement: ‘Women make better expatriates than men.’

Case Study 3.1 R & D Discovery China

Mission and growth

The origins of R & D Discovery China* may be traced back to late 2005,
when the board of UniCo* decided to establish an R & D presence in an
emerging economy. Following consideration of alternative global
locations, including India, Russia and South America, the corporation
opted to locate in China and made an initial investment of £300 million in
a ‘green field’ facility in Shanghai. Undoubtedly, the establishment of R &
D Discovery China was a bold and ambitious move by the corporation,
entailing the construction of an ‘end-to-end’, fully integrated, custom-built
and state-of-the-art facility. Over the first year of the site’s operation in
2007, major developments occurred at a ‘dragon speed’, including its
formal inauguration in Shanghai, the appointment of the company head

92
and senior scientific positions, the transfer of major product lines and legal
entity submission and the commencement of more generic recruitment.
The scientific acumen and creativity of its staff ultimately determine the
credibility of R & D Discovery China. A further distinctive operational
aspect of R & D Discovery China is its strategy of pursuing up to 10
projects simultaneously, each at a different stage of advancement, thus
placing a demand for dynamic and flexible work orientation on the part of
staff.
As R & D Discovery China has grown, and as it has increasingly
demonstrated innovative capability, so there has been progressive
localisation of key managerial and scientific responsibilities to the site.
This trend is perhaps most obviously manifested in the field of HR, which
was initially the responsibility of two expatriate managers from the United
Kingdom and United States, but which has now been devolved to a team
of six locally hired specialists. The strategy of localisation is also
potentially fruitful as it permits the tapping into guanxi, or local networks.
Interviewees referred to the nurturing of privileged relationships with
universities and scientific institutes for recruitment purposes,
representation of corporate interests at local, regional and national
governmental levels through political networking, through strong and
reciprocal links with scientific counterparts in Chinese-based scientific
institutes.

Capabilities and knowledge resources

R & D Discovery China’s distinctive, hybridised approach towards
scientific discovery has necessitated the combination of staffing and
knowledge resources from East and West. The chairperson of R & D
Discovery China is a renowned scientist from Shanghai, who has strong
relationships with the Academy of Sciences in China and local and
national government and who repatriated from a senior R & D position in
the United States approximately eight years ago. Reporting relationships at
the site are organised around the chairperson, a charismatic and influential
leader who represents the interests of the site at global corporate level.
The organisational structure of the site has been designed from the
Centre of UniCo and essentially uses Western nationals and Chinese
returnees at higher management level, returnees and locals at lower
management level, and only locals as scientists. Those participants in our
study who were present at the firm’s startup suggested that an emphasis
was placed on sourcing returnees (known locally as ‘sea turtles’) to fill

93
senior positions, as they possessed vital managerial and strategic skills and
were able to act as scientific mentors. Such individuals were typically
Chinese nationals who had graduated from prestigious Chinese scientific
institutes, who had been working in equivalent operations in the West and
who were recruited to R & D Discovery China through company web
advertisements.
Turning to the recruitment and composition of ‘bench’ scientists, HR
specialists reported that there was little difficulty in attracting local and
high quality reserves of scientific talent, through tapping into the reservoir
of doctoral graduates in the labour market. Virtually all recruits were
young (less than 30 years old) and comprised both men and women. Such
laboratory scientists were required to serve a three-month probation period
and were then employed on the basis of three-year renewable contracts.
The majority of managers and scientists participating in our onsite study
were conscious of manifesting extraordinarily high levels of commitment
to their work and to the ‘mission’ of R & D Discovery China. A number,
including repatriates, referred to the excitement of potentially ‘making
history’ through winning new patents in a particularly challenging field of
R & D, and where breakthroughs would benefit consumers not just in
China but around the world. Returnees were able to draw comparisons
between organisational culture and work ethics in the United States and
China, stating that the working context in the US was more functionalised
and bureaucratic, with less drive to achieve results. A number of
interviewees alluded to the significance of corporate culture, or the
fundamental principles of the company, as a motivational factor. It became
clear from our encounters with managers and scientists that their work
environment encouraged them in an ongoing sense of urgency, a huge
appetite for change and high energy levels. It was also mentioned that
employees’ readiness to mix personal and professional life was regarded as
a considerable virtue at R & D Discovery China. One of our study
participants asserted that the environment at the site was ‘contagious’, and
that it frequently shocked new starters.
One senior informant highlighted the significance of ‘synergy’, stating
that organisational actors steeped in Eastern and Western scientific and
organisational traditions could learn from each other. This participant
referred to a new and optimal balance between socialism and capitalism
being manifested at enterprise level, with ‘socialism having strong
government and capitalism being good for businesses’. The significance of
R & D Discovery China as a ‘learning institution’ was stressed, this being
manifested through strong links with universities and other scientific

94
bodies, with academic speakers offering lectures and seminars on company
premises.

Challenges and perceived risk

While a number of interviewees spoke of the productive benefits of
implementing the ‘socialist market paradigm’ at corporate level, involving
the dynamic combination of Eastern/Western staffing and knowledge
resources in both clinical and organisational domains, others suggested
that some practical dysfunctions arose from the hybridised, culturally
complex model. It was observed, in particular, that in China, ‘people
tended to jump’ without taking ‘due’ time for systems changes and
innovation, and this caused some consternation among Western
organisational counterparts. Some also felt that ‘the quickest solution was
not always the best one’ and that sometimes actions were taken without
allowing for sufficient dialogue. Accordingly, while the Centre of UniCo
welcomed the hunger for innovation that R & D Discovery China staff
exhibited, it was evident that some radical, locally inspired initiatives were
taking place outside its purview.
It was also revealed that the site had experienced serious employee
relations difficulties as international returnees had been remunerated at
significantly higher levels than locally hired staff. A two-tier status in pay
and other conditions was clearly in evidence at the site, with more
privileged positions resting on possession of internationally based
knowledge and experience. A requirement to speak English in formal
corporate settings and meetings reinforced this ‘glass ceiling’ for local
hires, as not all bench scientists could do so.
Despite their relatively privileged status, a number of the bicultural ‘sea
turtles’ we interviewed expressed reservations concerning their return
home. Some referred to existing in a state of ‘psychological limbo’ as they
had not fully re-integrated into Chinese life and culture, operating only in
the somewhat rarefied atmosphere of a Western-owned MNC. Others
believed that they had been financially penalised through repatriation, and
that family issues had been difficult to manage. One participant candidly
admitted that the internationalisation strategy adopted in the sectors would
not be sustainable in the long term, that the pendulum had shifted too
rapidly to the East and that a new equilibrium needed to be found between
Western and Eastern operational platforms.

Discussion

95
We argue that firms can only access the extraordinary Chinese work
orientation with certain inevitable preconditions and costs. First, such
capabilities cannot be realised without a corresponding localisation
agenda, which effectively draws on the social capital generated through
guanxi. In the case of R & D Discovery China, the most obvious examples
of the critical significance of networking included the incorporation of the
Chinese national chairperson into prestigious corridors of government and
science, and the appointment of a Chinese local HR department, which
was finely attuned to the nuances of the local labour market. Second, the
case demonstrates that the raw and unbridled work orientation of the
company’s local Chinese scientists needed to be tapped, institutionalised
and ‘branded’ through the ethnocentric agency of Western expatriates on
the site, to enable it to contribute to the corporate mission as envisaged by
senior management at UniCo HQ. In pursuit of this objective, the Western
interests on the site orchestrated an array of Western inspired and
‘rationalistic’ HR and performance management techniques, which
ultimately foundered on a rock of passive resistance among the local
employees. Bicultural ‘sea turtles’, the company’s repatriating Chinese
senior scientists and managers, could be regarded as pivotal human actors
in the fledgling enterprise. Such individuals acted not only as scientific
mentors but as ‘cultural carriers’ and agents of socialisation for the
corporate entity.
However, there were two critical indications, in the area of international
resourcing, that parties from ‘emerging’ and ‘advanced’ institutional
settings may not always be combined sympathetically at micro-level,
providing continued evidence of the site’s ‘shallow integration’ into its
international corporate value chain. First, the status gap between
internationally experienced and locally based staff rendered the notion of a
unified enterprise fictitious, and may have jeopardised the level of future
employee commitment. Second, the position of repatriating scientists and
managers, who performed the vital role of bridging Western and Eastern
interests in the enterprise, was precarious. A number of ‘sea turtles’
appeared to occupy a transnational and transitional space that was neither
‘here’ nor ‘there’, personifying the paradoxes associated with transposing
Western capitalistic values and techniques to release embedded reserves of
Chinese know how and inventiveness.
Case study questions
1. Why did UniCo decide to set up an R & D operation in China, and what
were its major strategic objectives in doing so?

96
2. Draw an organisational pyramid of staffing categories at R & D
Discovery China, indicating the ethnicities of categories you depict.
3. What were the causes of tension between the operation’s staff
groupings?
4. How far do you think the company will eventually achieve its strategic
objectives? Explain your response.
5. What can other organisations learn from the experiences of UniCo and
R & D Discovery China?

* We have used pseudonyms to protect the anonymity of survey

participants. The authors are grateful to the anonymous colleagues who
helped facilitate access to the case company and in the acquisition of data.

Activities
Group PEST analysis
Break into groups. Imagine that you are members of an MNC’s senior
management team, which is planning to outsource key business
functions to China from headquarters in the United Kingdom. As a
group, conduct a political, economic, social and technological (PEST)
analysis of the major factors likely to facilitate or constrain this
international corporate initiative. Where possible, draw on the local
knowledge of your group’s members.
Mapping social spaces in an organisation
Present a diagram that maps ‘social spaces’ in an organisation familiar
to you (preferably an international organisation). Explain where points
of tension exist within the organisation you have mapped, and show
why they exist.

Online resources
For instructors: answers to activities; long media article with
questions; additional questions and answers.

97
 For students: further reading; answers to case study.

Acknowledgement
The authors wish to thank Dr Francesca Gagliardi at the University of
Hertfordshire for assisting with the collection of case study materials.

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 4 Recruitment and selection in the
international context
Kristina Potočnik, Maria Felisa Latorre Navarro, Beliz Dereli and Blanka
Tacer

Learning objectives
To outline the specifics of recruitment and selection in the
international context.
To describe categories of international employees.
To identify and explain the international recruitment and selection
process.
To illustrate potential challenges of international selection and
recruitment from the employee and company perspectives.

Learning outcomes
After reading this chapter, students will be able to:

develop an international recruitment and selection plan for different

types of multinational company
create a set of interview questions for an international post
determine a set of selection criteria for different types of international
employees
evaluate indicators of selection and recruitment effectiveness.

Introduction
Careful planning is needed to ensure that international recruitment, and
selection can deploy the right candidates to international posts. Failure to
do so may result in inefficient use of time, financial losses or even risk to a
company’s reputation. HR managers in multinational companies (MNCs)
should consider various issues when preparing for international
recruitment and selection, mainly because of cultural or national
differences between the country in which an MNC is headquartered (the

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parent country) and the countries in which they have subsidiaries (host
countries). These differences affect international recruitment and selection
because:

employment legislation varies across countries

the pool of job applicants for international posts is wider – MNCs can
choose from parent-country nationals (PCNs), host-country nationals
(HCNs) and third-country nationals (TCNs) as well as, increasingly,
self-initiated expatriates (SIEs) and skilled migrants (SMs)
a thorough and specific job analysis for international posts is
required, even if the same type of post is advertised (for instance, the
competencies a manager needs in Australia might be different from
those a manager needs in another cultural context)
needs specific to advertising international posts drive MNC selection
practices, from filling a position to developing the managerial skills
of existing staff (Brookfield Global Relocation Services, 2012).

International recruitment and selection challenges are visible at the macro-,

meso- and micro-levels. A macro-level challenge relates to institutional
arrangements or legal factors (e.g. employment and health and safety
laws), national culture and social factors (e.g. education system and career
attitudes). The meso-level comprises an organisation’s recruitment and
selection policies, procedures and practices, the developing employer
brand and the evaluation of international recruitment and selection
effectiveness. The micro-level refers to the HR competencies for
international recruitment and selection, job analysis and person–
organisation fit; and competencies for working in and adjusting to an
international work environment. Micro-level challenges in the
international recruitment and selection also include job candidates’
reactions to a company’s HR practices and initiatives, such as their
reactions to different selection methods.

recruitment Practices designed to attract a suitable number of qualified job

applicants.

selection Choosing the best candidate for the available post from the pool of
job candidates.

self-initiated expatriate A person who moves abroad for work on their own initiative.

skilled migrant A well-educated individual who moves from a developing to a

developed country for work.

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 In this chapter, we address these challenges and discuss recruitment and
selection practices in the international context. We first review the
different categories of international employees MNCs can target in their
international posts, before analysing in detail a four-stage process model of
international selection and recruitment.

Categories of international employee

A number of approaches are available in international recruitment, which
Perlmutter (1969) describes as ethnocentric, polycentric, geocentric and
regiocentric (see chapter 1). Before an MNC designs its recruitment and
selection practices, it must decide on a general approach to international
recruitment and selection. Under any of these approaches, the MNC will
need to target a category of international employees in their selection and
recruitment. We summarise the characteristics of the main categories of
international employee in table 4.1.

Table 4.1 Advantages and disadvantages of using categories of

international employees (based on Al Ariss & Seyed, 2011; Reiche &
Harzing, 2011; Dowling et al., 2008; Froese, 2012)

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 Different factors determine which approach, and consequently which
category of international employee, the MNCs will eventually target: for
example, cultural distance between the headquarters and its subsidiaries;
living costs in the host country; immigration issues; and role expectations
of the international employees (Dowling, Festing, & Engle, 2008; Harzing,
2004; Sparrow, 2007). For instance, MNCs may focus on PCNs because
they expect them to assume certain roles (Dowling et al., 2008), such as:

1. network builders, who strengthen and develop interpersonal

linkages and contacts abroad
2. boundary spanners, who represent their companies in the host
countries and gather host-country information for the headquarters

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 3. agents of direct control, who engage in direct supervision to ensure
compliance of the HCNs
4. agents of socialisation, who transfer the corporate culture (i.e.
shared values and beliefs) to the host-country organisation
5. language nodes, who speak a host country’s language and so are
able to deal effectively with queries from the HCNs.

In general, using PCNs can help MNCs achieve their targets and objectives
in the host country, and all these roles involve transfer knowledge and
competencies from the headquarters to the subsidiaries located in host
countries (Dowling et al., 2008). However, Shaffer and colleagues (2012)
have recently suggested that, due to new demands in the globalised labour
market, MNCs must consider alternative categories of international
employees to fill positions (see table 4.2). Organisations use these groups
to make international posts simpler and more flexible, both for employees
and organisations. In summary, MNCs can target different types of
international employee. Importantly, as we explore next, the choice of the
targeted applicants will have a significant impact on the MNC’s
recruitment and selection practices.

short-term assignee An employee appointed to an international post for a short period,

usually less than one year.

flexpatriate An employee who travels for brief assignments, away from their
home base and across cultural or national borders.

international business An employee who makes frequent international business trips for
traveller short periods of time.

global virtual team A team member based in a different geographical location to other
member team members, and who works on interdependent tasks,
communicating mainly through information and communication
technologies (ICTs).

Table 4.2 Alternative contemporary types of international employee

(based on Shaffer et al., 2012; Mayerhofer et al., 2004; Maznewski et al.,
2006)

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Process model of international recruitment and
selection
In this section, we propose a holistic four-stage process model of the
international recruitment and selection process, starting with determining
the competencies of the HR professionals who recruit and select
international employees and concluding with an evaluation of its
effectiveness (see figure 4.1). The feedback from the last stage can be used
to improve the practices and procedures of the first three stages in future.
Each stage of this process model comprises macro-, meso- and micro-
levels, and every level raises specific challenges. Here, we discuss these
challenges in detail.

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Figure 4.1 A four-stage process model of international recruitment and
selection

Stage 1: Determining competencies of HR

professionals for international recruitment and
selection
In the first stage, MNCs should determine the competencies of the HR
managers who will be responsible for the international recruitment and
selection. A macro-level challenge here is the anticipation of the
recruitment and selection practices in the host country (e.g. whether or not
psychometric assessment is a common practice in the host country).
Defining an international HR competency profile based on its strategic
goals is a meso-level challenge for the organisation. The HR managers
who perform different international HR-related tasks need specific
competencies (e.g. linguistic abilities, cultural sensitivity). The
international HR competency profile differs depending on the stage of
international development an organisation has reached. For example, an
MNC with only two subsidiaries, in culturally similar countries, needs an
HR manager with additional linguistic skills, while an MNC with global

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staffing needs a more complex international HR competency profile. At
the micro-level, the development of international recruitment and selection
competencies is a task for each manager and member of the HR
department; these competencies include knowledge, skills, attitudes,
abilities, personality traits and other characteristics for effective work in
international recruitment and selection.
The scope of international recruitment and selection is related to the
company’s stage of internationalisation (see chapter 1 for discussion of
these stages). In the early stages of internationalisation, HR managers are
involved in the recruitment and selection of HCNs and TCNs, raising
challenges such as how to comprehend the local legislation and culture. In
contrast, in MNCs with already-developed local HR departments, the
recruitment and selection challenges often relate to cross-cultural
collaboration between subsidiaries and headquarters. Importantly, HR
managers at the headquarters need an intimate understanding of the
organisational strategy to effectively design job posts (i.e. to identify the
required competencies and skills) and make decisions regarding
international recruitment and selection. For instance, in the case of a
pharmaceutical company deciding to open a new subsidiary focused on
sales, international posts will mostly be connected with marketing and the
HR manager will need to design job competencies based on this strategic
aim.
International recruitment and selection calls for competencies that
address the special challenges that characterise the international
environment. The international recruitment and selection manager needs to
possess specific competencies for several reasons:

Cross-cultural situations require adaptation of recruitment and

selection methods and flexible interpretations of communications,
values and behaviours (Tarique & Schuler, 2010).
The international HR manager needs to consider the local institutional
environment, especially legal matters (Festing & Eidems, 2011).
International recruitment and selection connect with coordinating
different staffing interests. Local managers’ interests do not always
align with the global interests of MNCs. For instance, a manager in
Mexico may not support the international transfer of a team member
because they need that person’s competencies for the local company.
Building an international network is crucial to respond to the
continued shortage of required competencies in MNCs (Farndale,
Scullion & Sparrow, 2010).

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 Diverse forms of international mobility dictate the approach to
international recruitment and selection (Meyskens et al., 2009).

Building on Roe’s (2002) model of competency architecture, we derive a

competency profile for the HR manager responsible for international
recruitment and selection. In addition to knowledge, skills, attitudes and
other characteristics (KSAOs), the model allows consideration of abilities,
personality traits, competencies and subcompetencies as psychological
determinants of job performance, as shown in table 4.3. Once a company
has an HR manager in place to lead international recruitment and selection,
it needs a recruitment strategy to attract the best talent to the applicant
pool.

Table 4.3 A competence profile for international recruitment and

selection managers (based on Roe, 2002)

Profile area Specific attributes and skills

Knowledge IHRM theory

Recruitment and selection theory
Core business of MNC
Comparative management

Skills Cross-cultural and cross-functional

cooperation
Verbal communication
Non-verbal communication
Fluency in MNC’s official language
Systems thinking
Observation

Attitudes Positive toward diversity

Positive toward MNC
Comfortable with changes
Able to reconcile viewpoints

Other Interested in people from different cultures

characteristics Motivated to work in an international
environment
Committed to teamwork

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 Able to be mobile
Free from prejudices

Abilities Emotional intelligence

Verbal reasoning
Analytical reasoning

Personality Open
traits Responsible
Adaptable
Self-confident
Proactive
Emotionally stable

Competencies International internal and external

employer branding
Cross-cultural integration of workforce
planning
Cross-cultural internal and external
selection system design
Local adaptation of recruitment and
selection methods
International networking
Cross-cultural collaboration with local HR
departments and local managers
Coordination and monitoring of
international recruitment and selection

Subcompetencies International and local job market mapping

Cooperating across departments to develop
and maintain employer brand
Planning international assignments
Interviewing international candidates
Assessing international candidates
Evaluating international work experiences,
education and competencies
Managing the mobility of international
assignees
Balancing the global standardisation and
local adaptation of recruitment and
selection practices

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Stage 2: International recruitment
Recruitment practices are essential to attract the right talent in the highly
competitive international market (Ma & Allen, 2009). At this stage,
researching the legal, social and cultural environments in the host country
is the main macro-level challenge, while designing a recruitment strategy
and developing the employer brand are important meso-level issues. At the
micro-level, the main challenges are job analysis and remuneration
planning.
Recruitment starts with job specification and analysis to define a set of
characteristics and competencies a person needs to perform effectively in
the available international post. Thorough job analysis of the international
post should also inform the approach to international staffing that the
MNC adopts, for instance by providing information about the availability
of the HCNs for a specific post, the need for close surveillance of the
headquarters, or potential risks to local cultural adjustment. The job
analysis identifies such issues by drawing on multiple sources, including
in-depth interviews with the HCNs and PCNs who will collaborate with
newly appointed employees. In this context, we emphasise that future-
oriented job analysis focuses on dynamic and changeable requirements of
international posts (Landis, Fogli & Goldberg, 1998). These aspects must
thus be considered when designing the recruitment strategy for the
company’s international posts, together with questions such as the size of
the targeted applicant pool, the length of the commitment sought in the
post (short-term or long-term) and the budget available for salary and other
benefits. The success of the recruitment strategy (i.e. whether the company
attracts a sufficient number of highly skilled and qualified candidates) will
depend on the quality of the employer brand reference. That is, the
company has to develop a unique image with which potential job
candidates value and identify, linked to the company’s values and policies
(think of Google or Coca-Cola, for example).
Employer branding is mainly used to attract external candidates, but it
can also be used internally to stimulate already employed talent to apply
for the company’s international posts. Next, we review international
recruitment strategies for PCNs, HCNs and TCNs (including SIEs and
SMs), respectively.

International recruitment of PCNs

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Recruitment of PCNs may focus on candidates already employed by the
company (internal recruitment) or target anyone in the parent country’s
labour market (external recruitment). Internal recruitment relies on
certain practices and sources, such as internal job vacancy ads published
on staff boards or intranets, career planning and internal networking. It has
many advantages, including low costs, higher employee motivation to
excel at work (i.e. to increase the probability of getting the international
offer) and increased company attractiveness and reputation (Briscoe,
Schuler & Tarique, 2012). Nevertheless, this strategy can be very
restrictive because it can limit the number and quality of the candidates in
the applicant pool.

internal recruitment Recruitment focused on candidates already employed by the

company.

external recruitment Recruitment focused on any candidate in the labour market.

An HR manager can overcome these limitations by expanding the

recruitment strategy outside the company. Some common practices of
external recruitment are attendance at job fairs, job vacancy ads published
on the company website, newspapers and social media (e.g. LinkedIn,
Facebook), recommendations from employees and focus on competitors’
PCNs (Briscoe et al., 2012). Although external recruitment can reach more
highly skilled applicants, their lack of knowledge about the company is a
potential drawback. A combination of internal and external recruitment
may be the best strategy when focusing on PCNs.

International recruitment of HCNs and TCNs

The literature indicates a need to recruit HCNs for international managerial
posts to develop international talent (Ma & Allen, 2009), while paying
attention to a number of issues.

1. Analysis of the host country’s labour market to determine the

quantity of suitable candidates for the available posts. MNCs
should invest effort and resources in their external employer
branding. This is important because having a unique image which
the HCNs and TCNs value and are fond of will attract a greater
number of better qualified candidates to the applicant pool.
2. Analysis of common recruitment and selection practices in other
local or international companies. For instance, Chinese firms

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 usually recruit through informal channels or networks (Han &
Han, 2009). Indian private-sector organisations usually recruit
using social networking (Budhwar & Khatri, 2001). In the United
States, job applicants are more likely to search for job ads in
newspapers or on websites (Ma & Allen, 2009).
3. Adapting recruitment practices to local cultural values (Ma &
Allen, 2009). In countries with strong collectivist values (e.g.
China, Latin American countries), ads should include group-
focused activities, such as teamwork and team-based rewards. In
contrast, ads targeting applicants from individualistic countries
(e.g. United States, United Kingdom) should emphasise
individual-based activities, remuneration and benefits.

Some MNCs are concerned primarily with getting the best possible
employees for their international posts regardless of nationality, and these
companies can also target TCNs. However, cultural differences can be
harder to control in these cases (Moore, 2001).
Once the company is satisfied with the quality and size of the applicant
pool, it begins the process of selection, the third stage in our four-stage
model.

Stage 3: International selection

In this section, we review relevant selection criteria and selection methods
in the international context. Here, macro-level challenges are related to the
adaptation of selection methods to the host country environment; meso-
level challenges include the choice of selection methods MNCs will use
for their international posts, and micro-level challenges reflect different
selection criteria for international posts.

Selection criteria
Capacity for cultural adjustment
Cultural adjustment helps lessen the intensity of the stress an employee
experiences during acculturation and changes the candidate’s expectations
so that they may adjust more easily to the new situation. Black,
Mendenhall and Oddou (1991) have suggested three kinds of adjustment
for PCNs:

1. Work adjustment to job requirements, working conditions,

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 management styles and performance expectations.
2. Interaction adjustment that emphasises establishing good
relationships with HCNs and therefore underlines the need to use
the HCN’s language adequately.
3. General living adjustment – for example, adjustment to
accommodation facilities, shopping and local foods (Huang, Chi &
Lawler, 2005).

Family situation
Family situation is an important criterion that affects whether a PCN
decides to accept an international post and later how he or she performs in
the job (Harvey & Novicevic, 2001). Effective family communication (i.e.
the ability to share and discuss opinions clearly and develop constructive
solutions for conflicts that arise) and strong emotional support among
family members reduce stress intensity and facilitate adaptation to the new
environment (Caligiuri, Hyland, Joshi & Bross, 1998).
The need for couples to consider their dual careers is becoming an
increasingly important factor in applicants’ decision-making about an
international job offer (Riusala & Suutari, 2000). Some MNCs resolve this
problem by resourcing career counselling, job search and work permit
arrangements, or even covering education expenses for a spouse (Dowling
et al., 2008). Spouses most often desire relocation support in the form of
networking information (e.g. a list of employment agencies and Western
companies that use English-speaking staff) and career counselling. Yet,
according to a recent study of PCN spouses from Australia, Asia, Canada,
Europe, the United Kingdom and the United States, employment
assistance programs for spouses are very rare indeed (Cole, 2011). If the
spouse of a relocating PCN does not move, it is important that the MNC
covers the family’s travel and communication costs (Ntshona, 2007).
MNCs should also consider other family constraints on a candidate’s
acceptance of the international job offer, such as disruption to children’s
education, lack of care services for aged family members and the adverse
effect of relocation on family members (Osiecka, 2001).

dual-career perspective The aim of maintaining both spouses’ careers when one partner
relocates.

Linguistic ability
A UK–German study by Marx has reported linguistic ability as the fifth

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most important selection criterion, ranked after sociability, openness,
cultural adaptation and professional perfection (cited in Osiecka, 2001).
Although language differences are recognised as having a negative impact
on cross-cultural communication and job performance and may even cause
PCNs to return earlier than planned from an international post (Jordan &
Cartwright, 1998), some MNCs consider linguistic abilities to be non-
essential attributes.

cultural adaptation Changes in the individual that facilitate his or her adaptation to the
new environment.

Experience in the international context

Applicants who have experience in the international context are better able
to develop realistic expectations about the international post, which
reduces the risk of uncertainty and stress due to acculturation issues (Black
et al., 1991). Extensive experience of travelling and relocation also helps
in adjusting to a new environment, responding to new tasks and
establishing relationships (Groesch, 2004).

Personality traits
The role of the ‘Big Five’ personality characteristics in PCNs’ job
performance and their adaptation to international posts is well recognised
(Caligiuri, 2000a; Harvey & Novicevic, 2001; Huang et al., 2005; Jordan
& Cartwright, 1998). These characteristics describe the extent to which an
individual is:

1. extroverted – asserts him or herself in the environment by being

outgoing, sociable and talkative
2. agreeable – a team player, warm and trustworthy
3. conscientious – organised and hard working
4. emotionally stable – calm and able to cope with areas of stress in
his or her life
5. open and intellectually able – imaginative, able to adapt to a
changing environment.

The weighting the selection process for international assignments attaches

to each of these characteristics may vary from one culture to another. For
example, introverts may be preferred over extroverts in cultures where
modesty and conservatism are accepted as fundamental values (Huang et

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al., 2005).
Mendenhall and Oddou’s (1985) model posits four dimensions that link
specific behavioural tendencies to potential performance in international
posts (Dowling et al., 2008):

1. Self-oriented dimension – the extent to which an expatriate

expresses concern for self-preservation, self-enjoyment and mental
hygiene.
2. Perceptual dimension – a PCN’s expertise in correctly
understanding HCN behaviours, successfully combining all their
previous perceptual and appraisal experiences.
3. Others-oriented dimension – the extent to which a PCN is
concerned about their HCN peers and intends to cooperate with
them.
4. Cultural-toughness dimension – a PCN’s adaptive ability, or their
sensitivity to the new environment, determined by the degree of
similarity between the host and parent countries’ cultures.
Subcultures within each country also affect the degree of
similarity between host and parent countries.

Knowledge, skills and competencies

Some studies have found that soft skills – including global awareness, an
ethical understanding of conducting business in foreign countries, cultural
empathy, cross-cultural team building, international negotiation skills and
self-confidence – are essential for successful performance in international
posts (see, for example, Harvey & Novicevic, 2001). Technical
competence is another essential criterion in international selection.
Technically competent international employees can more easily manage
job uncertainty, have fewer work-related problems and build trustworthy
and cooperative relations with HCNs (Groesch, 2004).

Person–organisation fit
Job applicants are attracted to organisations that fit with their personal
values (Kristof, 1996). Due to the differences between host and parent
countries’ organisational cultures, accurate assessment of person–
organisation fit makes success more likely in international posts (Rian &
Ulf, 2012). The alignment of applicants’ personal values with a host
country’s organisational values fosters employee job satisfaction (Kristof-
Brown, Zimmerman, & Johnson, 2005) and organisational commitment
(Tsai, Chen, & Chen, 2012).

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Selection methods
When the HR department has established the selection criteria, it chooses
appropriate selection methods, which may involve tests, interviews, the
use of assessment centres (ACs) and cooperation with HR consultancies.

assessment centres In-house or external location for evaluating behaviour using

multiple tests and exercises for different purposes, including
employee selection.

Tests
Psychometric tests are used for personality and competence assessment,
linguistic ability assessment and cultural adjustment and flexibility
assessment, among others (Briscoe et al., 2012; Moore, 2001). When using
tests in international selection, we should consider using both assessments
of specific competencies and skills for international posts and culture-free
tests or tests adapted to HCN and TCN applicants’ culture of origin.
Certain tests have been translated, validated and standardised in a diverse
range of cultures, and these are preferred in international selection; they
include the Big Five Personality Questionnaire (Schmitt, Allik, McCrae, &
Benet-Martínez, 2007) and the Wechsler Adult Intelligence Scale
(Bowden, Saklofske & Weiss, 2011).

Interviews
All selection procedures include some sort of interview. Structured
interviews are more effective with applicants from high-power distance
cultures (e.g. Latin and Asian countries), while less structured interviews
are more effective with applicants from low-power distance cultures, such
as Anglo and Germanic countries (Ma & Allen, 2009). It is recommended
that the interview panel includes representatives from different
departments of the company, to enable a balanced assessment of the
applicants (Briscoe et al., 2012; Moore, 2001). The interview provides an
opportunity to assess and probe applicants’ ability to adapt to different
cultural contexts. It can also be conducted using video conferencing, which
may help ensure diversity among panel members. However, applicants do
not favour virtual selection methods (Chapman, Uggerslev & Webster,
2003), and it is debatable how reliably such an environment can aid
examination of their abilities.

Assessment centres

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ACs comprise standardised evaluation of cognitive abilities and
personality tests, structured interviews and exercises such as leaderless
group discussion, in-basket exercises, case studies and role-playing (in an
in-basket exercise, job candidates receive a set of items related to their
future post and are asked to indicate how they would prioritise and deal
with each; the exercise simulates tasks that an employee might do on
returning from a holiday). Applicants engage in exercises both individually
and in groups (Searle, 2003). The assessors may be HR personnel or line
managers from the recruiting organisation, external HR consultants,
psychologists or job experts (Edenborough, 2005; Guion & Highhouse,
2006). In the international context, assessors should be included from both
parent and host countries, to address cultural and national aspects of
applicant selection (Briscoe, 1997). Many MNCs around the world use this
method, including Shell, Siemens, HSBC and BASF (Jansen & Jongh,
1997). Some companies prefer to outsource to ACs because of a lack of
experienced staff or adequate facilities in-house. Outsourcing may also
prevent biases: if the selection is carried out among the internal candidates
and the company uses in-house assessment, then assessors’ individual
relationships with candidates may affect the objectivity of their
evaluations. The AC’s exercises should also test critical skills for
managerial success in a multicultural environment (e.g. the candidate’s
flexibility or adaptability).

Cooperation with HR consultancies

Some MNCs are inclined to outsource their recruitment and selection to
HR consultancies, especially for managerial posts. A consultancy’s
success and past experience with recruitment and selection, and their
knowledge of the MNC, are essential factors in determining whether using
a consultancy is appropriate (Ballantyne & Povah, 2004). The decision to
use a specific HR consultancy also depends on how well it fares in terms
of credentials and positive references; track record; size and number of
employees; client base; national or international presence; and cost-
efficiency and time management (Schoye & Rasmussen, 1999). A
consultancy may also need to be located centrally for ease of access. Some
MNCs prefer to work with only one consultancy to reduce costs and
ensure the integrity of the selection process, while others prefer
consultancies that have specific experience with particular positions or
occupations or that have a strong portfolio in a particular region. In that
case, an MNC may choose a different consultancy depending on the type
of post or the region they are recruiting for at that moment.

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Specific issues in selection methods
It is possible to ease the international employee selection process in two
ways (Caligiuri & Tarique, 2006, cited in Caligiuri, Tarique & Jacobs,
2009). First, a company can provide a candidate with a realistic preview of
the post; for example, by arranging interviews with repatriates who
formerly occupied the same post. This may reduce the risk of the
employee completing their post prematurely. Second, applicants can use
self-selection tools to help them critically evaluate themselves, especially
regarding personality and individual characteristics and career and family
issues. Such tools may help create an applicant pool for potential future
international posts by considering applicants’ availability, technical
knowledge, skills and abilities, job and life experiences and preferences for
international positions. However, Caligiuri, Tarique and Jacobs (2009)
caution that self-assessment may be ineffective when there are few job
opportunities in the labour market, since applicants may overestimate their
competencies and preferences for working in other countries due to the
difficulty of finding jobs in their own countries.

Final selection decision and job offer

The selection process concludes with a final selection decision and job
offer to the successful applicant. HR managers may or may not make the
final decision personally, depending on the level and purpose of the
international post, and in any case they will be required to recommend the
best candidate for the job. The top management team or the CEO may then
make the final selection decision.
A candidate’s acceptance of the job offer depends on various factors but
mainly on the content of the offer, which is comprised of objective aspects
(e.g. pay, holidays, job title) and subjective aspects (e.g. person–
organisation and person–job fit). It has been argued that applicants from
masculine cultures (e.g. the United States, the United Kingdom) pay
more attention than others to objective factors such as salary and holiday
allowance when considering a job offer (Ma & Allen, 2009).

masculine culture A society in which ‘emotional gender roles are clearly distinct:
men are supposed to be assertive, tough, and focused on material
success; women are supposed to be more modest, tender, and
concerned with the quality of life’ (Hofstede & Hofstede, 2005:
402). A high score in the masculine dimension implies that the
society is driven by competition, achievement and success.
According to Hofstede (2001), Japan, Mexico, UK, Germany, the
United States and Australia are the most masculine societies.

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 Once the selected applicant accepts the employment offer, the company
must socialise the newcomer. This will to a large extent determine the
success of the international recruitment and selection in the last stage of
our four-stage model.

Stage 4: Evaluation of success in international

recruitment and selection
The fourth and final stage of international recruitment and selection is
evaluation of the success of the process. Here, we look at the main
indicators of successful selection and the actual costs for the headquarters,
subsidiary and international employee. Macro-level challenges at this stage
comprise a continuous exploration of contextual factors in the host
country, which affect international recruitment and selection. Meso-level
challenges relate to establishing a system of success evaluation and
improving organisational HR practices related with international selection
(e.g. a review of medical packages, socialisation programs or mentoring).
Micro-level challenges include the analysis of recruitment and selection
effectiveness for the individual employee (e.g. job satisfaction). These
challenges are related to an employee’s successful completion of the
international post. At the micro-level, selection was successful if the
employee completed their international post and adjusted to the new
culture (Bhaskar-Shrinivas et al., 2005; Bonache, Brewster & Suutari,
2007). The evaluation of success should also consider the employee’s
performance level, not merely whether they completed their post,
including how far they fulfilled or even overachieved against
organisational goals. A number of factors improve the performance of
international employees and diminish their intention to quit: adjustment to
the host country’s culture; certain personality traits; and the level of
support PCNs and their families receive from the MNCs and their
subsidiaries (Bhaskar-Shrinivas et al., 2005; Takeuchi, 2010). Next, we
discuss some of these indicators.

Indicators of selection and recruitment success

Family and couple adjustment
The ability of individuals, couples and children to adjust to a foreign
environment and new customs is one of the most critical aspects of
expatriate success (Hays, 1974). Among the work- and family-related

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factors that may influence employee performance levels are children’s
wellbeing, family satisfaction and the quality of family and marital life in
the new setting (Takeuchi, 2010).

Headquarters’ HR practices and policies

As Takeuchi (2010) points out, headquarters may have a comprehensive
HR strategy that facilitates the process of adjustment in terms of
international logistic assignation (e.g. providing housing support or spouse
relocation resources) and organisational support (e.g. mentoring, career
development support, training, availability of global mobility managers in-
house or externally, or other benefits).

The role of HCNs

HCNs can support PCNs in achieving their objectives to a greater extent
by developing better relationships with them (Bhaskar-Shrinivas et al.,
2005). In this sense, HCNs and PCNs may perceive higher supervisory
support and develop an effective leader–member relationship, regardless
of who is the supervisor and who is the subordinate; this may lead to
improved attitudes and behaviours from the perspectives of HCN
satisfaction with a supervisor (Shay & Baack, 2004) and good PCN
adjustment and job performance (Kraimer & Wayne, 2004). Some
subsidiaries also implement practices such as onsite mentoring of PCNs by
HCNs. Mezias and Scandura (2005) suggest that onsite mentoring ensures
the fulfilment of PCNs’ basic needs in the new country (e.g. getting advice
about supermarkets, restaurants, banks, government taxes) and helps them
adjust to their new work role (e.g. participation in company events,
becoming aware of informal procedures in the subsidiary).

Individual factors
A smooth cross-cultural adjustment process corresponds to individual
satisfaction with work and non-work aspects of the relocation; a
commitment to the organisation; reduced intention to return early; and
more effective performance (Takeuchi, 2010). Other factors also influence
a person’s level of adjustment, including their ability with languages;
educational attainment level; multicultural experience; interpersonal skills;
sociability and extraversion; flexibility; self-efficacy; cultural intelligence;
openness to experience and new learning; and resilience to stress and
tolerance of uncertainty (Caligiuri, Tarique & Jacobs, 2009; Bonache et
al., 2007).

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Costs of failure in recruitment and selection
There is an economic cost to headquarters when an appointed international
employee’s relocation fails. PCNs are the key to knowledge transfer in
areas such as product design, distribution, know how, skills and innovative
customer service (Subramaniam & Venkatraman, 2001). Failure in the
selection process diminishes the benefits and networks of the headquarters
and weakens the subsidiary–headquarters relationship.
For the host-country organisation, the failure of an international
employee may decrease productivity, profitability and sales growth, and
may even influence customer satisfaction and market penetration; the
extent of its impact on these outputs depends on the person’s competencies
in the position and on his or her job status. Last, it may have negative
effects on the employee who has failed, in terms of reduced self-efficacy
and self-esteem and increased work–family conflict (Takeuchi, 2010).

Conclusion
A range of factors drive recruitment and selection practices in the
international context, including cultural differences between parent and
host countries and varying linguistic and legislative contexts. MNCs can
target different types of international employee in their recruitment and
selection efforts, ranging from PCNs, HCNs and TCNs to more recently
developed categories such as flexpatriates and short-term assignees. In this
chapter, we proposed and explained our four-stage model, which
encapsulates the process of international recruitment and selection as
follows:

Stage 1 – MNCs should recruit and select HR managers in the

headquarters to design international recruitment and selection for
subsidiaries, including conducting a thorough job analysis.
Stage 2 – A recruitment strategy to attract the best talent to the
applicant pool is designed and conducted.
Stage 3 – The selection of the best candidate to fill the available
international post is conducted, considering the criteria that will
determine the success of the applicant in the post.
Stage 4 – The evaluation of the success of implemented recruitment
and selection practices is conducted, including indicators such as
cultural adjustment and the quality of PCN–HCN relationships.

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The costs of getting recruitment and selection wrong can be very high for
both the MNC and the appointed employee. As international posts and the
need for global employees will only grow in future, MNCs should
prioritise ensuring the success of the international recruitment and
selection process.

Take-home messages
HR managers should conduct an in-depth job analysis when planning
recruitment and selection in the international context, to determine
what category of international employee to target (e.g. PCN, TCN,
HCN, short-term assignee) and what competencies he or she will
need to perform well in the post.
HR professionals who have extensive knowledge of both
headquarters (e.g. organisational culture) and host-country culture
and regulations (e.g. employment legislation) should manage the
recruitment and selection of international employees.
HR managers selecting for international posts should consider the
different competencies and social and personal skills that facilitate an
individual’s adjustment to the host country.
MNCs should develop programs and practices that help international
employees and their families adapt to new cultural environments (e.g.
socialisation programs, mentoring by an HCN, relocation
allowances).
Poor selection and recruitment for international posts may lead to
significant financial losses and the failure of an MNC’s strategic
goals (e.g. through reduced productivity or lost business deals).

Closing the learning loop

1. What are the key features of international recruitment and
selection?
2. What are the main advantages and disadvantages of different
categories of international employees?
3. Explain the four-stage process model of international recruitment
and selection.
4. Discuss selection criteria that may determine employee success in
an international post.
5. How can we best evaluate the success of international recruitment

126
 and selection?
6. Critically assess the consequences of getting international
recruitment and selection wrong.

Case study 4.1 Mercator Group

Mercator Group (www.mercator.si) is a Slovenian corporate group and
one of the largest retail chains in Southeastern Europe. It focuses on fast-
moving consumer goods, home products and technical devices. Its retail
network includes shopping malls, hypermarkets, supermarkets and
convenience stores operating in Slovenia and eight other European
markets: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo,
Macedonia, Montenegro and Serbia. It also owns several distinguished
private labels. Mercator Group’s international scope is embedded in the
following fundamental strategic goals (Mercator Group, 2011):

1. Strategic goals in the domestic market (Slovenia):

• To retain the position of the leading fast-moving consumer
goods retailer.
• To consolidate the position of the second-largest retailer of
home products.
• To develop supplementary trade services related to their
customer loyalty system.
2. Strategic goals in existing foreign markets (Serbia, Croatia, Bosnia
and Herzegovina, Montenegro):
• To consolidate or attain the position of the second-largest
fast-moving consumer goods retailer.
• To rank among the top three retailers of home products.
• To develop supplementary trade services related to their
customer loyalty system.
3. Strategic goals in new foreign markets (Bulgaria, Albania,
Macedonia, Kosovo):
• To rank among the top five retailers of fast-moving
consumer goods.

Today, Mercator Group employs more than 24 000 people. Its IHRM
strategy has developed in accordance with the company’s international

127
development. In the early phases of internationalisation, there were only
few international posts. The first subsidiaries were established in Croatia,
Serbia and Bosnia and Herzegovina between 1998 and 2003. In the
beginning, the subsidiaries were small, each one starting with a single
shopping mall and usually staffed with two international posts: one role to
supervise marketing, category management and operations and the other to
manage finances, investments and HRM. The headquarters in Slovenia
recruited and selected international assignees from an internal talent pool,
rarely from the external labour market. The HRM department at
headquarters also played a significant role in the recruitment and selection
of local employees in subsidiaries, including a management team and shop
attendants.
As Mercator Group’s international operations grew, its approach to
international recruitment and selection gradually changed. Subsidiaries
established their own HR departments and now handle recruitment and
selection locally. The HR department in the headquarters only becomes
involved in selection for key management positions. The number of
international posts expanded and is no longer limited to internal talent
from headquarters. International assignees are selected from the
company’s entire talent pool. The HR department at headquarters still
selects them, but local HR departments perform the recruitment and pre-
selection. Thus, local HR departments play a key role in the recruitment
and selection of local employees, as well as in international recruitment
and selection.

128
Figure 4.2 Number of employees in Mercator Group (adapted from
www.mercator.si)

Case study questions

1. In what ways does Mercator Group’s current international HRM
strategy emphasise local integration in its subsidiaries?
2. What was the company’s philosophy on international recruitment and
selection in the early phases of its internationalisation, and how has it
changed?
3. A geocentric approach to international recruitment and selection may
have advantages and disadvantages for Mercator Group. Which approach
would you recommend, and why?

Activities
Conducting an international interview
Break into small groups. Imagine that Mercator Group is seeking to fill
the position of board member for a subsidiary in Bulgaria. Review the
description of the role below. Next, consider the profile of Ivan
Vasiljev, a potential candidate for this position. How would you
conduct an interview with this candidate? Develop a set of suitable
questions.

129
Board member responsibilities
Supervises marketing, category management and operations
departments. Works closely with departments’ head, provides
strategic guidelines and leadership.
Implements and local adapts policies for marketing, category
management and operations from headquarter.
Leads business development and growth in Bulgaria.
Actively participates in annual evaluation and planning activities.
Establishes both short and long-term business goals.
Works closely with departments in the headquarters in order to
ensure suitable management for different projects.
Works closely with other Mercator Group’s markets.
Visits headquarters in Slovenia and other markets in which
Mercator operates.
Regularly attends board meetings.

Candidate profile
Ivan Vasiljev, 37, has an MBA from the Faculty of Economics at the
University of Ljubljana, Slovenia, and 12 years of professional
experience. He started out with a Slovenian retail company, where he
worked as a merchandiser before progressing to category manager and
non-food category director. He then spent two years as a country
manager in Slovenia for an MNC that supplied non-food products to all
significant retail companies in Slovenia. For the past six years, he has
been a sales director for another MNC, and has completed two
international assignments: four years in Hong Kong and a further four
years in Singapore. In his current role, he has responsibility for
business development in the fast-moving consumer goods sector.
Today, Ivan is married and has two daughters. His hobbies are golf,
skiing and tennis. He is fluent in English and Croatian and knows basic
Chinese.
Developing a recruitment plan
Break into small groups. Imagine that Mercator Group wishes to enter
the Romanian market and plans to open a shopping mall in its capital
city, Bucharest. The company has a strong employer brand in all its
existing markets, but not yet in Romania. You are working in Mercator
Group’s HR department and must prepare the recruitment plan for the
new shopping mall, including profile descriptions for several roles that
you will recruit in two stages, as follows.
Stage 1
Local director of Romanian subsidiary
Category manager (three positions)

130
 Accountant (two positions)
Marketing manager
Information technology associate
Secretary

Stage 2
Shopping mall head
Line manager (six positions)
Sales team members (75 positions)

How would you approach recruitment in this scenario? Discuss and

develop an action plan in your group. Remember to support your plans
with strong arguments.

Online resources
For instructors: answers to activities; long media article with
questions; additional questions and answers.
For students: further reading; answers to case study; IHRM in
practice.

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137
5 Cross-cultural training and development for
overseas assignments
Aykut Berber, Yasin Rofcanin and Yitzhak Fried

Learning objectives
To emphasise the prevalence of international assignments in today’s
integrated business settings.
To explain and evaluate cross-cultural training programs for
international assignees, emphasising differences between expatriates
and inpatriates.
To acknowledge that successful overseas assignment and relocation
require the joint efforts of both international human resource
managers and the focal employee assigned to the new destination.

Learning outcomes
After reading this chapter, students will be able to:

understand and evaluate cross-cultural training programs designed for

international assignees
understand and appreciate training tools, learning mechanisms and
socialisation programs to manage and minimise culture shock
comprehend that the success of long-term international assignees is
heavily influenced by the joint efforts of international human resource
managers and the relocated employee
appreciate the need to develop individualised and cross-culturally
appropriate training programs for overseas assignees before, during
and after their arrival in a host country.

Introduction
Effective management of international assignees (Reiche, 2011) in the
global business setting is one of the most challenging tasks for
international HR managers. Integrated, fierce and innovation-driven

138
markets characterise today’s business environment (Moeller, Harvey &
Williams, 2010); international assignees are key actors who share
knowledge in multinational companies (MNCs) and who act as boundary
spanners in a range of MNC units (Reiche, Harzing & Kraimer, 2009).
Combining the perplexity of managing international assignees with the
rising predominance of MNCs across the globe (Van der Heijden, van
Engen & Paauwe, 2009), IHR managers need to plan training and
development of international assignees for a global context – hence cross-
cultural training and development programs (Mezias & Scandura, 2005).
However, employees who are assigned international responsibilities should
also adopt a global mindset, as it is the joint responsibility of IHR
managers and focal employees to share mutual benefits in the global
training and development context (Lazarova & Caligiuri, 2001). In this
chapter, our main aim is to evaluate, understand and present key concepts,
tools and processes used in cross-cultural training and development
programs across international work settings.

cross-cultural training Training designed for international assignees to help them adapt
to, and integrate with, the host country’s business setting and
social context. Such programs are sequential and take place
before, during and after the arrival of the assigned employee in the
host country.

Appropriate selection and cross-cultural training of international

assignees are critical because of the direct and indirect costs to companies
in cases of failure (Hocking, Brown & Harzing, 2007). Direct costs include
the expense of relocating and returning the assignee, compensation
packages and return-related administrative costs. Indirect costs include
potential relational damages with employees, customers, suppliers and the
organisational community. Hence, IHR managers should identify and
select employees who are likely to perform effectively in new cultural
contexts; who have a learning orientation; who have flexible and global
mindsets; and who are very culturally intelligent (Harvey et al., 2005). In
other words, the selection criteria of IHR managers should go beyond the
assignee’s technical knowledge to focus on aspects related to his or her
adaptability and potential for learning in different cultural settings, as
evidenced in research (Harvey, Ralston & Napier, 2000) and current
practice. A survey conducted with 60 managers from 13 countries
confirmed that adaptability was seen as the most central criteria for the
success of international assignees (Moeller, Harvey & Williams, 2010).
Another study revealed that assessment centres (ACs) may be used to

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identify potential employees who could be assigned international duties
(Moeller, Harvey & Williams, 2010).

Overseas assignments: expatriates and

inpatriates
Employees are assigned to overseas positions in many ways (Moeller,
Harvey & Williams, 2010). Expatriation and inpatriation (Peterson, 2003;
Reiche, Harzing & Kraimer, 2009) are the two typical forms of
international assignment (see chapter 3), and both refer to managerial-level
employees working overseas on permanent or semi-permanent bases. In a
similar vein, both expatriates (known as ‘expats’) and inpatriates (known
as ‘inpats’) experience and encounter issues when they undergo culture
shock, cultural adaptation and integration processes in their new cultural
context (Reiche, 2011). However, expatriates and inpatriates are different:
the former is a parent-country national (PCN) assigned overseas for duties
in a foreign subsidiary (Feldman & Thomas, 1992), and the latter is a host-
country national (HCN), usually a subsidiary manager in the host country,
relocated to headquarters for a specified period of time (Harvey, 1997).
Third-country nationals (TCNs) are also sometimes relocated in
managerial roles, being a citizen neither of the country where the
headquarters are located nor of the destination to which they are assigned.
Overall, the most distinctive and significant difference between
expatriation and inpatriation is that inpatriation defines the overseas
relocation process in which HCNs from the foreign subsidiaries are
assigned to headquarters, whereas expatriated PCNs are assigned from the
headquarters to a subsidiary. Table 5.1 summarises the essential
differences between inpatriates and expatriates.

expatriates International assignees who are usually from more developed parts
of the world and who are PCNs. They share similar cultural and
educational backgrounds with employees at headquarters.

inpatriates International assignees who are usually from the less developed
regions of the world and who are HCNs. They share more diverse
cultural and educational backgrounds with employees at
headquarters.

culture shock The sense of shock employees encounter in an unfamiliar context,

such as a new country or company, mainly due to lack of sufficient
experience with, or knowledge and information about, the host
country.

cultural adaptation The final stage of the adaptation process for an assigned employee,

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 in which they adapt to, and reflect, culturally consistent behaviours
in their new business and country setting.

Table 5.1 Differences between expatriates and inpatriates

Expatriates Inpatriates

Assigned from Relocated to headquarters from

headquarters to foreign local subsidiaries, and so, generally
subsidiaries, and so, considered HCNs.
generally considered
PCNs.

Receive attractive Do not necessarily receive

compensation package attractive compensation package
and a better status and status; this depends on the
compared to their importance of the subsidiary from
previous positions. which they have come.

Do not generally face Face cultural adjustment challenges

corporate culture shock both concerning the corporate and
due to their familiarity country cultures.
with the headquarters’
corporate culture.

Constantly coordinate Integrated into the HQ management

with the headquarters team only temporarily.
team.

Usually come from Usually come from developing

developed economies. economies, mainly due to cheap
labour and production costs in such
countries.

May be dual-career Generally not dual-career couples,

couples. since working spouses are still not
common in inpatriates’ home
countries.

More diverse range of Less diverse range of business

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 business education and education and professional
professional experiences. experiences.

Reflect a dominant Reflect a dominant polycentric

ethnocentric orientation orientation in the MNC.
in the MNC.

The differences between inpatriates and expatriates are critical for

international assignees considering their socialisation, international
training and development needs (Hocking, Brown & Harzing, 2007). IHR
managers should develop training and development programs that will
meet the unique needs of inpatriates and expatriates. Additionally, IHR
managers should emphasise aspects such as the free choice of accepting
the new responsibility, security of repatriation and the provision of
individualised and attractive compensation packages in the new cultural
context (Mezias & Scandura, 2005). However, the assigned employee
should also make every effort to adapt to their new context. The support
and efforts of the home-country managers (IHR managers and the
immediate supervisors and colleagues of the assigned employee) and the
individualised efforts, mindsets, behaviours and attitudes of the employee
concerning the new cultural context jointly shape the international
assignee’s successful performance.
Accordingly, it is a key strategic imperative for international HR
managers to assign the right people to appropriate jobs in a global context.
At one time, research (e.g. Bhawuk & Brislin, 1992; Adelman, 1988) and
practice focused solely on the technical abilities of employees who were
relocated for international positions. However, as Earley and Ang (2003)
argued more recently, when employees are relocated they should
acknowledge cultural differences and adapt their behaviours according to
the norms, values and general culture of their new position and the host
country. Bhawuk and Brislin (1992) also emphasised that the newly
relocated employee should show sensitivity to, and understanding of, the
different context they are encountering (Harvey, Novicevic & Speier,
1999). In this respect, IHR managers should encourage and select
employees who have a global mindset, who show appreciation of new and
distinct cultures and who make some effort to adapt their behaviour to the
new norms and societal expectations of both the national and corporate
culture.

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 IHR managers share responsibility for the assigned employee’s full
integration before, during and after arrival in the host country. Therefore,
IHR managers should encourage the assignee and offer cross-cultural
socialisation, training and development opportunities that address more
than the assignee’s technical abilities. Moreover, cross-cultural training
and development programs should also integrate the parents, spouses and
partners of the relocated employee, as appropriate.

cross-cultural The adaptation process through which international assignees

socialisation familiarise themselves with company cultural contexts and the
norms, behaviours and expectations of the host country.

The socialisation process for overseas assignments

The full integration process of overseas assignees starts with their
socialisation. Socialisation helps to ensure the assignee’s correct
knowledge and experience about the host country or company cultures.
Recent research (e.g. Moeller, Harvey & Williams, 2010; Reiche, 2011)
and practice emphasise that socialisation should be modified to meet the
different needs of expatriates and inpatriates. First, inpatriates often come
from developing economies around the world and HCNs may not give
them the same level of respect and credibility as their expatriate peers
(Reiche, 2011). The socialisation process for inpatriates should underline
the linking and bridging roles of the inpatriate between the home and host-
country contexts. Second, inpatriates face greater country and company-
specific challenges than expatriates do (Harvey et al., 2005). For this
reason, the inpatriate socialisation process should include elaborative
processes to ensure the assignee’s successful integration with country and
company contexts. Third, as Reiche (2006) has argued, inpatriates come
from different cultural backgrounds than that of the host organisation,
while expatriates usually share common cultural habits and backgrounds
with their new organisational and country context. Therefore, socialisation
steps should initiate a greater integration and appreciation of the more
diverse cultural and educational backgrounds of inpatriates.

Cross-cultural training and development

With the rapid pace of internationalisation, more companies have explored
opportunities to expand businesses in emerging economies (e.g. China,
India, Mexico, Brazil, Turkey and many of the South/Southeast Asian and

143
Eastern European regions). For instance, a study by Colakoglu and
Caligiuri (2008) revealed that around 850 000 subsidiaries of MNCs
operate around the globe, and these operations are mostly clustered around
the late-developing markets. Therefore, international assignee positions
have become prevalent ways for MNCs to utilise managers with global
mindsets. Previous research showed that around 150 000 employees from
the United States were sent to overseas assignments. In same way, a recent
relocation survey (Moeller, Harvey & Williams, 2010) revealed that the
number of international assignee positions is expected to rise, as the
success of companies in global competition is highly dependent on a
competent and experienced workforce.
The central goal of cross-cultural training programs is to equip
employees with appropriate forms of behaviours in their new cultural
settings and work environments (Mezias & Scandura, 2005). However, we
argue that the international assignment is a process that encompasses
different stages of adaptability and performance. Scholars and practitioners
generally agree (Moeller, Harvey & Williams, 2010; Reiche, 2011) that
international assignees go through two main stages that as they settle to
their new responsibilities. These include pre-departure preparations and
post-arrival (early-arrival and late-arrival) experiences.
Relatedly, Selmer (1998) identified four distinct and sequential phases
of international assignees’ adjustment process. First, they show
ethnocentric attitudes; second, they experience culture shock; third, they
develop conformist behaviours; and fourth, they become culturally
adjusted. Selmer (1998) argued that international assignees need to be
trained at various stages of the assignment, to fit different social contexts
more closely and to perform effectively. Similarly, as the learning
capability, needs and receptivity of employees differ in each of the four
adjustment stages, the timing and content of the cross-cultural training
should fit with the assignee’s phase at a given time. The successful
management of this continuum determines the success or failure of
international assignees. Below, we discuss cross-cultural training with
respect to the four phases of cross-cultural adaptation (Selmer, 1998) and
with emphasis on the pre-arrival and post-arrival experiences of
international assignees.
In the pre-departure period, international assignees are reluctant to
develop in-depth understanding of the particular cultural context, mainly
because the new context is not salient to them at that moment. Assignees
experience only trivial cultural differences that do not necessarily require
cognitive and behavioural readjustment (Mendenhall, Dunbar & Oddou,

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1987). Employees in this stage lack a sufficient frame of reference about
the host culture and do not have enough experience or knowledge to
determine what constitutes a culturally significant issue in that country
(Reiche, Harzing & Kraimer, 2009). More specifically, inpatriates lack
information and experience about the country and company cultural
contexts where they will be relocated. As expatriates are already familiar
with the corporate culture of headquarters, they tend to encounter
challenges mostly during adaptation to the country context. For this
reason, pre-departure training programs for inpatriates should include
specific information about country and corporate culture.
Regardless of the form of international assignment, pre-departure
training and development programs should predominantly focus on two
key areas: enhancing cultural awareness and decreasing the level of
ethnocentrism (Mezias & Scandura, 2005). While the number of pre-
departure training programs has increased especially over the past 20
years, there are still not enough comprehensive cross-cultural training
programs designed for employees and their families (Moeller, Harvey &
Williams, 2010). Cross-cultural training programs should go beyond
simply offering basic culture orientation, language training and some
environmental briefings. IHR managers should emphasise cross-cultural
training that raises awareness of the local norms, values, ways of behaving
and other appropriate cultural codes.
As international assignees are exposed to comprehensive cross-cultural
training activities, they usually adapt to their new business settings easily
and will eventually modify their behaviours in accordance with the ways
of living and doing business in their new environment (Peterson, 2003).
The international assignee is likely to achieve full adaptation when he or
she starts viewing the world from the lens of the host-country context.
Successful pre-departure training and development programs include
cross-cultural adaptation and social processes not only for the international
assignee but also for his or her spouse and parents (Van der Heijden, van
Engen & Paauwe, 2009). Examples of activities undertaken during this
process encompass training in dealing with the new environment;
managing stress; understanding and adapting to new behavioural norms;
developing relationships, non-verbal and verbal communication skills for
use in the new culture; and practising non-judgement about others in the
new environment (Adelman, 1988). In this regard, pre-departure training
and development activities are usually aimed at developing the individual
and others, and modifying perceptions the international assignee and the
parents or spouse may have of the new cultural context (Bhagat et al.,

145
2002). Previous research (Reiche, 2006; Reiche, Harzing & Kraimer,
2009) revealed that culture-contrast learning (a learning approach that
emphasises the cross-cultural similarities and differences), and fact-
oriented training are among the most effective cross-cultural training tools
for expediting the daily transition of assignees at work and at home.
Therefore, the international assignee is exposed to initial knowledge about
the host country, and develops understanding and acknowledges cultural
awareness about ways of working and living in their new environment.
Once the employee is assigned to the new position (usually defined as
the early-arrival stage), he or she will start viewing the new environment
with idiosyncratic perspectives and implicit assumptions (Harvey, 1997).
During the early periods of arrival in a host country, the newly assigned
employee retains his or her home country–driven confidence and
ethnocentrism (Carraher, Sullivan & Crocitto, 2008); therefore, he or she
applies new behaviours only gradually. This stage is marked by culture
shock, in which the assignee is still unfamiliar with the new norms, rules,
behaviours, and overall cultural expectations of their new environment
(Bonache, Brewster & Suutari, 2001). International assignees are exposed
to many different experiences and impressions that require cognitive
reframing. In other words, as the assignee receives different cognitive
elements from the host environment, he or she experiences cognitive
inconsistency and therefore tries to reframe the new cultural context in his
or her mindset (Bhaskar-Shrinivas et al., 2005). In more specific terms,
inpatriates experience culture shock as they adapt to company and country
cultural contexts. They face challenges and make extra effort to reframe
their cognitive mindsets given the unfamiliarity of the country and
company cultures. On the contrary, a new expatriate’s culture shock is
most likely limited to the new country context.
Therefore, training during the period of culture shock needs to respond
to the different degrees of familiarity and integration inpatriates and
expatriates may have with their new surroundings. Training conducted
during the culture shock phase should reduce the uncertainty related to
cross-cultural expectations and facilitate cognitive reframing of
international assignees. At the end of this stage, the assignee will generally
have developed a flexible mindset, in which he or she can appreciate
behaviours specific to the host country and develop norms consistent with
its prevalent cultural context. Training modules for this stage should
include practical information about ways of living and working in, and
determining the expectations of, the host culture. The experiential learning
approach, including simulations, role-plays and situational exercises, is a

146
highly appropriate tool in the host-culture context. Overall, international
assignees experience simultaneous uncertainty and cognitive ambiguity,
which is why cross-cultural training tends to be most effective during this
phase. The overarching goal is to make sure that the assignee manages his
or her culture shock.
The latter stages of an assignee’s arrival phase are usually composed of
conformist and cross-cultural adjustment stages. During these stages, the
international assignee accommodates the norms and expectations of the
host culture (Moeller, Harvey & Williams, 2010) but is not fully confident
about behaving in ways that are different to behaviours in the home
country. Therefore, training in this phase should help assignees to learn by
doing as people do in the host country. In this way, assignees engage in an
interactional mode of learning and develop culturally sensitive skills
necessary to adapt to their work and home lives. Research suggests that
during the conformist stage, international assignees interact with trainees,
HCNs and/or experienced expatriates. These structured and unstructured
interactions enable assignees to incorporate and develop cross-cultural
competencies.
During the cross-cultural adjustment phase, the international assignee is
expected to develop an integrative and flexible understanding of the host-
country context. Local values, norms, expectations and behaviours are
accepted in an open-minded manner and the learning experience triggers
new ways of thinking in an unfamiliar cultural context. In cross-cultural
training, the international assignee can expand his or her portfolio of
attitudes and behaviours to fit new contexts, which will also be relevant
during repatriation.
In addition to cross-cultural training programs, IHR managers should
develop and implement individualised cross-cultural development
programs, which will help them to keep and utilise the skills of
international assignees (Briscoe, Schuler & Ibraiz, T., 2012). IHR
managers and the assigned employees should keep in mind that
development is a long-term process, aimed at creating a cadre of global
executives who possess global mindsets (Schuler & Briscoe, 2004). In a
successful international assignment, the employee adapts to the host-
country context through appropriate training programs, and repatriates
when he or she has completed the assignment. In this respect, cross-
cultural training and development programs should be directed towards
keeping and utilising the talented international assignees in the long run,
after repatriation. In this way, the IHR manager can avoid the indirect and
direct costs of failure in international assignments (Schuler & Briscoe,

147
2004).

Conclusion
In this chapter, our central aim was to define, discuss, exemplify and offer
practical guidelines on key concepts in cross-cultural training, including
socialisation, adjustment processes and culture shock. To fulfil this goal,
we first discussed and differentiated between inpatriates and expatriates,
the two most commonly observed groups in overseas assignments. We
then discussed cross-cultural socialisation and training designed for
international assignees and examined issues involved in cross-cultural
training pre-arrival and post-arrival employees.
Throughout, we emphasised that the frequency and success of cross-
cultural training programs are heavily influenced by the support of the
headquarters; the provision of appropriate learning materials and training
tools by international HR managers; the resources available in the
headquarters; the learning abilities and learning styles of the focal
employees; and the joint input of international HR managers and overseas
assigned employees in maintaining a successful assignment and relocation
process. Therefore, assigned employees and international HR managers
can be said to share responsibility for managing global careers in new
cultural contexts.

Take-home messages
International assignments are increasingly seen in today’s integrated
markets, particularly given the fast pace of globalisation and more
dynamic work settings.
Expatriation is not the only method for sending employees overseas;
organisations also commonly use inpatriation and self-initiated
expatriation, as recent scholarship has noted. MNCs use international
assignees extensively to fill overseas positions.
Despite their similarities, expatriate and inpatriate employees are
different in terms of their cultural and educational backgrounds; their
positions and compensation packages in the host country; their
reasons for overseas assignment; and their need for cross-cultural
training and development.
Training, development and adaptation needs differ among expatriates,
inpatriates and self-initiated expatriates, most importantly support
with issues around culture shock and the integration process. It is

148
 imperative for international HR managers to develop and implement
cross-cultural socialisation, training and development programs to
meet these different needs, and to offer repatriation programs for
returning employees.
International HR managers should design individualised training and
development programs to ensure that overseas assignees are able to
adapt to their new context; reduce their ethnocentric orientations; and
fully integrate with their new country and company settings.
The assigned employee should adopt a flexible and global mindset;
reduce his or her ethnocentric viewpoints regarding the company and
cultural context; and adapt his or her behaviours to respect local
norms, expectations and behaviours.
It is the shared responsibility of international HR managers and
assigned employees to maintain successful overseas assignment and
repatriation; their joint efforts lead to successful overseas assignments
and relocations, in which cultural adaptation is achieved and
relocation is secured.

Closing the learning loop

1. Critically discuss the following statement: ‘Expatriates adapt to
their host country’s culture better and faster than inpatriates do.’
2. What challenges may be involved in the socialisation process for
expatriates and inpatriates? How should international HR
managers manage these challenges?
3. Identify two differences between inpatriates and expatriates, and
discuss how cross-cultural training can be adapted to meet each
group’s needs.
4. What is the employee’s role in the cross-cultural socialisation and
training process, compared to the manager and HR department’s
role?

Case study 5.1 A career in textile design

Nour was born in Cairo, Egypt, where her Jordanian father was working as
an engineer in a British construction company when he met Nour’s
mother, Julia. Nour was raised in Liverpool and rarely left the United
Kingdom, except for a few occasional visits to her grandparents in
Jordan’s capital city, Amman. She always had a passion for textile goods
and studied the subject at the University of Birmingham. She was then

149
accepted on a master’s degree program to study the use of furnishing
textiles in Switzerland and Japan. Her years spent in these two different
cultures were fruitful: she attended various aesthetics courses and
improved her skills in design workshops; she learnt to speak French and
Japanese; and she developed relationships with several local designers in
both countries. Nour decided to get an MBA degree and lived in California
and Hawaii for a year, where she had the chance to work with two
different fabric and furnishing manufacturers that shared Nour’s passion
for Pacific and Japanese cultures.
Returning to the UK, Nour successfully applied for a position with City
& M, an international fabric design company. Established in 1956 and
originally English-owned, City & M went international in 1985,
maintaining its London headquarters but extending to more than 30
countries. The company now has branch offices in Buenos Aires, Doha,
Delhi, Frankfurt, Istanbul, Kyoto, Los Angeles, Milan and Shanghai. Nour
felt lucky to work in a company with such an extensive international
network. She started working on design projects, focusing on reviving
traditional designs for Swiss-style kitchen furniture by using concepts
from Japanese design.
The City & M managers repeatedly assigned Nour to duties that
involved Middle Eastern countries, despite her specific interest in Swiss
and Japanese styles of art and design elements. She travelled to many
countries in the Middle East and was responsible for designing fabric
products manufactured for customers in these markets. Yet her real
passion was in designing for European and Japanese markets. One day,
when Nour’s manager asked her to visit a customer in Doha, she said no
and suddenly quit her job, saying that she would like to pursue her own
career goals.
Case study questions
1. In this chapter, you read about issues and challenges faced in career
development. Discuss the career challenges Nour faced in light of recent
trends and her background as described in the case study.
2. What could Nour’s employer have done to attempt to retain her in the
company? In your response, consider cross-cultural development and
training.
3. Evaluate Nour’s career development path from the company and
Nour’s perspectives.
4. Do you think that Nour was right to quit her job? Why or why not?

150
Activity
Role-play
Overview
Break into groups of five. In each group, two students assume the roles
of international HR managers of a MNC, one of whom is responsible
for recruitment and the other for training and development. Three
students assume the roles of employees who are applying for an
international assignment.
Objective
The objective of this role-play scenario is to emphasise the importance
of selecting the right employee for an overseas position and engaging
in providing continuous cross-cultural training and development
program for the focal employee.
Directions
Building on the background information provided below, the role-play
will show three interviews, after which one manager will select the best
employee for the overseas position and the other will design a training
and development program for the chosen employee.

First, read the background information about the company, the

position and the three candidates.
Second, role-play separate interviews between the recruitment
manager and each of the candidates.
Third, role-play a meeting between the two HR managers, at
which the recruitment manager explains whom he or she has
selected, and the training and development manager suggests an
appropriate support program for the selected candidate.

Background
Company information: The role-play characters work for a company
called Speedy, a leading MNC in the fast-moving consumer goods
(FMCG) sector. The company has been in operation for 17 years, and
manages operations across 14 different countries. The company is
headquartered in North America and all five employees are employed
at headquarters. The organisational structure of Speedy is based around
product categories, each of which has client relations, sales and
operations divisions. The company outsources its finance and
accounting functions. Due to stiff competition and dynamic nature of
the FMCG sector, employees work long hours and frequently travel
abroad. Despite these work-related challenges, roles in FMCG in
general and client relations in particular receive a high number of

151
competent applications from MBA-qualified and other graduate
candidates.
Position description: The vacant position is a client account manager
position based in Romania. The account manager will constantly
interact with clients and is required to manage long-term relationships.
Therefore, the job demands cultural adaptability and communication
skills in the host-country context.
Employee 1 (Eli): Eli has been with Speedy for two years. Before
joining the company, he worked for McKinsey & Company in the
business development department for emerging economies. Currently,
he oversees the client relations on the west coast of the United States
and in China. His main goal is to increase the number of clients in each
region and try to generate as much revenue as possible, to enhance the
profitability of Speedy in these areas. He is also responsible for client
interactions – that is, the quality of communication with the clients. He
holds a bachelor degree from the University of Michigan and
immediately entered the MBA program at Boston University. During
his studies, he stayed in Singapore for four months, where he studied at
the Singapore Management University.
Employee 2 (Rohanna): Rohanna has worked at Speedy for seven
years. She worked in the finance department for two years before
transferring to the sales division, in which has been the sales manager
of the Europe, Middle East and Africa (EMEA) region for five years.
Previously, she worked in a wide variety of sectors: she held finance-
related responsibilities at a position with the World Bank and sales
responsibilities in her other jobs, including the energy and cosmetics
industries. She has a bachelor degree from Catholic Leuven University
and an MBA from Rutgers University, where she received a full
scholarship. She has travelled extensively in Europe as part of her
current job.
Employee 3 (Tarique): Tarique has recently been hired in, and
promoted, from Speedy’s management trainee program. He has been in
the company for two years and is working in his first role after
graduating with a degree in industrial engineering from the Middle
East Technical University, where he came top of his class. In Speedy’s
management trainee program, he has worked in a range of departments,
including finance, marketing and sales. He is the youngest of the three
candidates and has relatively limited work experience.
Discussion questions
1. From the perspective of the recruitment HR manager, which of
the candidates would you select for the vacant position and
why? Discuss the strengths and weaknesses of each candidate

152
 in turn.
2. From the perspective of the training and development HR
manager, describe the cross-cultural training and development
program you would prepare for each of the candidates. Outline
the challenges you would address during these programs.
3. From the perspective of the training and development manager,
if the selected employee showed unsatisfactory performance on
the job, what steps would you take?

Online resources
For instructors: answers to activities: long media article with
questions.
For students: further reading; answers to case study; IHRM in
practice.

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 6 International reward
Glenville Jenkins

Learning objectives
To provide a concise introduction to international reward
management.
To appraise the key concepts that inform international reward
management.
To illustrate the design architecture of reward systems at macro-,
meso- and micro-levels.
To identify the key strategic international reward issues in
multinational companies.
To explain how reward policies and practices are employed to
motivate employees on international assignments.

Learning outcomes
After reading this chapter, students will be able to:

understand the nature of international rewards

critically evaluate the architecture of international reward systems at
macro-, meso- and micro-levels
compare and contrast the main approaches to reward management in
multinational companies
comprehend the complexity and diversity of rewarding international
assignees.

Introduction
Sparrow (2006) argues that multinational companies (MNCs) require a
specific HRM architecture to operate successfully in an international
context. In terms of reward management, the foundations of this
architecture are built around designing the reward system to reward
employees for their knowledge, skills and aptitudes.

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 Economic and social factors strongly influence the design of reward
systems as does the frame of reference of international managers. In recent
years, the ‘new pay’ agenda (Heery, 2000; Lewis, 2000), in line with a
neo-liberal, free enterprise ideology, has strongly influenced managerial
perceptions about rewarding people, with its emphasis on ‘individual
market value, flexibility and performance’ (Corby, Palmer & Lindop,
2009: 7). Central to this approach is the idea that reward systems should be
designed strategically to reward results and behaviour that are consistent
with the goals of the organisation (Schuster & Zingheim, 1992). The
suggested means for doing this is variable pay, where pay is tied closely
to individual or team behaviour or to the achievement of organisational
goals. Lawler (1995), one of the central architects of the ‘new pay’
approach, stressed that ‘new pay’ was not a prescription to success, but a
way of thinking about reward design to make the organisation more
effective. He argued: ‘It is entirely possible to design a reward system that
motivates people to work and satisfies them while at the same time
contributing to organizational effectiveness’ (see also Lawler, 1995:178;
Armstrong & Murlis, 2007: 5).

variable pay Pay contingent on performance, contribution, competence or skill

of individual, team or organisation.

Still, the traditional goals of reward systems to motivate, recruit and

retain employees have not gone away, although the means by which these
goals are achieved are highly contested. Traditionally, rewards have been
classified into pay and non-pay benefits, the former including wages and
salaries and the latter comprising health insurance, pensions and holidays.
The scope of rewards was later widened and classified into extrinsic and
intrinsic rewards. Extrinsic rewards are pay and benefits (see below) that
meet employees’ basic need for security and recognition. Extrinsic
motivation, satisfaction and commitment may stem from these
instrumental rewards, but these tend to be short-lived rewards; financial
gain, not satisfaction derived from work, is what motivates employees.
Intrinsic rewards are the psychological benefits derived from well-
designed jobs that meet the employee’s needs and aspirations. They may
derive from the employee’s level of discretion in the job; how meaningful
the job is; the quality of the employee’s working life; and the extent to
which he or she achieves work–life balance. Intrinsic motivation,
satisfaction and commitment also arise from an employee’s greater direct
participation in the work, security status and job satisfaction (Armstrong &

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Murlis, 2007). Rewards can also be described as transactional and
relational rewards. Transactional rewards arise from the economic
contractual relations of work and include the tangible rewards of pay and
benefits. Relational rewards arise from the psychological contractual
relations of work and include intangible rewards such as individual work
experience or learning and development (Armstrong & Murlis, 2007).

extrinsic rewards Rewards derived from, for example, pay and fringe benefits,
promotion or advancement opportunities in the organisation, the
social climate and physical working conditions.

intrinsic rewards Rewards derived from the job itself, such as variety, challenge and
autonomy.

transactional rewards Financial rewards in the contract of employment.

relational rewards Rewards such as recognition, autonomy, learning and

development, quality of working life and work–life balance.

We can also consider the totality of extrinsic/intrinsic or

transactional/relational rewards in reward design, which is known as the
total reward approach (Thompson, 2002). This approach allows us to
consider the contribution of each reward as a way of generating employee
motivation, satisfaction or commitment.

total reward approach Considering the contribution of every reward as a way of

generating employee motivation, satisfaction or commitment.

The foundations of reward systems

The foundations of reward systems generally comprise three constituent
elements: basic pay, variable pay and benefits. In this section, we look at
each in turn.

Basic pay
Basic pay or base pay is a wage or salary negotiated as part of the contract
of employment. Most basic pay is time-based pay and in essence is a
standardised monetary rate for the job. A number of factors influence the
scope of basic pay, including:

the time a person needs to do the job

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 external regulation (e.g. minimum wage, health and safety
regulations)
internal regulation (e.g. trade union negotiations)
labour market comparability – the relationship between the pay of one
employee and another in the same occupation
differentials between salary and wage levels in the organisation
hierarchy (e.g. differences between train drivers and track workers)
competence and capability levels – skill, knowledge and aptitudes
needed to do the job.

basic pay A fixed rate of pay for the job.

The base salary for expatriate managers normally reflects the parity of
pay for a comparable position in the parent country. Base salary also
provides a reference point for establishing employee benefits and provides
the employee with a comparison to peers in the parent country. If the base
salary is in line with reward practices in the parent country over the term
of an international assignment, it will smooth the assignee’s transition
when they are later repatriated.
One of the key issues in international reward is the influence of labour
market comparability on base pay. Varying employee expectations of
reward in different national contexts make comparability and differentials
difficult issues for the international reward manager (Parker & Janush,
2001). Similarly, different external and internal regulation may also make
comparison difficult. As with other contexts, base pay is a key part of all
reward systems and can also be linked to variable pay and/or other
employee benefits in a ‘reward package’.

Variable pay
Variable pay is pay linked to the performance, contribution, competence or
skill of the individual, team or organisation. Many reward systems link pay
directly to employee performance outputs or productivity. The main
argument in favour of pay for performance is that pay motivates the
employee to achieve performance objectives and gives recognition for his
or her effort in achieving them. However, despite support for variable pay
in the ‘new pay’ paradigm, variable pay puts an employee’s total reward at
risk. Employee risk increases as a greater proportion of pay is made
contingent on individual, team or organisational performance. The
employee cannot predict his or her pay as easily as when pay is linked with

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time, and his or her basic need for security and recognition may be
threatened. A focus on variable pay may also weaken intrinsic rewards
because of the absence of employee participation in the design of reward
systems (Heery, 2000). Indeed, researchers have for some time voiced
concerns that variable pay undermines intrinsic motivation, satisfaction
and commitment (Pfeffer, 1998).
The variation in country use of pay for performance and increasing
variation in international assignments have led to increasing pressure to
reward expatriates for their role and performance through variable pay
systems. However, measuring expatriate performance is fraught with
difficulties (Harzing & Christensen, 2004). First, it can be difficult to
define clearly the aims and objectives of the assignment; second, it is
challenging to make a fair assessment of the extent to which the assignee
has achieved them (Kessler, 1994; McKenna & Richardson, 2007). The
limitations of variable pay have also been noted in international reward;
for example, Tahvanainen and Suutari (2005: 101) argue that the level of
expatriate dissatisfaction with incentives, particularly in the form of
performance-related pay, compounds these issues. Tahvanainen and
Suutari (2005) have shown that not every expatriate values the offer of
extra money, instead complaining that ‘the way of measuring achievement
of the incentive objectives was invalid’ or not set for the right job
functions; the relationship between goals and incentive objectives was not
always clear; and, for project expatriates, the incentive was paid months
after the assignment had ended. For some expatriates, such incentives have
a diminishing marginal utility and lose their motivational effect over time
(Gunkel, Lust & Wolff, 2009). Indeed, researchers have concluded from
case study analysis that ‘different institutional frameworks generate
different individual levels of satisfaction for employee incentives’, arguing
that ‘in some cases, an incentive in one country is, in fact, a non-motivator
in the other’ (Gunkel, Lust & Wolff, 2009: 308).

Benefits
Benefits are sometimes called fringe benefits or indirect rewards, and
include:

car leasing and usage

company discounts
employee insurance
healthcare provision
paid leave or holiday time

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 performance or merit elements
share options
superannuation or pension arrangements
training grants.

For expatriates on international assignments, benefits may also include:

cost-of-living allowances
housing provision or allowances
return flights to the home country
school and education costs
tax relief to offset an assignee’s liability in the host country (if higher
than in the parent country).

Konopaske and Werner (2005) found that benefits are an important

component in encouraging prospective expatriates to accept international
(and particularly long-term) assignments. However, Lovewell (2010)
highlighted a sharp increase in the number of MNCs operating a global
benefits strategy that enables expatriates to receive a consistent reward
package wherever their job may take them.

benefits Rewards that an employee receives on top of their basic cash pay.

Designing an international reward system

In designing an international reward system, an HR manager must
consider macro-, meso- and micro-level implications and concerns.

Macro-level implications and concerns

Legal compliance
In national and international contexts, reward systems exist in a legal
environment in which all employment organisations must operate. In
liberal economies, reward systems must comply with an increasing amount
of employment legislation and with indirect legislation that affects the
employment relationship. National cultures influence legal frameworks
and the accepted social norms and values of that culture determine what
inclusions are acceptable and unacceptable in a reward system.

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 In developed economies, employment is highly regulated and there is a
range of employee rights, such as the right to be a member of a trade union
and the right not to be discriminated against in employment due to one’s
sex, ethnicity or other social characteristics. However, the degree of
employment legislation and extent of the floor of rights accorded to
employees varies considerably between nations. In the less developed
economies, there may be only the minimum level of employment
legislation and few employee rights that constrain the employer in
allocating rewards to employees. Here, the employment relationship tends
to be regulated voluntarily between employer and employee.

floor of rights Basic statutory employment rights and minimum standards that
benefit all employees.

At an international level, the principles and rights contained in the

conventions of the International Labour Organization (ILO) have
attempted to provide a set of international employment standards to
promote minimum rights for ILO Treaty signatories (Servais, 2009). The
ILO conventions have a broad focus and relate to reward policy on such
issues as freedom of association and social dialogue, equality of
opportunity, wages and working time. Not all countries have signed the
treaty, and signatory states must act to enforce it at national level. The
conventions also have no direct regulatory effect on MNCs in a global
context. MNCs therefore are legally responsible to the legislatures of the
countries in which they operate, in complying with ILO conventions.

Meso-level implications and concerns

Internal equity
Management decisions about rewards, whether made unilaterally or
collectively with trade unions, must take into account the requirements of
internal equity. Internal equity is concerned that people in organisations
are rewarded appropriately for their contribution when compared with
others (Milkovich & Newman, 2008) and that comparisons and
differentials between jobs are seen as fair. In designing reward systems,
this implies that rewards in the organisation have been distributed in
accordance with the contribution of employees (distributive justice) and
that employee rewards should not be based on arbitrary or biased
management decisions but that such decisions should be made consistently

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and transparently (procedural justice) (Heery, 2000).
Some organisations adopt formal and systematic approaches to achieve
internal equity, determining the relative values of different jobs and roles
in the organisation. The primary method of determining the relative value
of jobs is that of job evaluation. Armstrong and Murlis (2007: 147) stated:
‘It could be claimed that, every time a decision is made on what a job
should be paid, a form of job evaluation is required. Job evaluation is
therefore unavoidable. . .’ Job evaluation introduces a hierarchical, rational
organisational structure of reward linked to jobs, and provides a potential
defence against claims of wage discrimination in developed economies.

internal equity Employee reward comparisons with similar or different jobs within
an organisation.

External equity
External equity is primarily concerned with aligning internal job values
with similar job values in the labour market at local, national and
international levels. External equity is based on the principle of labour
market equilibrium and the equilibrium wage. The value of any job may be
decided by supply and demand for that job when the market is in
equilibrium (i.e. market-driven). This is sometimes referred to as the ‘rate
for the job’. External equity is concerned with market competitiveness and
comparisons between what different employers will pay for the same job.
An employer who pays more than the market value of the job may be
perceived as uncompetitive.

external equity Employee reward comparisons with similar jobs in the labour
market at local, national and international levels.

Some employers may reject formal procedures such as job evaluation,

and may base their decisions on fairness, consistency and transparency or
purely on external equity. Such reward decisions, however, have led to
gender inequalities when the market value of female employment is lower
than that of male employment in the same job. Where market values are
high, this may put pressure on job evaluation schemes and market
supplements may be required to more closely reflect the market or
equilibrium rate. Also, an employer may need to pay wage differentials to
attract workers to unattractive jobs in the labour market, compensating for
the unattractive elements of a job, such as when an expatriate is asked to

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work in a country experiencing civil unrest. We must recognise such
tensions between internal and external equity, and make transparent
reward decisions whenever they arise (Milkovich & Newman, 2008).

Alignment with corporate strategy

Bloom, Milkovich and Mitra (2003: 1350) identify two major pressures
that MNCs face in their international operations, the first of which is the
pressure of alignment. They argue that there is pressure on international
managers to develop a ‘more integrated global organization that aligns
management structures with the MNC’s organisational context, especially
its global strategy’. Second, there is the pressure of conformance – that is,
the conditions that compel MNCs to conform to the local host contexts in
which they operate. Each of these pressures influences reward decisions to
some degree. These propositions assume that there is a deterministic
pressure on strategic reward decision-makers, emanating in each case from
the internal environment (alignment) or from the external environment
(conformance).

alignment Aligning reward decisions with the strategic goals of the MNC.

conformance Conforming to the various host-country contexts in which MNCs

operate.

The alignment proposition views international managers as rational

actors in their environment, who make strategic choices about business
goals and the means by which they will achieve them (Trevor, 2009). This
rational choice model informs the ‘new pay’ assumptions (Lawler 1984,
1990, 1995). Lawler (1984) has argued that three critical elements need to
be aligned with business goals for a reward system to be effective. First,
rewards must be strategically aligned to the organisation’s core values (e.g.
honesty, fairness, equity, trust). Management’s espoused values take on
symbolic and instrumental significance but are aligned primarily to the
product or service market; they take various forms, including quality of
product or service and cost reduction (Legge, 2005). Second, rewards must
be aligned to the organisational structure (e.g. the degree of centralisation;
the locus of decision-making; the relationship between internal and
external equity; hierarchical levels). Third, reward must be aligned to
process design (e.g. management style, communication systems,
participation and involvement in decision-making).

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Imperial, federal and hybrid approaches
Following Perlmutter (1969), Loveridge (1983) and Ferner (1997), we can
identify three substantive approaches to international reward management
that reflect alignment and conformance: the imperial, federal and hybrid
approaches.

The imperial approach

Some organisations have an imperial approach to international reward –
that is, they tend to emphasise the conquest of corporate culture over
national culture (Boxall, 1995). From an HR perspective, an MNC’s
organisational structure may reflect managers’ values about geographical
sourcing of the management team (Perlmutter, 1969: 11). An ethnocentric
organisation (see chapter 1) focuses its HR efforts on selecting key
positions overseas from the parent country’s internal labour market. In
such organisations, management knowledge and understanding are
informed by the parent-country nationals (PCNs). These managers are
viewed as superior to the host country nationals (HCNs). This approach
presents an exportive strategic orientation (Taylor, Beechler & Mapier,
1996; Scullion & Starkey, 2000) and ensures that alignment and control
are maintained through PCNs, who share the espoused values and cultural
orientations of managers in the parent country as well as their leadership
ideology and management knowledge. In the imperial view, such control is
essential in reducing the level of uncertainty (e.g. communication, HCN
expertise or experience) and risk (economic and political) involved in
conducting business abroad (Hocking, Brown & Harzing, 2007; Harzing,
2001). The imperial approach emphasises the subordination of host-
country cultural values to corporate cultural values or those of the parent
country.

ethnocentric An organisation that emphasises the subordination of host-country

organisation cultural values to corporate cultural values or those of the parent
country.

Morgan and Kristensen (2006) found that MNC managers transfer

practices, people and resources to subsidiaries in order to maintain control
and achieve their strategic objectives. The host-country subsidiaries have
differential capacities to resist these transferred practices or to develop
them in their own interests. However, they argue, such resistance is rare
and MNCs generally produce subsidiary ‘clones’. In studying Turkish–

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United States relations, Sayim (2010: 2648) saw a ‘straightforward transfer
of US multinational corporate policies in reward management to the
Turkish subsidiaries, without significant resistance from managers or need
for translation’. He further argued that a critical majority of studies
identify the US as ‘the “dominant” exporter of management knowledge
and practice’; what Legge (2005: 3) has called an applied ‘US academic
imperialism’. In reward management terms, the US MNCs are generally
found to have set highly centralised and formalised policies for their
subsidiaries, pursuing a ‘one world, one strategy’ approach (Sayim, 2010:
2632; see also Björkman & Furu, 2000; Bloom, Milkovich & Mitra, 2003;
Almond et al., 2006). For example, the automobile manufacturer General
Motors adopted this approach in the past but has become more hybrid in
recent years.
Almond and colleagues (2006) have modified this unidirectional model,
stating that US MNCs must conform to host-country expectations and also
need to adapt their reward management policies and practices in some host
countries due to specific sectoral or occupational labour markets,
unionisation, or the limiting power of collective bargaining in such
countries. Nonetheless, Almond and colleagues (2006) conclude that US
MNCs are determined to overcome host-country effects, particularly in the
area of pay for performance.

The federal approach

In contrast to the imperial approach, the polycentric organisation of HR
practices tends to conform to host-country cultures and will give foreign
subsidiaries a degree of autonomy, staffing them with HCNs. The parent
organisation’s HR department accepts the limitations of the organisation’s
internal labour market and recruits instead from labour markets in the host
country. The organisation presents an adaptive strategic orientation, where
HR buys into an existing network of management knowledge and skills.
Uncertainty and risk are ‘externalised’ from the parent organisation by
legal and financial means; by spreading risk across separate units and
incorporating the HCNs’ knowledge management and understanding of
local values and cultural orientations (Harzing, 2001). Such organisations
have a federal approach to international reward, one that builds on the
already existing economic and social foundations of the host country and
rests on ‘shared understandings and joint decision-making through
“mutuality”’ (Loveridge, 1983: 105–6). For HR managers, the delegation
of local HR to HCNs has the advantages of avoiding the cultural
adjustments of PCNs and their expense, while also offering cost savings by

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removing the need to develop a parent managerial hierarchy with
standardised control systems.
To be sure, Scullion and Starkey (2000) argue, MNCs that have
decentralised HR structures tend to have smaller HR departments and are
less strategic. Westerman and colleagues (2009: 770) argue that matching
HR practices to a country’s culture is important because this process:

conveys cultural awareness and sensitivity

conveys expectations of and rewards for employee behaviour
consistent with ingrained patterns of acceptable behaviour
results in higher levels of company financial performance.

Westerman and colleagues (2009) conclude that MNCs should consider

tailoring their rewards to fit the culture of their workforce and temper the
‘one-size-fits-all’ approach to reward design. A good example of this
approach is Gillette, which, through its International Graduate Training
Program, recruits top business students from host-country universities.
Lowe and colleagues (2002), in examining reward practices in 10
countries, challenged the use of ethnocentric exportation of reward
practices and argued that MNCs should focus on what employees in a
given culture want from a reward system. Similarly, Gunkel, Lust and
Wolff’s (2009) study of reward practices in China, Germany, Japan and
the United States found that different institutional frameworks generate
different individual levels of satisfaction for employee incentives, and
argued that it is unwise for MNCs to transplant reward practices from the
parent country to others.

Hybrid approaches
In geocentric organisations (see chapter 1), HR espouses meritocratic
values and places more importance on an employee’s levels of competence
and capability than on his or her nationality. Such organisations reduce
uncertainty and risk by employing ‘talent’, and consistently maintain
alignment and control through sophisticated communication channels.
Regiocentric organisations (see chapter 1) also adopt a federal approach,
but base it on regional labour markets; recruitment is then meritocratic but
restricted to the specific regional labour market and, as in the polycentric
organisation (see chapter 1), regions enjoy a degree of independence.
Again, HR accepts the limitations or constraints that the regional labour
market imposes (Perlmutter, 1969; Heenan & Perlmutter, 1979; Adler &

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Ghadar, 1990; Kelly, 2001).
Alignment further implies that the espoused value, for example the value
of customer service quality, is reinforced through the organisational
process design of re-education through communication and training;
replacement through selection, promotion and redundancy; and
reorganisation through redesign of the reward and performance
management systems. For example, this may involve re-educating
employees to embrace variable pay linked to customer satisfaction, even
though this effectively transfers some element of the market risk to the
employees; or linking an employee’s movement up salary bands to a
performance appraisal system that includes customer service measures; or
reassessing job values in relation to customer service (Legge, 2005).
Some have criticised this view of strategic alignment. Cross-cultural
research has pointed to the limitations of ethnocentric alignment strategies,
claiming that it creates problems of internal equity when PCNs and HCNs
are offered different rewards. This can generate intergroup conflict and
hamper the adjustment of PCNs in the host country (Mahajan, 2011).
Nonetheless, the rational model suggests that there is some, if
constrained, strategic choice for reward decision-makers in defining the
reward architecture and a key indication of alignment is the development
of a global reward strategy (Bloom et al., 2003). Reflecting on Scullion
and Starkey’s (2000) viewpoint, the 2008 WorldatWork Global
Compensation Practices survey (WorldatWork, 2008) painted a picture of
the increasing centralisation of reward decisions but also reported that
organisations are split between developing centralised structures (53 per
cent) and non-centralised structures (47 per cent). Also, 59 per cent of
organisations in the survey said they had a ‘global compensation strategy’
– that is, ‘policies and strategies that are applied uniformly in all
operations around the world unless individual country compliance dictates
otherwise’ (WorldatWork, 2008). In this, the WorldatWork survey closely
matched the 2006–2007 Mercer Global Compensation Strategy and
Administration Survey, which put the figure at 61 per cent (Mercer HR
Consulting, 2007). This evidence, though limited, suggests that MNCs are
employing both imperial and federal approaches.

global reward strategy Policies and strategies that are applied uniformly in all operations
around the world unless individual country compliance dictates
otherwise.

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 Both surveys highlighted companies’ use of a dual reward strategy, in
which they offered a global reward strategy for executives and some senior
managers and a local reward strategy for other employees, such as
professionals, contractors and sales. For many, the pattern was mixed,
suggesting a hybrid strategic approach, and some companies indicated they
saw potential for opportunistic change in the future (see Ferner, 1997).
Also, Europeans led in developing global reward strategies but lagged
behind the United States in applying such strategies to managers and other
employee groups (Mercer HR Consulting, 2007). The majority of MNCs
saw the Asia–Pacific region as the most challenging in which to
implement a global reward strategy (WorldatWork, 2008).
From this evidence, we can say that the strategic alignment of reward
practice at a global level seems rather constrained. Only limited
homogenisation and convergence have been possible in reward strategies,
structures and processes, and MNCs’ are perceived as managing executive
reward and the reward of others in divergent ways (Mahajan, 2011).

Micro-level implications and concerns

The expatriate role and international assignments
The expatriate employee is generally a PCN who works in another country
to support an MNC’s strategic objectives. Most expatriation arrangements
are long term (usually between one and five years): according to KPMG’s
2012 Global Assignment Policies and Practices Survey, 96 per cent of
MNCs employ expatriates on assignments of this type (KPMG, 2012).
Other expatriate assignments tend to be short term, and 86 per cent of
organisations use this type of assignment. However, nearly half of
organisations (47 per cent) also make permanent transfers of an indefinite
length. In 2012, KPMG reported that ‘Over the last two years
organisations are increasingly using commuter assignments and rotational
assignments’ (KPMG, 2012: 14). These alternatives to long-term
assignments are viewed as ways to reduce the cost of the long-term
assignment and to encourage greater return on investment (Johnson, 2005;
McNulty & Tharenou, 2004).
It is common for MNCs to offer informal assessment by line
management or the HR department, or no assessment at all (KPMG, 2012:
17). Bonache and Fernandez (2005) believe this underlines the
‘trustworthiness’ of the expatriate and the level of ‘company specific

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knowledge’, while others emphasise ‘loyalty’ and the exchange of benefits
and rewards in the psychological contract. Indeed, Yan, Zhu and Hall
(2002) argue that relational rewards are just as important as transactional
rewards in ensuring expatriate success. Warneke and Schneider (2011)
also suggest that the increasing heterogeneity of expatriates, in terms of
their age, gender, occupational background and country of origin (Altman
& Shortland, 2008; Mayrhofer, Kuhlmann & Stahl, 2005; Shaffer and
Ferzandi, 2006), means that companies have to induce potential candidates
to relocate by designing individual reward packages to meet each
employee’s demands. Perkins and Shortland (2006: 185) and Perkins and
White (2011: 383) argue that the individualisation of expatriate reward
moves away from the traditional approach of reward for effort and more
towards compensatory reward for an employee’s acceptance of lifestyle
changes, hardship and so on. This points more to a need for ‘persuading’
or ‘incentivising’ employees to engage in an international assignment
rather than employees actively seeking such roles.
It is not surprising, therefore, that research on the long-term expatriate
has emphasised the importance of comparability; that is, ensuring that a
PCN enjoys a standard of living no worse than in his or her home country
(Brewster & Suutari, 2005; Dowling, Welch & Schuler, 2004). It has also
emphasised the use of the balance-sheet approach, which we examine in
the next section.

The balance-sheet approach

MNCs commonly use the balance-sheet approach to determine the pay
and benefits of PCNs (Watson & Singh, 2005). The basic objective of the
approach is the maintenance of the PCN’s prior living standard, to which
is added a financial inducement to take on the international assignment.
The levels of a PCN’s parent-country pay and benefits are the foundations
of this approach. Adjustments are also made to offset any additional
expenses the PCN will incur in the host country. Financial incentives can
also be added to make the package more attractive. This approach is
considered to be cost-effective (Bonache & Fernandez, 2005). However, it
must be frequently reviewed to ensure the parity of cost-of-living rates
(Dowling, Welch & Schuler, 2004).

balance-sheet approach Expatriate reward based on the market value of the parent country.

As such, the approach provides ‘the benefits of equity for the expatriate

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between the assignments and better facilitates repatriation’ (Watson &
Singh, 2005: 33). It is also easy for prospective expatriates to understand
what transactional reward they will need to live abroad and to match their
base pay to parent-country standards. Financial benefits may also include
performance-related pay, travel expenses for trips home and use of a
company car. Arguably, this approach is as much about repatriation as
expatriation because it eases the assignee’s homeward transition when
their international assignment ends (Yan, Zhu and Hall, 2002). Despite
these benefits, there is no consensus on the use of the balance-sheet
approach. Researchers have put forward a number of views about its
strengths and weaknesses, including that it is:

an administrative tool that ensures assignments can be filled

(McKenna & Richardson, 2007)
too complex and expensive (Watson & Singh, 2005)
not an effective means of attracting and retaining the best expatriates
(Phillips & Fox, 2003; Stanek, 2000)
a path to expatriate dissatisfaction (Bonache, 2005)
unrelated to the expatriate role and the aims of the assignment
(Phillips & Fox, 2003).

Phillips and Fox (2003: 470) and Watson and Singh (2005) agree that the
approach needs to be reformed, but they offer different solutions. Phillips
and Fox (2003: 475) state that the approach ‘must be replaced by a
globalised transpatriate compensation system, based largely on host-
country levels and traditions but influenced by a global market for
transnational employees’. In contrast, Watson and Singh (2005) argue for a
focus on corporate culture and business strategy rather than on national
culture and local conditions.

transpatriate An employee who is not employed in the parent country, including

employees formerly labelled as expatriates or host-country
nationals.

Going-rate approach
An alternative method is the going-rate approach. This is primarily based
on host-country market pay rates (Dowling, Welch & Schuler, 2004;
Watson & Singh, 2005). Here, the base salary is linked to the salary
structure in the host country. The approach relies on local survey
comparisons of:

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 local HCNs
expatriates of the same nationality (e.g. all Canadians working in
Japan)
expatriates of all nationalities.

Additional payments may supplement base pay and benefits in low-pay

countries.

going-rate approach Expatriate rewards are based on the market value of the host
country

The advantages of the going-rate approach are its simplicity, its

provision of external equity, and its use in identifying the expatriate more
closely with the host country. It also supports equity among different
nationalities (Watson & Singh, 2005). However, it also has a number of
drawbacks, including variations in pay and benefits between assignments
for the same employees and between expatriates of the same nationality in
different countries. The first occurs when, for example, the expatriate is
transferred from a developed economy such as the United States to a
developing economy. In this situation, the expatriate may reject the
international assignment because of the lack of parity between parent-
country and host-country rewards. Expatriates are also likely to compete
for work in countries where the standard of living is higher; assignments in
countries with a lower standard of living are likely to be rejected. Unlike
the balance-sheet approach, the going-rate approach does not help to ease
the repatriation process (Dowling, Welch & Schuler, 2004).

Conclusion
In this chapter, we have built on the foundations of rewards to construct a
broader understanding of the complexity and diversity of international
reward practices in MNCs. In examining the need for strategic alignment,
we have noted that a number of approaches can be applied. The design
architecture of international reward systems is complex and reflects
variability in reward practices worldwide. In considering expatriate
rewards, we are reminded of the need to encourage employees to
undertake international assignments and the problems that can occur if the
reward package does not meet their expectations.
We have also seen that an examination of cross-national comparisons of

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reward practices forces practitioners and students to re-evaluate what is
considered normal practice within their own context. They may then
question the nature and meaning of the reward management practices they
employ, as well as the institutions that regulate rewards. Comparisons
inevitably lead to a better understanding of the similarities and differences
in rewards and to better theoretical understanding of international reward
management.

Take-home messages
An understanding of the foundations of reward systems helps to
explain how employees are rewarded on international assignments.
Internal and external equity are important in understanding how
expatriates value their rewards.
There is considerable variation in how international organisations
align their reward policies and practices to the corporate strategy.
Rewards assist in recruiting, retaining and motivating international
employees.

Closing the learning loop

1. What is the difference between extrinsic and intrinsic rewards?
2. Why are intrinsic rewards important in motivating international
employees?
3. What are the advantages and disadvantages of variable pay?
4. What are the key elements of the imperial, federal and hybrid
approaches?
5. Why are the expectations of international employees so important
in reward determinations?
6. Why do MNCs prefer to use the balance-sheet approach to
rewarding expatriates?

Case study 6.1 Reluctance to relocate

Alice Lee, 25, a talented executive working for an international insurance
company, had progressed fairly quickly in the organisation’s hierarchy and
was now a mid-level executive with very good career prospects. She had
aspirations to become one of the senior managers in the firm and was keen
to impress her peers and her mentor, Paul McKensie, to whom she

173
reported.
One morning, she was surprised to find in her email inbox a
communication from Paul asking her to come for a chat about a
challenging opportunity that he felt might be of interest to her. Alice was
not one to get excited but, with all the hard work she had put in over the
previous two years, she felt confident that this was the lead that she had
been waiting for and that promotion was now in the bag!
She entered Paul’s office and he greeted her with a smile. Paul was an
amiable person and she got on well with him. She sat in the chair next to
him and, thinking of promotion, smiled too. Paul started a conversation.
PAUL: Hi Alice, thank you for coming to see me. It is always nice to see
you. How are you getting on in customer services?
ALICE: I’m getting on really well, thanks. I’ve just finished the
Netherlands project and really enjoyed working with Antoine and
Freddie on improving our customer care, particularly after the recent
crisis in our service delivery. I think we are on the right path now.
PAUL: That’s great! Antoine has told me some great things about you, and
he is very pleased with the work that you have done. It’s for this
reason that I have called you to see me today.
ALICE: I’m intrigued. But I’m sure you will fill me in.
PAUL: Alice, this is a time in your career when you will need a much
broader picture of the company and its operations particularly on a
global scale. I’m very excited about the recent opportunities that have
opened up in Hong Kong and the possibility of breaking into the
Chinese market. I’d like to offer you an international assignment to
manage our customer care services in Hong Kong. This will be a
great opportunity for you as I know you are already fluent in three
languages, including Chinese. We will of course offer you an
excellent reward package with all the benefits you presently get and a
considerable enhancement to your salary to compensate for any
hardship you may incur. What do you think about that?
Paul placed a piece of paper on the desk that outlined her present salary
before and after tax, her flexible benefits package and health and social
insurance arrangements. Alongside this were further financial details
labelled ‘Hong Kong’ that included the following:

assignment allowance
housing allowance
cost-of-living adjustment
host-country percentage component

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 parent-country percentage component
host-country health and social insurance arrangements
host-country tax
net salary in host country. (This was highlighted and in bold type.)

Alice stared at the last figure and thought about the offer, before
commenting.
ALICE: Well, I’m a little shocked if I’m honest. I did not expect to be going
abroad at this time as I felt I still had a lot to contribute to the work
here.
PAUL: I can understand your initial reluctance but I’m sure when you think
of it more clearly, you will see what a great opportunity this is. Not
only to live in a new country with all the excitement that brings but to
do so in style. Hong Kong is a vibrant city. Antoine worked there for
three years and he totally enjoyed the lifestyle. I know the work will
be challenging at first but we would not have chosen you if we did
not think you were ready for the job.
ALICE: Three years!
PAUL: Yes, that is the norm. I can see that you will need some time to
think about this and I am sure that when you have thought this
through that you will rise to the challenge and do a good job.
ALICE: It’s not the money. I have recently become engaged. My partner
and I have to arrange the wedding and we’re about to purchase a new
house.
PAUL: How wonderful! You can of course take your partner with you and
we will make all the arrangements for your housing both here and
there. Don’t worry about a thing; we have an agency to take care of
this sort of thing.
Case study questions
1. Undertake research to find out as much information as possible about
the details of Hong Kong’s standard of living, as listed in the offer Alice
received in the scenario. How does it compare with your own country? (If
you are based in Hong Kong, choose another region or country of your
choice.)
2. Identify which expatriate reward approach Alice’s offer exemplifies,
and discuss its advantages and disadvantages.
3. Explain why Alice was reluctant to go to Hong Kong, based on the
reward research and practice you have learnt about in this chapter.
4. If you were the HR manager advising Paul, what reward solutions
would you recommend to help him persuade Alice to accept the role?

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 Activity
Role-play
Objective
This role-play for groups of three students explores the question of
whether the balance-sheet approach is the most efficient choice for
MNCs selecting an international reward management approach.
Roles
Chief executive officer (CEO)
HR director
Reward consultant

Scenario
A North American–owned international hotel chain wishes to develop
its international standing by entering the Indian market, and the
company’s CEO is exploring the available reward options. The HR
director makes some recommendations on how to reward international
employees in India, adopting the imperial position. The reward
consultant then makes counterarguments from the federal position. The
CEO discusses the strategic criteria (e.g. cost, quality) that will
underpin his or her decision in this matter, and decides which reward
approach to use, before explaining his or her choice.

Online resources
For instructors: answers to activities; long media article with
questions; additional questions and answers.
For students: further reading; answers to case study; IHRM in
practice.

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 7 Employee retention
Maria Balta

Learning objectives
To identify the importance of employee retention for the organisation.
To define and identify ways to manage employee retention.
To explain how job satisfaction can affect organisational commitment
and employee retention.
To identify strategies for employee retention, including remuneration
and benefits, work environment, training and career development
opportunities as well as inpatriation and repatriation.

Learning outcomes
After reading this chapter, students will be able to:

identify the benefits of retention for the employees and for the
organisation
understand the role of job satisfaction and organisational commitment
on employee retention
identify the key strategies that enhance employee retention.

Introduction
Organisations are increasingly adopting HR practices, with two main
benefits: increased organisational effectiveness and the fulfilment of
employees’ needs. Organisations are operating in an increasingly
competitive environment due to global competition, cost leadership
strategies, employee turnover and global skills shortages. These pressures
have made the recruitment and retention of talented employees a top
priority for all organisations, particularly those who are operating
internationally. To survive in the long term and achieve competitive
advantage in the global economy, the retention of valuable employees is a
critical strategy for HR managers and organisational leaders (Reiche,

182
2007). Senior executive selection and retention are becoming even more
important because these executives are responsible for the overall direction
and scope of business activities, set organisational goals and shape its
strategy and culture. Some executives have a clear vision and articulate it
throughout the organisation, including at board of directors, top
management and senior executive levels.

recruitment and training A talent management system that attracts, retains, develops and
utilises employees in ways that create competitive advantage for an
organisation.

Employee retention
The retention of valuable employees is a global challenge. Organisations
seek to become sustainable by attracting talented people and keeping them
satisfied and productive. Their aim is to employ exceptional people who
add value and help the organisation create a culture that cannot be copied
(Jackson & Schuler, 2003). The retention of intellectual capital is of
growing strategic importance (Tymon, Stump & Doh, 2010) and as a result
the retention of qualified employees has attracted growing interest among
organisations, practitioners and academics (Scullion, Collings & Gunnigle,
2007). As McKinsey & Company consultants highlight, there is ‘a war for
talent’ mainly in recruitment for multinational firms, where leaders have a
key role in the success of the company (Chambers et al., 1998). Employee
retention has been a major issue for many companies across the world, but
Asian countries such as South Korea, Malaysia, Singapore, Taiwan and
China have faced particular difficulties, despite the economic growth of
the region in recent years (Barnett, 1995; Chang, 1996; MacLachlan, 1996;
Syrett, 1994).

employee retention The ability to keep valuable employees by maintaining a working

environment that supports staff.

Effective employee retention is a systematic effort by employers to

create and foster an environment that encourages current employees to stay
with the company by putting in place policies and practices that address
their individual needs. Organisations are focusing on employee retention
by encouraging employees to remain in the organisation as long as
possible. So, HR managers must know what factors motivate their
employees to stay in the field or cause them to leave. Employee retention

183
refers to the ability of the organisation to keep its valuable employees
through various strategies, including making available training and career
development opportunities (see chapter 5) and job satisfaction, motivation
and competitive remuneration packages (see chapter 6). Employee
retention is beneficial for the organisation as well as the employee because
organisational performance is a product of individual performance (Pfeffer
& Sutton, 2006). As a result, companies provide training and mentoring to
their top employees and strive to retain them by helping them to broaden
their skills and competences (Groysberg, Nanda & Nohria, 2004).

job satisfaction A pleasurable or positive emotional state resulting from a person’s

appraisal of his or her job or job experiences.

The retention of key employees is critical to the long-term survival and

success of any organisation. We know that employee retention is
associated with customer satisfaction, increases in product sales,
satisfaction among colleagues and staff, effective succession planning and
deeply embedded organisational knowledge and learning. Organisations
that enjoy lower staff turnover than close competitors benefit in two ways:
first, by reducing their costs and second, by improving productivity. Cost
reductions associated with employee turnover include the expense of
recruitment efforts to fill empty positions, the risk of recruiting
inexperienced staff and the need to invest in new recruits’ training.
Productivity is also improved when customer and client-effective
employees remain in the organisation, bringing their knowledge and
expertise in contact with the business.
Retention management is a strategic, coherent process that starts with an
examination of the reasons employees join an organisation (Davies, 2001;
Solomon, 1999). Organisations that are effective at retention have
identified the key hard and soft skills they require. Salary is an important
issue that often causes employee dissatisfaction, particularly for some
professionals, such as medical practitioners and engineers, who have long-
term tenure in a specialist field. In both professions, there is a mismatch
between a person’s remuneration and their occupation (Allen & Van Der
Velden, 2001). Sloane and Williams (2000) and Nguyen, Taylor and
Bradley (2003) claim that remuneration determines whether an employee
is satisfied or dissatisfied. Therefore, managers need to retain their
experienced, skilled employees; high employee turnover may have an
impact on effective service delivery.

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Salary and wages Rewards based on financial recompense.

Teamwork is another important means of retaining workers. According

to Nel et al. (2002), teamwork allows greater employee participation and
increases the organisation’s performance and, as a consequence, influences
the motivation and satisfaction of employees. Studies have shown that
employees who participate in different forms of communication networks
in organisations are more satisfied with their jobs and more committed to
the organisation compared to those who do not participate. Another
important means of retaining employees is ensuring that each person
knows his or her responsibilities. By creating a culture of responsibility,
employers can improve the morale and productivity of employees and
enhance retention in the organisation, so reducing turnover costs.
Employers can also retain qualified staff by identifying and
accommodating their individual needs. Luecke (2002) mentions a series of
factors that encourage people to stay in the organisation including job
security, work–life balance, job recognition and flexible working hours.
Increasingly, employees want to contribute to a society that reflects their
values, choosing to work for organisations that hold similar values to their
own; employees tend to enjoy working for organisations where they feel
they can ‘make a difference’. This is critical for organisations: greater
alignment between company and employee values will cause employees to
engage.

Recruiting and retaining valuable staff

The purpose of a successful talent management system is to attract, retain,
develop and utilise employees in ways that create competitiveness, staff
engagement and commitment, lower external sourcing costs and lower loss
rates of knowledge and experience (Smilansky, 2007). In an international
context, it is challenging for a multinational company (MNC) to retain
talented staff, and a firm should examine determinants of staff turnover
and adopt specific retention-oriented HR practices. The retention of
talented employees has become a key challenge for large MNCs (Stahl et
al., 2007; Stahl et al., 2012) but also for small-to-medium sized firms that
have recently experienced rapid internationalisation (Scullion & Brewster,
2001; Festing, 2007). As the workforce becomes more mobile, MNCs
must coordinate globally to create a strong, shared corporate culture and
harmonise their activities across the countries in which they operate
(Brewster et al. 2011). Employee retention helps to build a workforce with

185
unique skills that employees of other organisations do not have. The
retention of employees provides a competitive advantage to the
organisation that develops a loyal workforce and enhances its ability to
deliver to customer demands. This helps the organisation to produce
products and services that competitors cannot easily imitate, reduces
recruiting expenses and helps employees feel secure with their jobs even
when they receive comparatively low salaries. The rapid growth of
knowledge-based economies has resulted in the growing need for
companies to hire and retain high-value workers in demanding roles and
responsibilities; workers’ growing knowledge is valuable (CIPD, 2007).
The recruitment and retention of managerial talent also require the
implementation of specific strategies (Scullion & Brewster, 2001). For
example, where a firm is located in a remote area, the recruitment effort
can be smoothed by offering to hire the spouse or partner of a prospective
employee as well as the candidate. In this way, the organisation reduces
recruiting and relocation costs by creating a unique incentive for the
employee to accept the job relocation, at the same time reducing the risk of
their accepting an offer from a rival firm. However, MNCs can also lose
staff this way, when a spouse or partner leaves his or her job to accept such
an offer. Therefore, it is crucial for organisations to recruit employees who
can fit with the organisational culture because they are likely to stay longer
in the company. The retention of high-calibre employees remains a key
issue among HR departments in both local and multinational firms. The
retention of local employees is important because they are the main source
of knowledge, skills and social networks available for leveraging the
business (Novicevic & Harvey, 2001). MNCs adopt a pluralist approach to
international staffing decisions between headquarters and subsidiaries
(Bartlett & Ghoshal, 1998; Novicevic & Harvey, 2001). This helps
individuals with their career commitment and long-term membership in
the organisation (Reiche, 2007). Employees who are happy with their work
environment have fewer reasons to quit their jobs; so, managers should
prevent employee turnover by focusing on their employees’ job
satisfaction, motivation, remuneration and training and development
opportunities.

Job satisfaction
Job satisfaction has been treated as both a global concept referring to
overall satisfaction and as a facet-specific concept referring to various
aspects of work, including pay, supervision and workload. A number of

186
researchers (Cook et al., 1981; Anderson et al., 2001) have stated that job
satisfaction is widely relevant in industrial and organisational psychology.
Brayfield and Crockett (1955) argue that an employee who is satisfied at
work is more productive. Therefore, managers should ensure that
employees remain enthused with their work. Locke (1976: 1304) defines
job satisfaction as ‘a pleasurable or positive emotional state resulting from
the appraisal of one’s job or job experiences’. Greenberg and Baron (2003:
148) define job satisfaction as ‘positive and negative attitudes held by
individuals toward their jobs’. People are motivated to fulfil certain goals
that lead to satisfaction and productivity. Job satisfaction is a
psychological variable at micro-level and represents an effective response
to specific aspects of the job; it is an attitudinal, affective and cognitive
construct (Porter et al., 1974). Job satisfaction derives from motivational
factors such as autonomy, responsibility for tasks, clear job expectations,
organisational policies, professional interactions and perceived job status
(Luthans, 1995). It is very important for employees to have autonomy and
authority that allows them to participate in the decision-making process
when it comes to their work because this increases motivation to continue
to work for the organisation, fulfil responsibilities to others in the
workplace and complete tasks. Employee participation influences
performance and increases the satisfaction and productivity of employees
(Pfeffer, 1994). Employee participative work systems enhance employee
motivation and lead to greater quality of work and productivity. For
employees to stay with the organisation, they need to feel satisfied with
their job and commited to the organisation. Other factors that help
employees remain satisfied with their jobs include pay, recognition, good
relationships with co-workers, working conditions, opportunities for
personal growth through training and development and challenge in their
roles.

job status and Interpersonal employee rewards that generate job satisfaction.
recognition
autonomy Jobs that provide individuals with freedom to make decisions and
operate without close supervision.

personal growth Expansion of individual capabilities.

completion The ability to start and finish a project or job.

Defining job satisfaction

Various theories and investigations have tried to clarify job satisfaction at

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work. Maslow (1943) explained that human beings have five sets of needs:
psychology, safety, love, esteem and self-actualisation. He visualised these
needs in a hierarchy or pyramid, in which one need must be satisfied
before the next can be satisfied. Herzberg, Maunser and Snyderman (1959)
later concluded that job satisfaction consists of hygiene factors and
motivators. Hygiene factors include company policy and administration,
supervision, salary, interpersonal relations and working conditions.
Motivators influence the individual’s determination and productivity and
include responsibility, advancement, achievement, recognition and the
nature of the work itself. Hackman and Oldham (1976) added further
dimensions to the concept of job satisfaction, such as task identity, task
significance, skill variety, autonomy and feedback. They focused on the
importance of these job characteristics in the achievement of workers’
satisfaction and motivation.

Achievement A self-administered reward that is derived when a person reaches a

challenging goal.

Smith, Kendall and Hulin (1969) developed the Job descriptive Index
(JDI), a measure of job satisfaction that consists of five aspects of work:

1. pay
2. promotion
3. supervision
4. co-workers
5. the work itself.

JDI is the most frequently used measurement for satisfaction at work

(Kinicki et al., 2002), and various researchers and managers have used it to
assess employee attitudes. The JDI’s validity as an instrument for
measuring job satisfaction is proven (Roznowski, 1989), and it remains
without doubt ‘the most carefully constructed measure of job satisfaction
in existence today’ (Vroom, 1964: 100).
Pay is the amount of money that a worker receives in return for their
services (see chapter 6 for more discussion of different forms of reward).
Price & Mueller, (1981) and Lum and colleagues (1998) suggest that it is a
significant facet of job satisfaction. Herzberg, Maunser and Snyderman
(1959) consider pay as a hygiene factor that leads to job satisfaction. The
discrepancy theory of satisfaction argues that satisfaction depends on what
the job involves and what the employee expects from it (Porter & Steers,

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1973). So, an employee is satisfied with pay only if it meets their
expectations of what they need to be paid (Schwab & Wallace, 1974).
Promotion is the advancement of a worker to a higher position in an
organisation (Price & Mueller 1981), and it is something that any
employee who is determined to advance his or her career seriously
considers. Company training programs enable employees to advance to
higher positions as they provide a means for them to develop their skills
through an investment by the organisation in their human capital. Hulin
(1968) suggests that employees are dissatisfied when they are stuck in a
job that does not have promotional opportunity, which reinforces the
importance for the organisation of signalling to their employees that they
are investing in their future careers by enrolling them in development
programs. In short, demonstrable opportunities for employee advancement
have a positive effect on job satisfaction and reduce employees’ turnover
intention.

promotion A promotion reward decision based on performance and seniority.

Supervisors and co-workers are also capable of ensuring employee job

satisfaction, according to Babin and Boles (1996). An employee who
enjoys good relationships with his or her co-workers is more likely to
remain in an organisation and cooperate with others to achieve company
objectives. If a worker does not have a good relationship with his or her
supervisor, however, it is likely they he or she will not be satisfied with
multiple facets of his or her job. It is therefore important that supervisors
establish a healthy relationship with workers and promote collegiality
between workers to ensure that individuals in their team are satisfied with
their jobs (Babin & Boles, 1996). Finally, the work itself plays a key role
in job satisfaction. Results have shown that employees who are enjoying
their work, are satisfied and less likely to leave the organisation (Porter et
al., 1974).
Price and Mueller (1981) developed a causal model for turnover with in
which job satisfaction and some of its determinants are said to influence
turnover. In the model there are seven determinants that influence turnover
indirectly through job satisfaction:

1. routinisation
2. participation
3. instrumental communication
4. integration

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 5. pay
6. distributive justice
7. promotional opportunity.

Organisational commitment
Organisational commitment is associated with issues that influence the
entire organisation, while job satisfaction is concerned with job aspects of
an employee. According to Williams and Hazer (1986), organisational
commitment is the extent to which individuals are associated with the
activities of the organisation in which they work. Porter et al. (1974)
suggest the following three factors promote organisational commitment:

1. a strong belief in and acceptance of organisational goals and values

2. a willingness to exert considerable effort on behalf of the
organisation
3. a definite desire to maintain organisational membership.

Employees who are committed to the organisation should understand its

objectives and should work hard towards achieving those objectives.
Moreover, Meyer and Allen (1991) argue that organisational commitment
consists of three components which indicate a desire (affective
commitment), a need (continuance commitment) and an obligation
(normative commitment) to remain in an organisation. This model explains
that employees with affective commitment remain in the company simply
because they choose to, those with continuance commitment remain
because it is essential for them to, and those with normative commitment
remain because they feel obliged to do so. Therefore, to understand an
employee commitment to an organisation, we must examine these
psychological states; they may help to characterise the employee’s
relationship with the organisation and predict whether he or she is likely to
remain with the organisation (Meyer, Allen & Smith, 1993).

organisational The extent to which individuals associate themselves with the

commitment activities of the organisation for which they work.

Satisfied workers are more likely to remain with an organisation and

participate in the organisation’s activities than are dissatisfied workers
(Locke & Latham, 2006). Evidence from various studies has suggested a
strong relationship between job satisfaction and organisational
commitment (Lee & Mowday, 1987; Williams & Hazer, 1986; Rayton,

190
2006). However, other studies (Bateman & Strasser, 1984; Vandenberg &
Lance, 1992) suggest that, to the contrary, organisational commitment
determines satisfaction. Further studies suggest that there is no correlation
between satisfaction and organisational commitment (Currivan, 1999;
Curry et al., 1986; Rayton, 2006), attributing the lack of a demonstrable
relationship between job satisfaction and organisational commitment to a
likely ‘spurious relationship’ between those two factors (Rayton, 2006:
124).

Employee turnover intention

Employee turnover is a serious matter in any organisation as it costs a
company two of its most important resources: time (to hire new employees
or find another person to perform the tasks) and money (the cost in hiring
and training new workers) (Singh & Loncar, 2010). Early studies
(Brayfield & Crockett, 1955; Herzberg, Maunser & Snyderman, 1957;
Vroom, 1964) concluded that an employee is more likely to leave when he
or she is not satisfied at work. Since then, most studies have concentrated
on job satisfaction as the main factor that influences employee turnover.
Although organisations have studied the reasons for employee turnover, it
is a persistent problem for many (Porter et al., 1974). As the costs of
employee turnover increase, organisations must inevitably examine the
factors that contribute to employees’ turnover intention (Koch & Steers,
1978).
Hulin (1968) examined the effect of job satisfaction on turnover. Job
satisfaction aspects such as pay and promotional opportunities predict any
decrease in turnover rates among employees. However, macro-level
aspects, such as changes in the labour market and unemployment rates
may also raise or lower turnover intention. Studies have focused on
employee turnover intentions, since information on workers who leave
their jobs by choice has proven tough to obtain (Currivan, 1999). It is
suggested that external factors influence actual turnover (Shore & Martin,
1989), and so managers must develop a better understanding of turnover
intentions from both internal and external perspectives to keep employee
turnover to a minimum.
Mobley (1977) explains that several steps occur before an individual
decides to quit a job with which he or she is dissatisfied. Dissatisfaction
leads him or her to think of quitting and searching for another job. Further,
a study by Mobley, Horner and Hollingsworth (1978) concludes that job
dissatisfaction has a greater effect on the thought of quitting and the

191
intention to quit than on turnover. Tett and Meyer (1993) suggest that
satisfaction is closely related to turnover intentions, while organisational
commitment is closely related to actual turnover. However, according to
Michaels and Spector (1982), job satisfaction has a small but significant
effect on turnover in comparison to the effect of organisational
commitment.

Strategies for employee retention

Working environment and conditions
The working environment is considered one of the most important factors
in employee retention (Zeytinoglu & Denton, 2006). The work
environment in industrial workplaces may cause employees to be exposed
to noise or toxic substances and manual handling risks (e.g. heavy lifting
work). Yet the work environment is equally important in consumer and
client-facing sectors such as service industries (Normann, 1986). Here, the
interaction between employees and clients is more psychological than
physical because it creates trust between the client and the vendor, which
contributes to the client’s purchasing intention. The psychological work
environment consists of workload, decision, support, latitude and decision-
making. It is crucial for managers to understand that employees need a
good work environment where they feel valued and can make a difference
to the organisation. Important aspects from the psychological point of view
are job content, job-switching, opportunities for personal and professional
development, opportunity for continuous training, ability to use personal
knowledge and experience, opportunities to influence the personal work
situation and contacts with colleagues and management. Managers should
recognise the emerging needs of employees and provide a healthy and safe
environment for employees to ensure they remain committed to the
organisation; good working conditions will motivate employees to stay in
an organisation. Employees tend to stay in corporations that provide them
with a positive work environment where they feel that there is trust, open
communication, team spirit and a good physical environment, and that
they are valued and make a difference. In particular, the physical work
environment plays a pivotal role in employees’ decision to leave or
remain, and it is considered a major factor in employee retention.

working environment Conditions that contribute to the creation of a healthy, safe and
and conditions enjoyable workplace.

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 We can increase employee retention levels by improving the work–life
balance of employees. Flexible working hours policies (such as flexible
rosters, compressed working weeks, part-time and job-sharing
arrangements, working from home and teleworking arrangements) can
improve the working conditions of employees with children. Employees
grow more loyal when they can identify themselves in a group and
contribute to the performance of a group (Van Knippenberg, 2000).
Therefore, managers should focus on team performance and on helping the
individual to feel part of the group. Managers can promote teamwork by
determining the key requirements for team working through knowledge,
skills and abilities of employees. This can be achieved through conducting
job selection in a team-based environment, training employees in
teamwork and including performance indicators of team-based work in
appraisals (Stevens & Campion, 1994). In Australian organisations,
flexible working time arrangements reduce turnover for managers,
professionals and technicians as well as skilled workers (Smith,
Oczkowski & Smith, 2011). Such policies sit within a range of factors to
consider in improving employee retention, including job security and
recognition, training and development, supervisor support culture, good
work environment, work–life balance and organisational justice (Stein,
2000; Beck, 2001; Clarke, 2001).

Remuneration and benefits

Remuneration and benefits play a key role in retaining good employees,
particularly those who perform exceptionally or have indispensable,
unique skills. A competitive remuneration package demonstrates the
company’s strong commitment to its employees and builds strong
employee commitment in turn. Compensation is the most popular retention
strategy (Horwitz, Heng & Quazi, 2003) and organisations that offer high
compensation packages attract a large number of candidates and usually
enjoy a low turnover rate, at least in the short term. Organisations may
seek to attract and retain talented employees by offering attractive reward
packages that include stock options, special pay, retention pay, gain share
pay, performance base pay and bonuses. However, as Smith (2001) argues,
such remuneration may encourage high-calibre applicants to join an
organisation but is not sufficient to retain them in the long term.

remuneration Intrinsic rewards (e.g. variety, challenge and autonomy) and

extrinsic rewards (e.g. recognition, cash bonuses, awards or free
trips).

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benefits Rewards that an employee receives on top of cash pay.

It is important to distinguish between standard compensation, such as

salary, wages and benefits and what is normally referred to as pay for
performance (see chapter 6 for more discussion of pay for performance).
Reward is the offer an organisation makes to its employees for their
contribution and encouraging them to do well in the future. Reward can be
intrinsic (i.e. cash) or extrinsic (e.g. cash bonuses and other financial
benefits, professional awards, free trips or recognition); see chapter 6 for
further discussion. Of the extrinsic kinds, recognition from managers, team
members, co-workers and customers can enhance employee loyalty in the
organisation. For example, in Japanese organisations, the employee benefit
system includes healthcare, childcare support and retirement schemes,
which enhance employee satisfaction and help to ensure that employees
remain committed to the organisation (Yamamoto, 2011). MNCs have
introduced compensation packages to prevent employee turnover (Tang,
Kim & Tang, 2000) and may offer their expatriate assignees salary and
benefits compensation comparable to another part of the organisation (e.g.
another subsidiary, headquarters) to create competitive, equitable
remuneration across the organisation’s operations (Briscoe, Schuler &
Tarique, 2012).

intrinsic rewards Rewards derived from the job itself, such as variety, challenge and
autonomy.

extrinsic rewards Rewards derived from, for example, pay and fringe benefits,
promotion or advancement opportunities in the organisation, the
social climate and physical working conditions.

financial benefits Fringe benefits, superannuation or pension plans, healthcare

cover, vacations.

Training and development interventions

Training and development opportunities are an important factor in
employee retention. Organisations invest in the training and development
of employees who can provide them with a return on that investment
(Messmer, 2000). Managers of talented employees should provide a
proficiency analysis, give opinions on employee interests, appraise the
capabilities of employees and develop an action plan according to the
needs of employees. Managers focus on workforce ‘analytics’ by focusing
on staffing processes to analyse and optimise the whole system or improve

194
individual aspects (Stepstone, 2005). Organisations invest in human capital
through training that helps employees to enhance the skills and knowledge
they need to perform well in their jobs (Noe, 1999). As organisations
operate in a globally competitive environment, managers should ensure
that employees are equipped with the appropriate training to perform their
duties now and in the future; for example, interpersonal communication,
technological knowledge, problem solving and basic literacy. Large
organisations tend to spend more on physical resources to retain their
talent (Black & Lynch, 1996) and firms that offer more benefits tend to
train their employees more by adopting innovative job practices (Frazis et
al., 1998). Leading professional services companies recognise the
importance of comprehensive training, skills and career development as a
factor in attracting and retaining intellectual capital (Accenture, 2001).

training and Schemes in which organisations invest to help employees improve

development their skills and knowledge.

A company should invest in employees’ career development in order to

retain intellectual capital. Career development is a formalised, organised
and planned effort that considers both what the organisation requires from
its employees and what the individual needs to achieve progression. As we
have seen, career advancement opportunities motivate employees to stay
with an organisation and organisations can strengthen the bond with the
employees in this way (Steel, Griffeth & Hom, 2002). From this
perspective, a company should offer training and development schemes
that aim to equip its employees with skills that are valued in the labour
market (Butler & Waldroop, 2001). Career development is beneficial for
employees and employer alike: organisations that seek competitive
advantage require talented employees with unique skills, and employees
need particular skills and training to enhance and cultivate their
competencies in the labour market (Prince, 2005). For example, German
firms that focus on the long-term investment of human capital through
employee training and development have tended to retain talent (Festing,
Schäfer & Scullion, 2013); in French and Swedish firms, learning and
development opportunities are also crucial for the retention of talented
employees (Hytter, 2007). The Ritz-Carlton Hotel Company is a global
organisation that provides intensive training to transform its newly hired
employees into the kind of service providers who win awards. It focuses
on specific training and asks the five best employees in each job category
to deliver it.

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Inpatriation, nationalisation and repatriation
The concept of inpatriation involves the transfer of local nationals in a
MNC on a semi-permanent or permanent basis (Harvey & Buckley, 1997;
Harvey, Novicevic & Speier, 2000). Inpatriation reduces the share of
foreign expatriates through a localisation strategy and fosters international
assignments for local staff (see chapter 3).
Nationalisation is one of the retention strategies that dictate aspects of
employment practices in both the public and private sectors, encouraging
and supporting the employment of local people. Nationalisation strategies
are commonly used in United Arab Emirates (UAE) countries and involve
mainstream strategic HR activities such as selection and recruitment,
education and training, career management and the design of reward
systems (Rees, Mamman & Bin Braik, 2007). In the case of UAE,
nationalisation is known as ‘Emiratisation’ and described as the
recruitment and development of UAE nationals to increase their
employability and so reduce the country’s dependence on an expatriate
workforce (Abed, Vine & Vine, 1996; Dale, 2004; Ingo, 2008).
Emiratisation is a process governmental and private sector organisations
use with the aim of retaining their local workforce by providing work
opportunities and career prospects to local workers.
Repatriation is a process of change and adjustment that expatriates
undergo at the end of an assignment (Suutari & Brewster, 2003).
Repatriating employees need support to reconstruct their identities in their
home organisations (Harvey & Novicevic, 2006). This support can be
provided to them through short-term assignments as assistance towards the
repatriation process (Starr, 2009). Crucial aspects in the repatriation
process are career management, clear repatriation policies and practices
and accurate working expectations (Sánchez Vidal, Sanz Valle & Aragón,
2008). Expatriates from North American MNCs perceive the
companywide appreciation of global experience and opportunities for
career planning as key to the repatriation process (Lazarova & Caligiuri,
2001). The level of adjustment repatriates achieve contributes to their
levels of job satisfaction and job attachment (Stevens et al., 2007). For
Australian professionals, the key factors for repatriation in the home
country include national identity, length of time already spent overseas and
quality of life available in the home country (De Cieri et al., 2009). MNCs
can achieve greater employee retention by adjusting generalisable
practices from the home country to create context-specific practices that
are flexible across different host environments (table 7.1 shows strategies

196
that companies can use and gives examples of each type).

repatriation The transfer of local nationals to an MNC on a semi-permanent or

permanent basis.

Table 7.1 Strategies for employee retention

Strategy
Approaches
area

Working Health and safety issues, working conditions,

environment relationships with co-workers and supervisors.

Remuneration Monetary and non-monetary rewards.

Training and Staff development programs, development of

development skills and abilities, personal growth.

Inpatriation Inpatriation strategy aims the transfer of local

and nationals to the MNC’s on a semi-permanent to
repatriation permanent basis. Repatriation strategy aims to
provide, regulate and promote employment for
nationals as retention strategy.

Conclusion
In this chapter, we have explained that employee retention refers to the
ability of the organisation to keep its valuable employees through various
strategies, including managing job satisfaction and motivation, offering
competitive remuneration packages and making training and development
opportunities available. High levels of job satisfaction are the key to
employee retention and arise from work-related issues such as autonomy,
task requirements, organisational policies, professional interactions and
perceived job status. A company can achieve good employee retention
through establishing favourable working conditions; offering financial and
non-financial benefits and training and development opportunities; and
managing inpatriation and repatriation strategies. To retain staff,
organisations need to enhance and cultivate the competencies and skills of

197
their employees through significant investment.

Take-home messages
It is important to understand that employee retention offers benefits
for both employees and the organisation, and that HR managers need
to focus on retaining staff and reducing employee turnover intentions.
Job satisfaction, achieved through remuneration, promotion
opportunities, supervision, collegiality and challenging tasks, has
been found to be a sufficient reason for employees to stay with an
organisation. Also, affective, continuance and normative commitment
can increase employees’ willingness to remain in the organisation.
Strategies that can enhance employee retention include good working
conditions, a healthy work environment, intrinsic and extrinsic
rewards, on-the-job training, ongoing career development schemes
and the recruitment of local employees.

Closing the learning loop

1. Why should HR managers be aware of employee retention issues?
2. How can employee retention provide organisations with a
competitive advantage?
3. Why do job satisfaction and organisational commitment help
prevent employee turnover intentions?
4. What strategies can HR managers use to retain talented
employees?

Case study 7.1 Boots

Boots, a UK retailer, is considered by many as the market leader in the
health and beauty retail industry. It was established in the 19th century and
today has a huge presence in the UK, operating more than 1500 stores.
Boots employs more than 62 000 people and is considered a major
employer, with staff working in roles across distribution, logistics and
support. The Boots brand is highly valuable as customers associate it with
trust and expertise given the company’s reputation for high-quality
customer care. The company is always looking to its future by consistently
hiring exceptional young people, mostly graduates, to become part of the
Boots heritage, a dedication to development that pays dividends in terms

198
of employee retention: more than half of the current Boots workforce
(32 000 people) has been with the company for 5 years or longer.

Employee development
Boots has consistently focused on the development of its employees and
continues to do so. This is evident not only in the company’s record of
winning industry awards, but also in its framework for employee
development. Employees are encouraged to reach their full potential
through programs such as the award-winning Work Inspiration program,
which offers young people opportunities to gain work experience, and its
apprenticeship scheme for school leavers. Further, the graduate program
converts young professionals into future store leaders and is a vital part of
Boots’ company culture.

Career development
Career development is important to Boots and the company continually
invests in its people through a range of internal masterclass and coaching
opportunities. A dedicated program is also available for employees
interested in managerial roles, and this training support is available at all
levels, from first-time line managers to the senior leadership team. As
high-quality customer care is one of the hallmarks of Boots, the main
focus in-store is to deliver excellent customer care. To that end, employees
are trained to address customers’ needs and to find personalised solutions
to people’s health problems. Constant training and support are available
through the company’s internal eLearning system and through professional
development days.

Workplace health
Boots is committed to the health of its employees. Employees have the
option to assess their health and monitor their weight and diet through
online health assessments, modifying their lifestyle where needed. Further,
comprehensive information is available on the company intranet and
public website, to help its managers and employees cope with health
conditions and lead healthy lives. In recognition of the company’s efforts,
Boots’ Occupational Health Service was granted Safe Effective Quality
Occupational Health Services (SEQOHS) accreditation in 2011.
Case study questions
1. Which career development strategies have been adopted by Boots?
2. In what ways do Boots’ programs enhance the career development of

199
its employees?
3. Describe the benefits of the workplace health programs Boots provides
to its employees?
4. How effective do you think Boots’ strategies may be in terms of
preventing absenteeism and enhancing employee retention, and why?

Activities
Individual activity
Imagine that you are the chief executive of an MNC in an industry that
interests you. You are preparing a discussion paper in which you
explain why employee retention is crucial for your organisation. In
your paper, discuss the main strategies your organisation has used to
retain its valuable staff and explain why they did or did not work.
Researching employee retention
Using the internet, locate and research a company that offers
exceptional employee support in one or more of the following aspects:

working conditions
reward and incentive systems
training and development.

Why do you think this firm has decided on this approach to the
financial and/or non-financial benefits it offers?

Online resources
For instructors: answers to activities; long media article with
questions.
For students: further reading; answers to case study; IHRM in
practice.

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 8 International labour relations
Mustafa F. Özbilgin

Learning objectives
To introduce and define the concept of international labour relations.
To explain the historical transformation of labour relations in the
international context.
To define international labour standards and explain why they are
sometimes controversial.
To present a multilevel model of international labour relations and
explore how macro-, meso- and micro-level actors and stakeholders
contribute to the crafting, transposition, implementation and
monitoring of international labour relations and standards.
To explain why nation states and multinational companies choose to
adopt international labour relations.
To present two case studies that illustrate the complexity of adopting
international labour standards at national level.

Learning outcomes
After reading this chapter, students will be able to:

understand international labour relations, their key stakeholders and

processes
appreciate the historical transformation of labour relations in the
international context
define international labour standards and debate sources of and
controversies surrounding international labour standards
identify the macro-, meso- and micro-level actors and stakeholders in
international labour relations and appreciate their respective roles in
the crafting, transposition, implementation and monitoring of
international labour relations and standards
explain why nation states and multinational companies may choose to
adopt international labour relations

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 account for the complexity of adoption of international labour
standards at national level.

Introduction
The field of research known as international labour relations (ILR)
examines how institutional stakeholders (such as international
organisations, supranational bodies, trade unions, the state, society and
industry) shape the conditions, standards and relations of labour. ILR is
different from domestic labour relations because it allows us to consider
multiple national settings. As such, to understand ILR we need an
appreciation of both various economic, social, political and institutional
arrangements (Lipietz, 1997) at the domestic level and the relationships
between institutional actors in two or more national settings. It is important
to note that, although ILR policies and discussions may take place
internationally, labour relations practice remains firmly localised. As the
policy and practice of labour relations span international treaties, national
regulation and local practices, this chapter’s structure reflects the
multilevel nature of labour relations, taking into account macro-, meso-
and micro-levels (that is, labour relations at international, national and
organisational levels).

international labour A field of research that examines how institutional stakeholders,

relations such as international organisations, supranational bodies, trade
unions, the state, the society and the industry, shape the conditions,
standards and relations of labour.

The chapter approaches the subject from four angles. First, we examine
the contemporary context of labour relations, putting the transformation of
labour relations in its historical setting; such context helps us to understand
how and why ILR is practised today and how ILR connects with IHRM.
Second, we assess the range of labour standards (e.g. wages and
conditions) on which ILR activities focus in the international arena. The
achievement of labour standards remains a distant dream and yet setting
and maintaining labour standards are important mechanisms in protecting
workers’ rights. Third, we examine the key stakeholders (e.g. trade unions)
with which international assignees and international HR managers must
negotiate and agree labour standards. This section offers a political reading
of the ILR and assesses the influence of its varied institutional actors.
Fourth, we explain the three reasons for adoption of international labour
standards – the principled stance, solidarity and voluntarism – exploring

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the implications of each rationale. At the end of the chapter, we offer two
case studies, from Turkey and South Africa, that highlight the complexity
of adopting and implementing ILS at national level.

Contemporary ILR: the historical context

To understand the history of ILR, we need to understand the drivers that
propelled key institutional actors such as nation states, trade unions and
international organisations to engage with the terms and conditions of
labour. The emergence of large global firms as dominant stakeholders in
the field of ILR has alarmed the labour unions in nation states, which are
concerned that the operations of global firms may effectively lower the
international standards, terms and conditions of labour (Marginson et al.,
1995). For example, global firms can cause social and economic dumping,
pulling down wages and damaging workers’ terms and conditions, as they
relocate their business functions to countries and regions that offer cheap
labour and weaker terms and conditions of labour.
In response to the challenge that global firms pose to labour standards,
trade unions formed international alliances that have sectoral and global
reach. However, these alliances did not find it easy to counterbalance the
force of international firms in influencing ILS. The emergence of
resistance against the imbalanced transformation of labour relations in
favour of international firms and to the detriment of labour took multiple
forms such as trade union alliances and work-council formations (Pries &
Seeliger, 2013). Collaboration between trade unions can often be complex,
due to differences in structure, function and substance in worker
collectives (e.g. trade unions) across countries. Nation states, similarly to
worker collectives, have developed alliances with other nations, based on
common values and shared understanding of labour relations, to more
effectively influence ILR. International collaboration between nation states
on labour standards has also been complicated due to differences in
national priorities between states.
Therefore, it would be an understatement to suggest that ILR has been
subject to fundamental challenges and transformation. Labour relations
have not transformed to the same degree or in the same form across
countries and sectors, due to divergence of national interests. However, the
transformation of labour relations does have some core themes that have
been commonly studied. First, scholars in the field of ILR have been
concerned with the withdrawal of the state from a regulatory role for
labour in industrialised countries. The practical implication of this

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transformation has been that state interests have become more closely
aligned with those of international firms, and less so with the interests of
workers and worker collectives (Purcell, 1993). Second, the power of
worker representation and trade unions has declined in the traditional
tripartite relationship between workers, employers and the state (Dundon
et al. 2004), with power now skewed towards employer and corporate
interests. Third, in this new order, notions of individualism and
voluntarism (Jonsen et al., 2013; Özbilgin and Tatli, 2011) are now seen as
fundamental values of labour relations and popular recipes for the effective
management of labour relations.
This altered international setting presents a relatively hostile context for
the collective representation of worker interests and the setting of
international standards for labour relations. In response to change, workers
have transformed their traditional mechanisms (such as solidarity,
collective bargaining, negotiations, strikes) for counterbalancing the
interests of employers, as in the case of Latin American unions (Anner,
2011). There is some continuity, in terms of the forms of collective action
that are available to trade unions, but as Townsend, Wilkinson and
Burgess (forthcoming) explain, new forms of employment relations have
emerged in response to individualisation and de-unionisation, which have
emphasised collaboration rather than conflict between interests of workers
and employers.

Labour standards in the international context

International labour standards (ILS) may be defined using a range of
norms about the terms (e.g. working time), conditions (e.g. equality), and
experiences (e.g. wellbeing) of workers – a dynamically debated set of
economic, social, and moral considerations. Labour standards vary
markedly from nation to nation; as individual countries often take different
economic, social and political paths, they develop their own norms and
standards of labour. ILS are aspirational standards that are agreed and
enshrined in international, supranational and regional conventions, which
seek to reconcile areas of divergence between terms and conditions of
labour in different nations; they represent a movement towards common
standards, based on shared economic, social and ethical concerns. ILS
remain a distant dream, among the most contested issues in international
trade and politics.

international labour Aspirational standards agreed and enshrined in international,

standards supranational and regional conventions, which seek to reconcile

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 areas of divergence between terms and conditions of labour in
different nations. ILS represent a movement towards common
labour standards, based on shared economic, social and ethical
concerns.

Many institutional actors have an interest in shaping the debate on ILS,

including international and supranational organisations. The former
include the International Labour Organization (ILO), World Trade
Organization (WTO) and United Nations (UN) and the latter include the
Association of Southeast Asian Nations (ASEAN), European Union (EU),
international trade unions, international identity networks and social and
political lobbies. These actors have joined a wide-ranging debate on labour
standards, discussing matters such as freedom of association among
workers, working time arrangements, the use of forced labour and slavery,
child labour, health and safety at work, minimum pay, discrimination at
work and labour migration.

Exercise
What roles do the ILO and WTO play in shaping the debate on ILS?
How do their agendas converge and diverge? Check out the
organisations’ websites for relevant information about ILS.

Although the subject of ILS appears innocuous at first sight, the matter
of setting and complying with standards is controversial, since some
countries experience disproportionate economic and social effects when
they adopt labour standards. For example, there is widespread legal
protections against workplace gender discrimination, but fewer countries
yet offer legal protection against workplace discrimination based on sexual
orientation. There remain significant differences in implementation and
monitoring of standards, and in the penalties imposed for non-compliance,
among countries that offer gender equality legislation. Here, it is critical to
understand the underlying reasons for each country’s local methods in
managing labour relations, which range from disparities of economic
power and differences in historical context to contrasting social norms and
ethical approaches. Therefore, it is important to question what the creation
of a single set of standards means for different countries (see Charnovitz,
1987 for a detailed historical overview of ILS), as their adoption is likely

214
to create strongly disproportionate impacts in each country that takes part.
If ILS are to be set, it is critically important to ask whose labour standards
should be adopted as ILS; in answering this question, we highlight power
disparities between countries that assert the importance of ILS and other
nations.
If disparities between national conditions and systems render adoption
of international standards difficult, why do countries ratify and adopt these
standards? In a recent study, Baccini and Koenig-Archibugi (2012) offer
two theory-based responses. First, the sociological institutional approach
suggests that countries choose to ratify ILS agreements to conform to the
normative expectations of allied countries in their regional or
supranational networks (e.g. European laws against different forms of
discrimination encourage nation states to converge on equality standards).
Second, the rational institutional approach posits that countries ratify
such agreements to remain competitive in a global market in which non-
compliance may lead to the loss of trade opportunities (e.g. barriers to
trade imposed because of a country’s acceptance of child labour).

sociological institutional The proposition that countries choose to ratify ILS agreements to
approach conform to the normative expectations of allied countries in their
regional or supranational networks.

rational institutional The proposition that countries ratify ILS agreements to remain
approach competitive in a global market in which non-compliance may lead
to the loss of trade opportunities.

A multilevel model of ILR

Multiple layers of stakeholders shape the field of ILR: our model
encompasses the macro-, meso- and micro-levels (that is, international,
national and organisational levels). At the macro-level, organisations such
as the ILO, WTO and sector, industry and interest-specific international
bodies uphold ILS. At the meso-level, national actors such trade unions,
employers’ associations, works councils, the state and social, political and
economic pressure groups shape the national interpretation of international
standards. At the micro-level, stakeholders such as organisational leaders,
line managers and opinion and change agents in organisations assume the
responsibility of promoting, monitoring and managing the implementation
of international standards. The chain of responsibility after a nation ratifies
an ILS is diffuse and complicated by layers of influence at all three levels.
It is therefore important to study ILR as a phenomenon in the context of

215
this complex set of influences.

Macro-level stakeholders
The international field of labour relations is replete with interest groups
and lobbies that represent nation states, regional alliances and the
collective interests of global organisations, multinational companies
(MNCs) and international confederations of trade unions. In this section,
we look at the key players at the macro-level. The ILO is the premier
reference organisation, as it sets ILS through international conventions
among its member countries. Each member country is represented in the
ILO not only by its national government but also by its worker and
employer representatives. The ILO was established in 1919 as part of the
Treaty of Versailles at the end of the First World War. Today, it boasts 182
member countries, more than 120 of which are signatories to the eight core
standards, based on four principles that shape ILO’s work:

1. the right to collective bargaining

2. the right to freedom of association
3. the abolition of child labour and forced labour
4. the fight against discrimination at work.

macro-level Actors at the international level, including international agencies,

stakeholders supranational organisations, regional blocks, global and
international firms and international trade unions.

The ILO’s key aim is to foster peace in the world by promoting better
conditions of work and life for everyone. The ILO uses international
agreements and conventions as a way to seek agreement for common
standards that nations can agree on and ratify at meso-level. Member states
do not only adopt and ratify as law the conventions on which they have
agreed; they must also report regularly on their progress in implementing
the standards.
WTO members uphold certain principles set out in the core ILO
conventions: freedom of association, the elimination of forced and child
labour, and the fight against discrimination at work. Given these shared
principles, the WTO plays a complementary role to the ILO. There are
other regional and supranational alliances among nation states, such as the
EU, North American Free Trade Association (NAFTA), ASEAN, the Arab
League and the African Union (AU), among others. Such supranational

216
alliances also have a range of perspectives on the setting of international
standards. Some of the powerful nation states that participate in
supranational alliances also assert their own agendas for labour standards
through unilateral arrangements in the international arena, which has a
considerable impact.
Multinational, international and global firms exert influence on the ILS
debate both in their own right and as part of strategic alliances.
Commercial enterprises have as much coercive power as nation states,
which clamour to attract global firms in an effort to foster economic
growth and reduce unemployment and poverty. Therefore, the interests of
MNCs are also represented through their political influence on nation
states (Rodriguez et al., 2006).
The International Trade Union Confederation (ITUC) is an important
stakeholder in the international arena of labour relations. Representing
trade unions and affiliated organisations from 156 countries, ITUC
represents the labour relations interests of 125 million workers. ITUC
asserts influence in negotiating terms and conditions of labour at the
international level, and seeks to combat the negative consequences of
international trade for workers. Such negative consequences may include a
loss of jobs due to offshoring, the denigration of workers’ rights and a
decline in terms and conditions of employment (www.ituc-csi.org). ITUC
collaborates with Global Unions (www.global-unions.org), an
international trade unions organisation that upholds the ideals and
priorities of the trade union movement. ITUC and Global Unions organise
to defend human rights and labour standards across the world.
Other organisations are also instrumental in generating data for
monitoring, studying and effectively managing labour relations. One
prominent example is the International Labour and Employment Relations
Association (ILERA), founded in 1966, which focuses on scientific studies
of labour and employment relations in the international context by
fostering the development of national industrial relations specialists;
enabling knowledge transfer and sharing through research and education in
labour relations; hosting global congresses; and fostering international
studies of aspects of labour relations.

Exercise
What roles do the ILO and WTO play in setting international labour

217
 standards? What are the differences and similarities in their respective
approaches and responsibilities? Check out the websites of both
institutions for more information about their goals and activities.

Meso-level stakeholders
Although ILR refers to the rules, resources and relations of labour in the
international context, the terms of internationally agreed standards and
actions are always subject to renegotiation and wide interpretation at
meso-level (that is, nationally or locally). Here, the conditions, terms, rules
and resources of labour relations are negotiated among national actors,
which may include a configuration of the state, trade unions, employers’
associations and other economic, political and social lobbies. Nation states
must ratify ILS in order to adopt them as national standards and so ILS
themselves are subject to local reinterpretation; this process allows for the
divergence of interests across nation states and among meso-level
stakeholders in each nation state. Therefore, a range of nation states may
interpret a single set of standards in multiple ways and the unique
institutional setting in each country may affect the form of the ratified
standards.

meso-level stakeholders Actors at the national level, including workers’ collectives, the
state, employers’ associations, lobbies, interest groups and society.

Further, many institutions, networks and interest groups seek to

influence and shape the policy and practice of ILR not only at the meso-
level but also at macro- and micro-levels. Some national contexts offer
plentiful opportunities for institutional actors such as employers’ unions,
trade unions, lobbies and interest groups to speak to the international
arena.

Exercise
Identify a country and search for labour standards agencies including
the state regulator, trade unions, employers’ associations and other
stakeholders and discuss their effectiveness in their ability to enforce
and/or oppose ILS at the national level.

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Micro-level stakeholders
Multinational, international and global organisations are sites in which ILR
are practised and ILS are implemented; at the micro-level, the terms and
conditions of those labour relations and standards are played out. Micro-
level stakeholders, including organisational leaders and gatekeepers, can
interpret, promote or resist standards, depending on their local tradition
and institutional customs. Studying micro-level practices is essential to
identifying potential gaps between ILS and organisational practices and to
locating disparities in how different regions, sectors and branches in
organisations are implementing standards.

micro-level stakeholders Actors at the organisational level, including managers, workers,

employers, pressure groups, shareholders, society and interest
groups.

Organisations operate in a relational context, in which they interact with

other significant labour relations institutions such as trade unions, works
councils and the state; with external stakeholders such as society and the
overlapping institutions of education, employment, justice, health and
safety; and with social institutions of family, religion, tradition and
customs. Therefore, any attempt to implement labour standards at the
organisational level should consider the interplay between organisational
processes and these institutional and individual actors inside and outside
the organisation. Civil Society Organisations (CSOs) are a remarkable
example of emergent stakeholders, with their advocacy of identity-based
standards (Fransen & Burgoon, 2013); one such organisation, the
International Lesbian, Gay, Bisexual, Trans and Intersex Association
(ILGA) promotes the equality of sexual orientation at work. Organisations
on either the international stage (e.g. Amnesty International) or the local
scene can address specific or broad concerns on labour relations. They can
launch campaigns and effect changes by galvanising support for a range of
causes through social and political action.

Exercise
Identify a country that seems to you to be progressive in its adoption of
ILS. Search for annual ILO reports on that country’s record of

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 violations of ILS in terms of gender equality. What are the
organisational and institutional barriers to full implementation of
gender equality in this country?

In summary, Table 8.1 shows the multilevel model of ILS and lists the
key stakeholders for each level. It also presents the main focus of ILS
activities at each level.

Table 8.1 Multilevel models of international labour relations –

stakeholders and focus

Key
Level Focus
stakeholders

Macro Nation states International negotiations on

Global, political, economic, social and
multinational and ethical terms and conditions for
international labour relations.
organisations
Trade unions and
employers
unions
Regulators of
international and
supranational
conventions

Meso The state Interpretation of the international

Trade unions standards at the national level
Employer among key actors.
associations Definition and interpretation of
Social, economic terms and conditions, drawing on
and political local interests.
lobbies

Micro Internal and Interpretation of standards through

external institutional strategic lenses and
organisational implementation at the level of

220
 actors practice.
Leaders in the
organisation

Reasons for meso- and micro-level adoption of

ILS
To understand ILR, we must explore the reasons why nation states (at
meso-level) and MNCs (at micro-level) adopt labour standards (Brown,
2000). There are three distinctly different political processes for the
adoption of labour standards in the international arena. These are the
principled, solidarity and voluntary approaches, which overlap to cover the
spectrum of reasons for the adoption of labour standards.

The principled approach

First, nation states and multinationals may choose to adopt labour
standards unilaterally based on a principled stance. For example, they can
use trade sanctions (e.g. suspension of trade relations) to enforce
compliance to certain standards of a political, economic and social nature,
including labour standards. In the 1980s, a number of countries introduced
principled trade sanctions to force the South African government to
abolish its apartheid regime. Unilateral trade sanctions are often saved for
severe cases of non-compliance with, or breach of expectations of, a nation
state. The principled approach may draw on rationales drawn from
economic thought (Palley, 2004) or from political or social philosophy
(Brown, 2000) to support the unilateral imposition of labour standards.
Some countries also choose to adopt a principled stance against certain
standards when they clash with the dominant economic, social, or political
choices and customs of the country.

principled approach A nation state or MNC’s unilateral imposition of trade restrictions

on a country that does not comply with a set of agreed labour
standards to which the nation or MNC agrees.

Exercise
Search online for ‘trade restrictions’ and ‘labour standards’ plus a

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 country (or regional block) of your choice. Identify sources that
illustrate how the country you have chosen imposed trade restrictions
on another country that did not comply with its labour standards.
Prepare a class presentation based on the information you found.

The solidarity approach

Solidarity or alliance behaviour (commonly known as a ‘multilateral
enforcement model’) among countries and organisations is the second
approach nations and MNCs may adopt in aiming to enforce labour
standards. In this model, a group of countries and organisations forms a
multilateral alliance to enforce compliance with an agreed set of labour
standards. The EU is one such solidarity model, as the member states agree
on standards of labour including terms, conditions and mobility and
enforce them within the EU. Another prominent example is NAFTA, a
trade agreement between the United States, Canada and Mexico; although
it seeks to enforce common standards of labour, NAFTA takes a less
coercive approach to imposing common labour standards than does the
EU.

solidarity approach A nation state or MNC’s multilateral alliance, formed with the aim
of enforcing compliance to an agreed set of labour standards; also
known as the multilateral enforcement model.

Exercise
Choose a sector and a country. Search online for alliances that unions
in your chosen sector have formed to promote labour standards in their
home country and/or internationally. Have the unions formed an
international coalition? What are their core labour standards and to
what extent do the standards converge with the ILO conventions?

The voluntary approach

Voluntary adoption of labour standards is the third approach nation states
and MNCs may adopt. Using this approach, organisations choose to adopt

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ILS on their own initiative without the need for coercive measures (e.g.
litigation). The voluntary model involves a spectrum of activities at the
organisational level, including championing of labour standards by leaders
in the organisation, which allows labour standards to ‘cascade’ down the
organisational hierarchy to the level of individual practice. Organisations
can choose to apply for approval under certain labour standards schemes:
for example, the SA 8000 standards. The granting body for these
standards, Social Accountability International (www.sa-intl.org), is a
multi-stakeholder non-governmental organisation (NGO) that aims to
advance the human rights of workers internationally. A company with SA
8000 certification is indicating to concerned customers that it has
voluntarily complied with a set of labour standards (Gilbert & Rasche,
2007). Although companies do act voluntarily, we find that the term
‘voluntarism’ does not sufficiently acknowledge the coercive power of
customers and other stakeholders in encouraging organisations to adopt
measures to meet labour standards.

voluntary approach A nation state or MNC’s adoption of ILS on their own initiative,
without the threat of coercive measures such as litigation.

Exercise
Identify an organisation which adopts SA 8000 and locate its annual
report, in which you may find a comment on its implementation. What
barriers to implementation has the organisation encountered? To what
extent do its targeted activities converge with the core standards of the
ILO?

Implications of ILS for international assignees

Variations in labour standards require that international assignees must
acquaint themselves with labour standards in countries to which they are
assigned. They need to understand the legal context, institutional
arrangements and labour relations practices in their destination country.
Yet such understanding is not sufficient to be able to operate effectively in
a new national setting. International assignees also need to develop
competencies for influencing, shaping and engaging with labour relations

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in a host country.

Implications for international HR managers

It is important to note that the home-country tradition of MNCs, in terms
of union recognition, use of child labour and management of equality,
diversity and inclusion, can affect the transposition and local adoption of
labour standards in other countries. However, the debate on this issue is
multifaceted. Hamill (1983, 1984) illustrated that United States firms had a
weaker propensity to recognise trade unions than did the United Kingdom
and Europe with their traditionally stronger industrial relations controls.
US and European MNCs may still adopt different strategies for
implementing labour standards in their branch networks. However, Muller
(1998) identified that even in the case of Germany, which has a highly
regulated employment relations system, the presence of a home-country
tradition or perspective does not necessarily block the transposition of
labour relations strategies.
HR managers in MNCs need to recognise international regulation,
national discussions and local practices in terms of labour relations.
Differences in economic, political and legal systems across countries
require local interpretation and implementation of ILS. As a result, MNCs
cannot offer a single, unified strategy in this area, nor can they delegate
these matters to national branches, as localised labour standards may
generate negative stakeholder reactions when they jar with international
standards. MNCs, with their global recognition, often operate in a volatile
environment in terms of labour relations disputes. As a result, they are
more likely engage with debates on the ILS as a strategic priority.

Conclusion
In this chapter, we have explored the field of ILR, an area of research and
business practice that explores how stakeholders, such as international
organisations, supranational bodies, trade unions, the state, society and
industry, seek to shape the conditions, standards and relations of labour.
We saw that a number of patterns underpin the transformation of
international industrial relations, including the withdrawal of the state from
labour regulation and the diminution of the collective power of worker
representation in the traditional tripartite relationship between workers,
employers and the state, as the power balance has become skewed towards
the interests of employers and corporations.

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 Next, we examined ILS, aspirational standards that are agreed on and
enshrined in international, supranational and regional conventions. Such
conventions seek to reconcile differences in national terms and conditions
of labour and to converge on common standards based on shared
economic, social and ethical concerns. However, ILS remain controversial
and debates about their interpretation and implementation indicate a gap
between the aspirational standards set out in conventions and what is
achieved in practice. There are also issues of the affordability of ILS, as
economically stronger countries tend to perform better in terms of their
compliance with standards. International, national and organisational
stakeholders play varied roles in shaping, agreeing, interpreting and
implementing ILR and ILS. While international actors shape, set and
monitor the debate on ILS, national stakeholders are required to interpret
and devolve responsibility to the level of practice using effective
campaigns and regulations. Organisations are where labour standards are
practised and experienced. Therefore, the organisational stakeholders are
important at the level of effective implementation. We set out broad and
interrelated reasons why nation states and MNCs choose to adopt ILR.
First, they can adopt a principled stance and impose trade restrictions on
countries that do not comply with labour standards the nation or firm has
adopted. Second, solidarity among nation states and organisations in terms
of alliances may lead others to comply with certain standards. Finally,
countries and organisations may adopt ILS on a voluntary basis without
the need for coercive measures.

Take-home messages
International labour relations take place in multi-actor, multilevel
contexts.
The historical transformation of labour relations in the international
context reveals the significance of struggles for power and influence
over standards of labour, and terms and conditions of work.
International labour standards are often defined globally but it is at
the local level that people receive and respond to them. As such, ILS
remain aspirational and are highly contested.
There are macro-, meso- and micro-level actors in ILR and their
respective roles and influence is highly variable in crafting,
transposing, implementing and monitoring ILR and ILS.
There are three different approaches to adoption of ILS: principled,
solidaristic and voluntary approach.

225
Closing the learning loop
1. What are international labour relations?
2. Why do countries have different stances on labour standards?
3. What or who are the key stakeholders in international labour
relations, and what roles do they play?
4. Why do nation states and organisations choose to adopt
international labour standards?
5. In what ways are international labour relations complex, and how
does this complexity affect the implementation of standards?

Case studies 8.1 and 8.2

The following case studies illustrate that, although individual countries

may be signatories of one or more standard, there is often a gap between
the aspirations ILS set out and the workplace practices that companies use.
The case studies help to identify complex, multilevel reasons for the
existence of this gap. Case study 8.1 concerns the death of a 13-year-old
boy, Ahmet Yildiz, in an industrial ‘accident’ in Turkey. Case study 8.2
discusses a wildcat miners’ strike in Marikana district, South Africa, and
its violent consequences.

Case study 8.1 The death of Ahmet Yildiz

Ahmet Yildiz was a 13-year-old Turkish boy from the southern
Mediterranean city of Adana. He was the youngest child of a family of
seven children. He was attending school and was working in a plastics
manufacturing firm after school, to pay for his school expenses. He earned
100 YTL (approximately AU$35) per week from his job at the factory. His
family thought that he was making tea and cleaning in the factory.
One day, a manager from the factory took an injured Ahmet to hospital,
where Ahmet died. Although the boss claimed Ahmet’s injuries were the
result of a traffic accident, doctors identified that heavy blows to both
sides of his head were the cause of death. The suspicious doctors passed
the case to police, who discovered that Ahmet had been operating a
pressing machine in the plant when there was an industrial accident, and
detained the factory owner.
The case of Ahmet Yildaz highlights that, although Turkey has ratified
international agreements that abolish child labour, companies there

226
continue to use child labour; several national and international reports have
also underlined Turkey’s problem in this area, including one remarkable
report by the ILO. This case was an urgent reminder that a comprehensive
strategy to tackle child labour must consider multiple stakeholders,
including businesspeople, employers, families, government agencies
(education, healthcare, police) and trade unions.

Case study 8.2 The Marikana massacre

In 2012, wildcat strikes at a Lonmin-owned mine in Marikana district,
South Africa, culminated in violent outbursts between the national police
service and miners, drawing widespread international attention. The
clashes killed 47 people and injured many workers.
This was a very complex case. The violent clashes involved four parties,
each with a different agenda: the leadership of the National Union of
Mineworkers (NUM), the striking members of the NUM, Lonmin
company security forces and the South African police force. It was
reported that the clashes began with an inter-union rivalry between
leadership and members of the union, when NUM leadership fired shots at
the NUM members who had launched the wildcat strike. The violence
grew and many workers, policy and security personnel were killed or
injured, leading the media to call it the ‘Marikana massacre’.
After rounds of mediation, the wildcat strikers accepted a deal to return
to work: a 22 per cent pay rise and a one-off payment. As commentators
have observed, the miners’ unrest had arisen from poor economic
conditions, a high unemployment rate and the lack of local affordable
accommodation for workers. The absence of a tradition of collective
bargaining in the South African mining sector and the poor economic
climate that platinum mines faced at the time also influenced the poor
terms and conditions at Marikana.
The Marikana case involved a complex set of circumstances and in such
cases we would expect the solution to be correspondingly complex. It
would be likely to include development activities in the organisation,
among corporate leaders, union leadership and members, the community
and workers at all levels. The international community would also need to
play a role, as it would set, enforce and broker labour standards.
Case study questions
After reading case studies 8.1 and 8.2, conduct independent web research
into the incidents they describe, and answer the following questions.

227
1. Which macro-, meso- and micro-level stakeholders may need to be
involved in responding to:

an individual incident such as those described in the case studies

systemic problems that come to light as a result of an incident?

2. If you were a national regulator of labour standards, how would you

deal with an incident such as those described in the case studies? Explain
your response, considering the principled, solidarity and voluntary
approaches to adoption of international standards.

Activities
Web research and presentation
Download a comparative table from the International Labour
Organization website (www.ilo.org), showing countries’ compliance
with ILS. Using the internet, research reasons for differences between
countries and potential solutions to resistance and non-compliance.
Present your research to the class.
Group discussion
Form groups. Each student in the group should choose one of the
stakeholders shown below and talk about the particular interests of that
stakeholder in labour relations. Next, the group should discuss what
each of the selected stakeholders would need to do to ensure
compliance with labour standards, based on the two case studies in this
chapter.
Stakeholders
Business owners
Consumers in a country that buys products
Consumers in the home country
Education sector
Employers
Employers’ associations
Families
Health sector
Local community
Non-union workers
Police service
State regulator for labour relations
Trade union leadership

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 Trade union members

Online resources
For instructors: answers to activities; long media article with
questions; additional questions and answers.
For students: further reading; answers to case studies; IHRM in
practice.

References
Anner, M. S. (2011). Solidarity transformed. Ithaca, NY: Cornell
University Press.
Baccini, L. and Koenig-Archibugi, M. (2012). Why do states commit to
international labor standards? The importance of ‘rivalry’ and
‘friendship’, LSE Working Papers Series. 23 August.
Brown, D. K. (2000). International trade and core labour standards: A
survey of the recent literature, OECD Labour Market and Social Policy
Occasional Papers, 43. Paris: OECD Publishing.
Charnovitz, S. (1987). Influence of international labour standards on the
world trading regime: A historical overview, International Labour
Review, 126: 565.
Dundon, T., Wilkinson, A., Marchington, M. and Ackers, P. (2004). The
meanings and purpose of employee voice, International Journal of
Human Resource Management, 15(6): 1149–70.
Fransen, L. and Burgoon, B. (2013), Global labour-standards advocacy by
European civil society organizations: Trends and developments, British
Journal of Industrial Relations. doi: 10.1111/bjir.12017.
Gilbert, D. U. and Rasche, A. (2007). Discourse ethics and social
accountability: The ethics of SA 8000, Business Ethics Quarterly, 17(2):
187–216.
Hamill, J. (1983). The labour relations practices of foreign-owned and
indigenous firms, Employee Relations, 5(1): 14–16.

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Hamill, J. (1984), Labour relations decision making within multinational
corporations, Industrial Relations Journal, 15: 30–4.
Jonsen, K., Tatli, A., Özbilgin, M. F. and Bell, M. P. (2013). The tragedy
of the uncommons: Reframing workforce diversity, Human Relations,
66(2): 271–94.
Lipietz, A. (1997). The post-Fordist world: Labour relations, international
hierarchy and global ecology, Review of International Political
Economy, 4(1): 1–41.
Marginson, P., Armstrong, P., Edwards, P. K. and Purcell, J. (1995).
Extending beyond borders: Multinational companies and the
international management of labour, International Journal of Human
Resource Management, 6(3): 702–19.
Muller, M. (1998). Human resource and industrial relations practices of
UK and US multinationals in Germany, International Journal of Human
Resource Management, 9(4): 732–49.
Özbilgin, M. and Tatli, A. (2011). Mapping out the field of equality and
diversity: Rise of individualism and voluntarism, Human Relations,
64(9): 1229–53.
Palley, T. I. (2004). The economic case for international labour standards,
Cambridge Journal of Economics, 28(1): 21–36.
Pries, L. and Seeliger, M. (2013). Work and employment relations in a
globalized world: The emerging texture of transnational labour
regulation, Global Labour Journal, 4(1): 26–47.
Purcell, J. (1993). The challenge of human resource management for
industrial relations research and practice, International Journal of
Human Resource Management, 4(3): 511–27.
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on the multinational enterprise: Politics, corruption, and corporate social
responsibility, Journal of International Business Studies, 37(6): 733–46.
Townsend, K., Wilkinson, A. and Burgess, J. (forthcoming). Routes to
partial success: Collaborative employment relations and employee
engagement, International Journal of Human Resource Management,
1–16.

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231
 9 Reputation in the international context
William S. Harvey

Learning objectives
To introduce the concept of corporate reputation.
To highlight the importance of reputation for organisations as well as
for cities and countries.
To underscore the connection between reputation and IHRM.
To emphasise the significance of scale when measuring reputation.
To provide an overview of reputation and its significance for different
stakeholders.
To demonstrate how and why reputation is important for talent,
international assignees and skilled migrants.

Learning outcomes
After reading this chapter, students will be able to:

understand the concept of corporate reputation

acknowledge how reputations can benefit and damage organisations
acknowledge that reputation is closely linked to IHRM
explain why reputation is important for potential, existing and former
employees, and how they can shape corporate reputations
recognise that international assignees and skilled migrants move to
countries, cities and companies because of their reputations, and that
they can both create and destroy such reputations.

Introduction
Reputation is a collective assessment of a country, institution,
organisation, group or even individual. Hence, it can be applied at different
levels of analysis, including the macro (e.g. countries, regions and cities),
meso (e.g. institutions and organisations) and micro (e.g. groups and
individuals). Reputation is a ‘collective assessment’ because many

232
dimensions are judged. For example, in the context of an organisation,
these elements might include the quality of the product or service or the
calibre of the employees (Fombrun, 2012). This ‘corporate reputation’
also depends on a specific group of stakeholders such as investors,
customers and employees. Finally, it is judged in relation to a reference
group. The reputation of the Coca-Cola Company, for example, is
benchmarked against its major competitors, such as PepsiCo; in the same
way, the tennis player Roger Federer’s reputation may be positioned in
relation to the reputation of his long-term rival, Rafael Nadal.

corporate reputation The collective assessment of a company made by particular

stakeholders in relation to its competitors.

Context is an important starting point for reputation because we need to

understand which stakeholders are forming perceptions (e.g. employees,
customers or competitors), the location of those stakeholders (e.g. in
China, the United States or the UK) and the time frame in which the
perceptions form (e.g. 2011, 2012 or 2013). This is particularly significant
in the context of IHRM because people in organisations have very specific
and also different contexts, which will shape their own individual
reputations and those of their organisations as well as the regions and
countries in which they reside. Once we have an understanding of the
contexts, we can begin to examine individual perceptions. This is
intricately linked to HRM because people are at the centre of how
reputation is judged (perception); as people shape the perceptions of
others, we can measure corporate reputation through them. A female
employee of McDonald’s, for instance, may hold personal perceptions of
the quality of customer service at the company. In addition, her own
behaviour as an employee of McDonald’s will shape the perceptions of
others about the quality of customer service the company offers. Countries
and companies are gaining greater visibility internationally and people are
increasingly moving across the world for professional and lifestyle
opportunities, and so reputation is no longer a local, but a global
phenomenon.
The macro-, meso- and micro-levels are all relevant to an understanding
of reputation. Geography, for example, may be considered at multiple
levels, from macro- and meso-levels (international and national) to micro-
level (local community). Similarly, time can be considered at any scale
ranging from a broad time frame (a decade or year) to a narrow one (a
month, day, hour or minute). The use of scales has practical importance

233
because we can analyse different results at different scales; for example,
the reputation of the Government of the People’s Republic of China in
2013 may be quite different to its reputation in May 2013 or on 15 May
2013. When we combine different scales, such as time frame and
geography, the measurement becomes more complex because the
reputation of the Government of the People’s Republic of China in
Shanghai on 15 May 2013 may not match its reputation in Beijing on 15
May 2013. Scale is not only relevant to contexts, but also to perceptions.
We could ask, for example, residents of Shanghai and Beijing what
perceptions they hold about the People’s Republic of China (macro), the
Central Politburo Standing Committee of the Communist Party of China
(meso) or the President of the People’s Republic of China (micro). Again,
these perceptions are highly likely to vary. In short, it is vital to understand
different scales because they determine the types of reputation we are
measuring. Of course, there is no right or wrong scale for measuring
reputation and each has advantages and disadvantages. Whichever scale
we use, we should be transparent about exactly what kind of reputation we
are measuring.
Measuring reputation at different scales is highly relevant in the context
of IHRM because the results affect the mobility decisions of organisations
as well as individuals. For example, positive country, regional and city
reputations will arguably make organisations more likely to deploy their
talent in such places and increase the propensity of talented people to want
to move there, while negative country, regional and city reputations are
likely to have the opposite effect.

The importance of reputation

Reputation is also significant for IHRM because companies that have
positive reputations are able to attract talented employees, while
companies that have negative reputations find it difficult to attract high-
quality workers. Many organisations now operate on an international scale,
which means that they have global reputations, enabling them to attract
workers from multiple countries. Companies with positive global
reputations can tap into a much larger pool of labour than companies with
negative global reputations. Reputable organisations are also better able to
retain existing employees than less reputable organisations (labour market
reputation is discussed in more detail below). This is important because the
cost of replacing talented workers is expensive. According to the
Australian Human Resource Institute (AHRI, 2008), the cost of turnover

234
for organisations for an average employee salary of $55 660.80 is 75 per
cent of that salary, which is considered a conservative estimate.
Reputation is vital for organisations because it is an ‘intangible asset’. It
is intangible because it is not physical in nature (e.g. an iPad), and it is an
asset because it can hold tremendous value for organisations, particularly
global ones (e.g. Apple Inc.). Reputation is valuable for organisations
because customers assume that companies with good reputations sell high-
quality products and services; if a potential customer has no prior
experience with the company but it is reputable, they are more likely to
buy its products and services because they feel confident that its products
and services are reliable and of a high quality (Roberts & Dowling, 2002).
In the same way, the more difficult it is for new customers to assess the
quality of products and services, the more likely they are to rely on signals
of quality such as reputation (Rindova et al., 2005). Existing customers are
also more likely to repeat-buy the products and services of a reputable
company, particularly if the reputation is consistent with their positive
experience of a product or service. Apple, for example, has gained a
reputation for both producing high-quality products and for having a loyal
customer base.
In summary, companies with positive reputations in consumer and client
markets hold a competitive advantage over companies with weaker
reputations because they are in a better position to sell products and
services (Fombrun, 1996). An additional bonus for companies with
positive reputations is they are able to charge premium prices for products
and services. McKinsey & Company, for example, arguably holds the
strongest reputation among global management consulting companies and
also reputedly charges the highest prices to its clients. Of course,
customers and clients do not want to pay a premium, but they are willing
to do so if they perceive the product or service to be higher quality than
other options; reputation provides them with some indication of likely
quality outcomes (Pfarrer, Pollock & Rindova, 2010). This is particularly
important in certain industries, such as professional services, because
potential clients cannot assess the quality of a service before they purchase
it. An engineering company seeking a law firm to represent it during a
merger and acquisition, for example, does not know what quality of
service the available firms will provide and so may well select the firm
with the best reputation.
While there are many positive consequences for organisations that hold
good reputations, the opposite is also true for organisations who hold
negative reputations (see table 9.1). The London Stock Exchange share

235
price of the oil and gas company British Petroleum (BP) was £639.70 on
19 April 2010, a day before the Deepwater Horizon oil spill in the Gulf of
Mexico. On 31 June, its share price had fallen to just £304.60. In other
words, the valuation of BP had more than halved in light of the disaster.
During this period, BP received unprecedented criticism from the federal
and state governments in the United States, the global media, non-
government organisations and interest groups and competitor
organisations, which distanced themselves from the company. This is an
extreme example of how negative reputation can have major negative
financial, legal and social repercussions for organisations.

Table 9.1 Consequences of positive and negative reputations

Consequences of a positive Consequences of a negative

reputation reputation

A company experiences A company experiences

increased sales and decreased sales and
investments. investments.

Customers assume high Customers assume low quality.

quality.

A company may charge A company must charge lower

premium prices. prices.

A company can attract and A company may lose potential

retain workers. and existing workers.

A company can create media A company is subject to media

and public attention. and public scrutiny.

A company may Customers may lose faith in

overemphasise leadership leadership quality.
quality.

Organisations that build a consistent reputation over the long term tend
to become more prominent (that is, a greater range of stakeholders are
familiar with their products, services and activities) and enjoy enhanced

236
status (the ranking and prestige assigned to organisations). If organisations
continue to build their prominence and status then they will likely become
‘celebrity firms’. Celebrity firms are those that receive a large degree of
attention from the media and the general public because they serve as
examples of organisations adopting bold or unusual action in a given
industry (Rindova, Pollock & Hayward, 2006). Google, for example, has
been consistently ranked by Fortune magazine as one of the most admired
companies and in part this is a function of its long-term commitment to
bold initiatives, in line with the following mission statement: ‘Google’s
mission is to organise the world’s information and make it universally
accessible and useful’ (Google, 2013). Although celebrity firms can
greatly benefit from their high-profile status, they can also suffer from it.
The automobile company, Toyota, for example, has historically held a
reputation for reliability (Ahrens, 2010), but in light of a number of reports
of problems with the acceleration pedal in some of its vehicles in 2009 and
2010 it has had to recall several million vehicles and has suffered a
tarnished reputation as well as significant financial losses (Madslien,
2010).

status Prestige and ranking assigned to an organisation, relative to

similar organisations.

celebrity firms Companies that receive high levels of media and public attention
because of their distinctive actions, cultures, identities and
leadership styles.

Organisations can also benefit and suffer when their chief executive
officer is a celebrity CEO; that is, when journalists attribute the outcomes
of organisations, such as their financial performance, to the actions of their
leaders (Hayward, Rindova & Pollock, 2004). In other words, the media
gives the behaviour and influence of a CEO disproportionate weight in
assessing an organisation’s positive or negative performance. This is
particularly the case with leaders who have founded companies that have
subsequently become celebrity firms. Sir Richard Branson, for example,
has become synonymous with Virgin, the international investment group
he founded. The same is also true of former leaders of organisations.
Hayward, Rindova and Pollock (2004) cite the example of Jack Welch,
former chairman and CEO of General Electric, revered by the business
press for his transformation of the company’s fortunes between 1981 and
2001. Yet much of the business press vehemently criticised Welch for
implying that White House employment figures released during the 2012

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presidential election campaign had been tampered with. The different
responses of the media, which could equally be applied to other celebrity
CEOs such as Warren Buffett of Berkshire Hathaway, illustrate how
celebrity leaders can both create and harm an organisation’s reputation.
Sanders and Hambrick (2007) use a baseball analogy to describe how
celebrity status can enable organisations to ‘hit home runs’ and to ‘strike
out’. This is highly relevant to IHRM because attracting and retaining high
profile and internationally recognised talent can be both an asset and a
burden.

celebrity CEO A chief executive officer who receives high levels of media and
public attention and who is credited with the actions and
performance of the organisation.

Reputation and talent

The reputation of organisations is closely aligned with IHRM. The
literature on the ‘war for talent’, for example, emphasises the importance
for organisations of attracting, retaining and developing employees
(Chambers et al., 1998; Michaels, Handfield-Jones & Axelrod, 2001). The
primary argument is that the skills of talented individuals are a source of
competitive advantage for organisations and that this source is now global
in nature (Beechler & Woodward, 2009). Therefore, organisations need to
use innovative strategies to attract the best workers, providing good
workplace environments to positively engage potential and existing
employees and creating career development initiatives so that high-
potential employees have the opportunity to thrive in the workplace. This
is particularly true today because the service sector has come to dominate
many national economies and the quality of employees is the unique
selling point of organisations in that sector. There has been some criticism
of the war for talent. Pfeffer (2001), for example, argues that an
overemphasis on talent can suppress teamwork and discourage people
from listening and learning; Gladwell (2002) suggests that too much focus
is placed on individual intelligence, rather than on systems, processes and
communication. Such debates are important to IHRM because they
influence, both locally and globally, organisations’ abilities to attract,
recruit, select, train, develop and measure talented employees.
Despite reservations about the overemphasis on talent, the academic
evidence shows that potential employees are attracted to companies with
higher reputations (Hannon & Milkovich, 1996). Research with the

238
Careers Service and Student Union at the University of Oxford, for
example, found that an organisation’s reputation played an important role
in determining whether undergraduate and postgraduate students applied
for a position there, with students showing a much stronger tendency to
apply for celebrity firms than for less well-known companies (Harvey,
2011a). The findings showed not only that potential employees’
perceptions about organisations influenced their decisions about
applications, but also that the perceptions of family members, peers and
careers advisers also contributed. In short, reputation in different guises
played a significant role in shaping where potential employees applied for
jobs.
Existing employees also shape reputations because they act as
ambassadors for their organisations, which is known as labour market
reputation (Harvey & Morris, 2012). Gray and Balmer (1998) argue that a
positive reputation among employees is important because it improves
morale and productivity, which then influences the impressions of people
outside the company. For example, if employees feel disengaged and
unhappy with their organisation and they are asked to attend a university
careers fair on behalf of their employer, it is likely that potential
employees will sense their discontent; this will influence both their
impression of the organisation and their decision whether or not to apply
for a job at the company. The academic evidence suggests that employees
are becoming increasingly demanding of employers and that they care
more about working for companies that hold strong reputations than
receiving higher salaries or better professional development opportunities
(Pruzan, 2001).

labour market Reputations of organisations that are shaped by employees.

reputation

The role of reputation among employees is likely to become more

important for organisations as the transfer of information online
accelerates. With greater use of mobile devices such as smart phones and
tablet computers, the growth of information-sharing websites and the rise
of online media, it is becoming easier and faster for people to share and
learn about the activities of organisations. In an example of how quickly a
company’s reputation can change, in 2009 two employees of Domino’s
Pizza filmed and shared on YouTube footage of one of them preparing
sandwiches for delivery while putting cheese up his nose and nasal mucus
on the sandwiches. In two days, more than one million people had viewed

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the video and the company faced a public relations disaster, with one
YouGov poll suggesting that the perception of its quality among
consumers had rapidly changed from positive to negative (Clifford, 2009).
Although this is an extreme example of how employees can affect a
company’s reputation, it serves to show that modern forms of online
information sharing enable employees to shape the reputations of their
employers proactively rather than reactively.
Employees are also increasingly tending to work for multiple employers
in the course of their careers rather than for one career-long employer;
Arthur and Rousseau (1996) use the term ‘boundaryless career’ to
describe this tendency. This has important implications in terms of
reputation because former employees can also shape the reputations of
their former employers. Greg Smith, a former executive director of the
investment bank, Goldman Sachs, for example, wrote the following about
his former employer in the New York Times: ‘I can honestly say that the
environment now is as toxic and destructive as I have ever seen it’ (Smith,
2012). Similarly, Michael Woodford, a former CEO and president of the
Japanese camera company, Olympus, not only blew the whistle on
systemic accountancy fraud in the company in 2012, but also suggested
that such problems were entrenched in Japanese business culture
(Woodford, 2012). The evidence from the business media as well as from
academia suggests that senior employees, whether current or former
members of organisations, have greater clout in shaping corporate
reputation than junior members, although the latter are still highly
significant and should not be underestimated (Harvey & Morris, 2012).

boundaryless career A career built by working for multiple employers rather than
through a career-long role with one employer.

Reputation, international assignees and skilled

migrants
Organisations are not the only ones sourcing talented workers from abroad
as part of their competitive strategies; employees are also seeking out
opportunities to work for multiple employers in different countries
throughout their careers. Although there are many types of migrant with
varying skills levels, we focus here on international assignees and skilled
migrants (SMs) – that is, migrants who hold a tertiary level qualification
or equivalent training and at least three years of paid or unpaid

240
employment since qualification or completion of training (Harvey &
Groutsis, 2012). International assignees are transferred abroad through
their organisations and SMs move abroad either to work for a new
employer or independently. Both groups are significant in terms of
reputation because they make a major contribution to the economies in
their host and home countries (Saxenian, 2006; Harvey, 2011b). They are
influenced by the reputation of countries as well as organisations when
making decisions about where they live and work, and they also influence
the reputations that other people hold towards the same countries and
organisations. Gaining experience of working in other countries is also
expected by many global employers and considered an important means of
climbing the career ladder, particularly in certain fields such as
professional services (Beaverstock, 2002). With countries and companies
becoming more integrated into the global economy, it is likely that the role
of international assignees and SMs will grow in the future.

international assignees People who are transferred abroad to another job post through
their existing organisation

skilled migrants A well-educated individual who moves from one country to another
for work.

In his ‘theory of migration’, Lee (1966) suggested that people move

because of a combination of push and pull factors. Push factors are
created when people feel dissatisfied with their current location, causing
them to wish to leave, while pull factors are created when people are
attracted to other appealing work locations, causing them to wish to move.
Employees interested in working overseas are pulled to countries and
companies whose reputations appeal to them. The actions of governments
and organisations shape such reputations: for example, the Singaporean
Prime Minister, Lee Hsien Loong, has actively promoted Singapore’s wish
to attract and retain foreign workers and has stressed their importance to
the country’s economy. Such actions have led to many foreign workers
moving to Singapore, which now has a strong reputation for welcoming
skilled and ambitious professionals from overseas (Ong, 2007). Another
example is Start-Up Chile, an initiative started in 2010 by a Chilean
businessman, Nicholás Shea, who has pulled technology talent from
abroad by offering promising young firms $40 000 and a year’s visa to
work on their ideas in Chile. To date, 500 companies and 900
entrepreneurs from 37 countries have participated in this initiative,
presumably because the country has gained a reputation for being easy to

241
work in and for offering a good lifestyle (Economist, 2012a).

push/pull factors Factors that encourage (pull) or compel (push) people to move
from one location to another.

SMs are not only interested in workplace factors, but also attracted to
the glamour of working abroad for reputable companies. In South Korea,
for instance, many Indian IT professionals have moved to the country
because they wish to work abroad for a celebrity company, such as
Samsung (Kim & Lee, 2012). SMs are also attracted to countries, and
particularly cities, that have a reputation for a good lifestyle and quality of
life (Harvey, 2011b, 2011c). The Economist’s (2012b) Liveability Ranking
and Mercer’s Quality of Living Survey (2012) are two examples of
popular rankings that shape the reputations of world cities among SMs. In
short, the reputations of countries, cities and organisations play a critical
role in people’s decisions about where to live and work.
International assignees and SMs can also actively shape the reputations
of countries, regions and organisations. Saxenian (2006), for example,
argues that Chinese, Taiwanese, Indian and Israeli engineers and scientists
have been instrumental in building the success and reputation of Silicon
Valley in the United States as the world’s leading high-technology cluster.
Over many decades, these engineers and scientists have also helped to
build the reputations of their home countries as producers of highly skilled
graduates in IT and engineering. A number of these professionals have
returned to their home countries to start up companies, which has
facilitated the growth of the area’s reputation. Chinese returnees, for
example, have helped to develop Zhongguancun as a very reputable high-
technology region in Beijing (Chen, 2008). Similarly, returning Indian
entrepreneurs have played a critical role in building Bangalore’s reputation
as a leading information technology cluster (Saxenian, 2006). Although
returning SMs have been instrumental in building the reputations of their
home and host countries, they are able to build the reputations of both
places no matter which of them they currently work in, because of the
value of their transnational social networks. These networks create cross-
border business opportunities that would not be possible if the SMs did not
have the business and cultural experience of living and working in both
countries (Harvey, 2008, 2012). For example, a Chinese scientist who has
experience of working in the United States has the advantage of knowing
the business and cultural climate in both countries, which can help foster
transnational business networks and opportunities between the two.

242
 Finally, reputation can be built through various intermediaries who
broker meso- and micro-level knowledge. In terms of country reputation,
there are a number of intermediaries such as governments, migration
agents, online forums and media organisations, who shape the perceptions
of potential migrants about other countries. In the context of British
expatriates, for example, the BBC (2012) produced a series of television
program in 2012 called Wanted Down Under, in which British families
were given the opportunity to live in Australia for a week before deciding
whether they would emigrate. This is an example of an intermediary (the
BBC) shaping how other people (the viewing audience) form perceptions
of other countries, through the production, editing and presentation of the
program. In terms of corporate reputation, there are many labour market
intermediaries who shape the impressions of potential and existing
employees. Vault (2013), for example, is an organisation that seeks to
provide high-potential professionals with insider information and advice
about the best employer organisations. Such rankings have an important
bearing on whether potential and existing employees apply for, and accept,
positions at particular organisations.

intermediary A person or group who acts as an agent between two people or

groups.

Conclusion
In this chapter, we have examined reputation as a collective assessment
related to a particular group made with reference to an organisation’s
competitors. While reputation is an intangible asset, it provides
organisations with tangible results, both positive and negative, and is
closely related to the key concepts of IHRM, such as the attraction and
retention of global workers. Advantages and disadvantages to companies
arise from the presence of certain individuals, such as celebrity CEOs, and
organisations, such as celebrity firms. At an individual level, potential and
existing employees are becoming more interested in reputation and more
actively engaged in shaping it. At the same time, employees are now less
bounded to organisations and have become powerful actors in the creation
and destruction of reputations. At a global scale, too, countries and
organisations are experiencing more workers moving across the world, and
international assignees and skilled migrants are an important part of this
trend. Talented workers are influenced to move by not only corporate
reputations, but also city and country reputations. International assignees,

243
SMs and intermediaries are therefore important agents in shaping country
and corporate reputations. Finally, this chapter has demonstrated that
reputation is multifaceted, becoming more widespread and more
significant for individuals, organisations, cities, regions and countries.

Take-home messages
Reputation is a collective assessment of an organisation in relation to
its competitors, based on the judgements of a particular group.
Reputation is a vital intangible asset for companies and can provide
positive and negative returns.
Reputation can be measured at the macro-, meso- and micro-levels.
Much attention has been paid to the effect of reputation on
organisations, but reputation also plays an important role for
individuals, cities, regions and countries.
Reputation can change rapidly, both positively and negatively,
through new forms of technology and communication.
A range of intermediaries can shape country and corporate reputation.

Closing the learning loop

1. What do you understand by the term ‘corporate reputation’?
2. Give one example of a celebrity firm and one example of a
celebrity CEO.
3. What is meant by a ‘boundaryless career’, and how does this
concept relate to corporate reputation?
4. How are employees becoming more important in shaping corporate
reputation?
5. In what ways does reputation influence international assignees and
skilled migrants, and vice versa?

Case study 9.1 Mineral mining in a developing country

A global mining company located mineral deposits in a coastal region of a
developing country in Africa, following exploration work. The area where
the mineral deposits were found was one of the largest biodiversity
hotspots in the world, rich in flora and fauna. The region was very poor,
with few job opportunities and a degraded infrastructure; some villagers
lived in the rural area adjacent to the proposed mining area, the majority of

244
whom earned less than AU$2 per day. The mining company proposed to
invest heavily in local infrastructure and services, including building
roads, a new port, schools and hospitals and accommodation for
employees.
The company recognised that it needed to respect local biodiversity as
well as respond sensitively to the needs of regulators, local communities,
investors, non-governmental organisations and employees. It entered a
joint partnership with the national government that constituted one of the
largest investments in the country for many years.
Now, the mining project has been approved, with an expected duration
of approximately 50 years. At the end of the contract, the mine and the
entire local infrastructure will belong wholly to the national government.
International conservation groups have become aware of the company’s
plans and are campaigning against them, despite the support of the local
community, including local village leaders, for the project.
Case study questions
1. What are the reputational risks for the mining company described in
this case study?
2. Which stakeholders should the company prioritise in managing its
reputation?
3. Why is communication important in the company’s management of its
reputation?
4. What role should the company take in environmental protection for the
area in which it plans to mine?
5. Which do you think should take priority: conservation or development?

Activities
Group or individual tasks
The following questions may be discussed as a group in class or
assigned to students as written tasks.

1. The American business magnate Warren Buffett said: ‘It takes

20 years to build a reputation and five minutes to ruin it. If you
think about that, you’ll do things differently.’ Discuss the
implications of this statement for corporate reputation.
2. How far do you agree that leaders receive too much praise and
criticism when it comes to their companies’ reputations?
3. ‘Today’s employees are obsessed by corporate reputation.’

245
 Discuss this statement.
4. Assess the effects of reputation on skilled migrants. Are they
greater or lesser than the influence of skilled migrants on
reputation?

Online resources
For instructors: answers to activities; long media atricle with
questions; additional questions and answers.
For students: further reading; answers to case study; IHRM in
practice.

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 10 Expatriation and repatriation in the Asia–
Pacific region
Valerie Caven, Susan Kirk and Cindy Wang-Cowham

Learning objectives
To explore the theoretical and empirical issues in expatriation and
repatriation in the Asia–Pacific region that inform the development
and management of global mobility policy and practice.
To examine the contextual facilitators of, and constraints on,
management of globally mobile talent in the region.
To critically evaluate the issues inherent in the management of global
talent.
To show how the impact of sociopolitical, economic and cultural
factors in the region can inform approaches to global talent mobility.

Learning outcomes
After reading this chapter, students will be able to:

identify issues that affect expatriation and repatriation in the Asia–

Pacific region
differentiate between various contextual factors that enable and
constrain the mobility of global talent in the region
evaluate macro-, meso- and micro-level issues, tensions and
contradictions associated with managing international human
resources in the region
understand a range of approaches to global mobility, taking into
account the different cultural, economic and sociopolitical
environments of the region.

Introduction
In this chapter, we look at region-specific issues that affect the
expatriation and repatriation of workers around, as well as into and out

250
of, the Asia–Pacific region. The management of globally mobile labour
has become a key challenge for multinational companies (MNCs)
worldwide, and particularly in parts of the Asia–Pacific, where
demographic issues and the supply of skills have created difficulties in
staffing businesses (Collings, Scullion & Morley, 2012). This presents
particular challenges in the Asia–Pacific due to great disparities between
standards of living in emerging markets (e.g. India) and more established
countries (e.g. Singapore). The multitude of contexts in which to study
expatriation and repatriation includes complex and diverse national
cultures, institutional systems and political and economic regimes.

expatriation The process of assigning employees to international, cross-border

and cross-cultural jobs.

repatriation Voluntary and self-directed efforts of employees to develop careers

abroad. Repatriation, unlike expatriation, is initiated without
official support from the focal company.

We restrict our discussion to countries that the World Bank

(www.worldbank.org) includes in its definition of the East Asia and
Pacific region: Australia, Brunei, Cambodia, China, Fiji, Hong Kong,
Indonesia, Japan, North Korea, South Korea, Lao, Macau, Malaysia,
Mongolia, Myanmar, New Zealand, Papua New Guinea, Philippines,
Singapore, Solomon Islands, Taiwan, Thailand and Vietnam.

Context
At a macro-level, governments obtain competitive advantage through skill
development or acquisition; thus attracting key skilled workers from
outside of the country as a solution to supply-side shortages. However,
success in this endeavour is dependent on how attractive the destination is
perceived to be in terms of relocation. Australia, for example, is a well-
developed first-world nation that offers an excellent infrastructure and
abundant natural resources (APEC, 2011) whereas the Indian subcontinent
is seen as a less desirable destination due to its levels of poverty and
associated welfare issues. The Australian points system for acquisition of a
work permit is designed to attract expatriates with scarce skills that are
unavailable locally, but Australia otherwise recruits from the internal
labour market. Conversely, the Vietnamese government is seeking to
address skill deficits by attracting incoming foreign direct investment
(FDI) and associated expatriate technical and managerial talent from

251
neighbouring Taiwan and China (Cooke & Lin, 2012).
So, firms seeking to expand operations in the Asia–Pacific must face a
number of key challenges and make important choices, which are
influenced by the movement of labour in, out of and around the region.
This is explored in more detail in the next section.

Talent flows in the Asia–Pacific

China and India face ‘critical talent flows’ (Tung, 2008; Cooke, 2008),
resulting in skills shortages and intense competition for certain pools of
labour (De Cieri et al., 2009). In sectors where the circulation of highly
skilled individuals is constant, problems in continuity and stability are
extreme. Carr, Inkson and Thorn (2005) observe how in New Zealand
labour outflows (known as a ‘brain drain’) have been of concern since the
1980s. Harvey (2011) notes that this is a particular problem in certain
occupations, and cites the movement of skilled scientists from India to the
United States. The attitudes of Asia–Pacific talent to expatriation also
influence the movement of labour; Asian expatriates tend not to consider
certain ‘pull’ factors (such as family issues and spousal career) that would
be likely to cause employees from other regions to decline an assignment
(Kim & Froese, 2012). For example, when the MNC Aglionby – this
chapter’s case study company – required one of its Korean employees to
relocate to Indonesia for a year, he decided to leave behind his wife and
children (Kirk, 2010).

talent flows The movement of skilled labour around a region.

brain drain Net loss of skilled labour as it moves out of a region or country.

In contrast, Singapore, Malaysia and Thailand rely on inbound talent

flows and migration policies to facilitate economic growth (Kaur, 2010).
In China, reform of the hukou system of work (a permit system) has eased
restriction of internal migration between regions and encouraged talent
flows in the country (China Daily, 2011; Huang & Zhan, 2005). At
national level, the issue is how to balance flows of key skilled workers to
support countries’ current and future economic needs.
The macro-economic situation has an impact on organisations (meso-
level), for which the challenge is balancing talent flows not only out of and
into, but also around global operations. Parts of the Asia–Pacific that have
experienced either ‘brain drain’ or ‘brain gain’ when restrictions on

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global mobility are in place can experience ‘brain circulation’ once those
restrictions are eased (Tung, 2008). Brain drain occurs when a worker’s
home country loses skill or knowledge due to the movement of human
capital to a host country; brain gain occurs in the host country that receives
the human capital. These concepts have less relevance in parts of Asia–
Pacific where individuals may choose to leave their home country to take
advantage of economic or developmental opportunities but later return; as
Tung (2008: 469) argues, this involves a ‘triangular human talent flow’,
known as brain circulation. Brain circulation activities between Silicon
Valley, India and Taiwan suggest that the movement of skill and talent has
multiple benefits (see the discussion of Silicon Valley in chapter 9).
Saxenian (2005, 2006), for example, finds that there is significant mobility
of talent and knowledge flows between these regions.

brain gain Net gain of skilled labour as it moves into a region or country.

brain circulation Flow of skilled labour and knowledge between multiple regions or
countries.

Brain drain, brain gain or brain circulation?

Emerging markets such as India and China experience labour supply
difficulties because they are producing insufficient numbers of graduates
who have the requisite skill levels (Collings, Scullion & Morley, 2012).
This is also true of more developed countries, such as Australia, where 35
per cent of posts across a range of sectors remain unfilled (ADEEWR,
2012). The Asia–Pacific region is a source of talented labour: for example,
the United Kingdom’s National Health Service recruits well-qualified
nurses from the Philippines and India (Alonso-Garbayo & Maben, 2009).
There are also talent flows into, out of and around the Asia–Pacific region.
Inbound assignees to India are increasing at the fastest rate, where an
overall increase is expected of 80 per cent between 2010 and 2014. China,
which currently has the highest inbound expatriate rate, is predicting a 23
per cent rise in the same period (Ernst & Young, 2011).
India and China’s outbound assignees are growing at the fastest rate of
all the Asia–Pacific countries, with China projecting an outbound increase
comparable to that of the inbound rate. In India, 75 per cent of outbound
assignees are junior employees sent abroad to gain the experience
necessary to ensure that the country benefits economically when they
return (Ernst & Young, 2011). Other parts of the region predict a similar

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outflow of talent, with Australians the most willing to work abroad
(Roobol & Oonk, 2011). Thus, the talent pool in the Asia–Pacific region is
not static and is subject to ebbs and flows dependent on macro-, meso- and
micro-level factors.
In China and India, brain circulation (a triangular human talent flow) is
replacing brain drain and brain gain (Tung, 2008), as highly skilled
individuals leave their country of origin to study abroad or accept senior
posts in other countries and later return home. In some sectors, such as
science and technology, formal networks have been established to
encourage this circulation of human capital. This ‘diaspora option’ (Meyer
& Brown, 2003) arguably overcomes problems a country or organisation
experiences when it loses human and social capital through migration.
Thus, talent flows are complex and often problematic, since talent
inflow does not always compensate countries and organisations for talent
outflow. For example, the brain drain of educated workers from the
Taiwanese electronics sector has resulted in Taiwan losing out to its
competitors in Korea and China (Mishkin, 2013). Table 10.1 summarises
the key factors that influence global talent flows at macro-, meso- and
micro-levels in the Asia–Pacific region.

Table 10.1 Factors that influence global talent flows in the Asia–
Pacific region

Level Factors

Macro- Cross-cultural understanding and knowledge sharing

level encouraged by both governmental and non-
governmental organisations in the region (Fee &
Gray, 2013).
Support from host country (particularly in relation to
family) influences intention to repatriate
(Forstenlechner, 2009).
Cultural expectations and dominant social norms (e.g.
repatriation to China) (Guo, Porschitz & Alvez,
2013).
Differences in education systems deter or encourage
talent flows in parts of the region (Cho, Hutchings &
Marchant, 2012).

254
 Meso- Knowledge transfer and succession planning, to
level encourage retention (De Cieri et al., 2009).
Polycentric approaches to staffing, to reduce the
influx of expatriates (e.g. South Korea’s approach in
China) (Kang & Shen, 2013).
Expatriates replaced with local hires (Smedley, 2012).
A lack of reintegration programs deters expatriation
and/or return to the region (Newton, Hutchings &
Kabanov, 2007).
Increased social capital (Cappellen & Janssens, 2005;
Dickmann & Doherty, 2008).
Enhanced leadership skills (Mendenhall, 2001;
Dickmann & Harris, 2005).
Greater functional flexibility (Guthridge & Komm,
2008).

Micro- Opportunities for career capital acquisition through

level expatriation (McNulty, De Cieri & Hutchings, 2012;
Saxenian, 2006).
National identity and quality of life act as push/pull
factors (De Cieri et al., 2007; Harvey, 2011).
Religious and cultural influences (Cho, et al., 2012).

At the meso-level, in organisations and industries, HR professionals

operating in the region are concerned with the recruitment, retention and
mobilisation of talent. Their priorities in this environment are to develop
competitive recruitment strategies; to attract available talent; to devise
appropriate engagement policies (e.g. attractive reward packages); and to
ensure such talent remains with the organisation. Global mobility strategy
should recognise the importance of both support throughout an employee’s
international assignment and reintegration once he or she has completed it.
A number of factors influence expatriation, especially strategic
considerations; control and coordination; knowledge transfer; leadership
development; and operational planning (e.g. launching new initiatives) to
fill skills shortages and ensure career development (Dickmann & Baruch,
2011). However, a significant number of individuals decline expatriate
assignments: the refusal rate is estimated at 57 per cent (Atlas, 2012). It is
vital to understand both the issues that influence an individual’s decision

255
to accept an international assignment and the ways in which push/pull
factors can be manipulated to encourage global mobility (Baruch, 1995;
Dickmann & Baruch, 2011). Thus, an appreciation of the implications of
micro-, meso- and macro-level factors is crucial in managing globally
mobile talent.

Push/pull forces
Baruch (1995) developed a framework for analysing people’s decisions to
accept or decline an international assignment. The influencing factors that
exert a push or pull on the individual include:

a person’s values and needs

organisational systems and processes
national culture
economic and legal issues.

push/pull factors Factors that encourage (pull) or compel (push) people to move
from one location to another.

These forces operate in conflicting directions, either pulling the employee

to accept the move or pushing them to reject it. Kirk (2010) has also
shown that the range of macro-, meso- and micro-level elements that
influence a decision is broad, which helps explain why people choose to
move or to remain. Factors include:

global economic forces (not just local or national)

social factors (e.g. attitudes to travel, especially since the events of
9/11)
social responsibility (e.g. employee welfare) and ethical issues (e.g.
reducing carbon footprint)
technological developments (e.g. video conferencing as an alternative
to travel)
legal issues (e.g. work permits/visas and the use of flexible contracts).

These issues may be external to the individual (e.g. legal issues such as
obtaining a visa) or internal (e.g. a person’s identity). They exert either a
pull or push depending on the context, including the existence of perceived
alternatives. For example, a pull may influence an individual whose
identity includes a willingness to travel, encouraging him or her to accept

256
opportunities; conversely, a push may arise from a person’s strong sense of
local family commitments or national identity, leading him or her to reject
a relocation offer. In this way, the push influences without necessarily
compelling a person’s decision.
At micro-level, performance issues act as push factors, with managers
acting as gatekeepers who constrain the mobility of the individuals they
value and wish to retain. This reflects a larger debate over individual
agency versus managerial control and highlights the complexities of the
multiple forces and trajectories of push/pull factors. A desire to control
operations may exert a push for mobility of employees but too much
mobility may exert a pull to retain employees in the parent country since it
can lead to communication and decision-making problems. In terms of
recruitment and retention, mobility opportunities can exert a push or pull,
motivating those individuals who seek mobility and deterring those who
do not.
Interorganisational influences on mobility include the acquisition of
social capital through networking; development of global leaders;
harmonisation of global practices; and encouragement of cultural diversity,
as discussed, for example, by Cooke and Lin (2012) in their study of
Chinese firms with established operations in Vietnam. Figure 10.1 draws
on Kirk (2010) in adapting Baruch’s push/pull model to represent the
range of macro-, meso- and micro-level factors that act at international,
national and organisational/individual contexts. As the figure shows, these
factors may act to push or pull factors for people seeking or rejecting
mobility.

257
Figure 10.1 Organisational perspective on the push/pull model (adapted
from Kirk, 2010)

As discussed in chapters 3 and 4, there are many reasons to send staff on

international assignments, and many actors are involved. Such
assignments, of course, can help a company to gain a foothold in a host
country, but they also enable staff to develop a broader perspective of how
their company operates in different environments, increasing their
identification with the global organisation. Global networks can be
developed to exchange knowledge and share ideas and skills, where
international assignees may have responsibility for training local staff in
specific areas of expertise. Host-country governments may require a
subsidiary to recruit local staff once it is established. Thus, expatriates are
utilised to train host-country nationals (HCNs) in preparation for a
handover, as for instance in the case of Indonesian, Filipino and Hong
Kong expatriates assigned to China to provide such development for local
managers (Wang-Cowham, 2007). Incentives may be needed as pull
factors to encourage employees to take up foreign assignments, as working
and living conditions in the host country may differ from the home
country. The most desirable Asia–Pacific locations for expatriates, in
terms of quality of living and infrastructure, are Japan, Singapore, Hong

258
Kong, Australia and New Zealand, and the least attractive location is the
Indian subcontinent (Mercer, 2012). Organisations will tailor their pull
factors depending on how attractive the country and region are for
potential expatriates. For example, if an area is seen as less desirable or
even dangerous, a company may offer an enhanced salary and safe, secure
accommodation. However, the region’s dependency on Western
expatriates has steadily reduced in recent years (Smedley, 2012) as
organisations have increasingly recruited local talent. So, organisations
operating in the region may now need to focus on strategies for retaining
local talent in the region.

Staffing in the Asia–Pacific region

Firms recruiting for the Asia–Pacific region can choose to hire parent-
country nationals (PCNs), HCNs or third-country nationals (TCNs). Table
10.2 summarises the advantages and disadvantages of each staffing option.
Although companies need to prevent expatriate failure (see discussion in
chapter 5), there is clear evidence of a lack of concern about HR issues.
Cho, Hutchings & Marchant (2013) highlight the lack of support for
Korean employees relocated to Australia, citing lack of training and
preparation time and poor assignee selection. The costs of expatriate
failure are high both for the organisation and for the individual, not only
financial terms but also in terms of damage to reputation (at macro-, meso-
and micro-levels), loss of future business and emotional stress. There are
also difficulties with repatriation or reintegration, although less so in some
parts of the region than others, as we discuss in the next section.

Table 10.2 Staffing strategies in the Asia–Pacific region

259
Repatriation in the Asia–Pacific
Traditionally, the term ‘repatriation’ has been used to describe the process
of when an expatriate completes an overseas assignment and is preparing
to return to their country of origin (Osman-Gani & Hyder, 2008).
However, it has little relevance in some parts of the Asia–Pacific (e.g.
China) where companies tend not to repatriate international assignees but
instead to reassign them to a new expatriate project. This can be
problematic for both the organisation, in terms of continuity and control of
operations, and the individual, with regard to career capital and identity
issues (Kirk, 2010). Such employees have been described as ‘career
nomads’ (Driver, 1982; Cadin, Bailly-Bender and de Saint-Gieniez (2000),
whose global mobility may be the result more of the ‘fecklessness and/or
marginalisation’ of the individual concerned than of their proactive, self-
managing career behaviour (Inkson, 2006). Kirk (2010) noted that a
person’s excessive number of international moves may be seen in a
negative light, and used the term ‘glo-pat’ (glopatriate) to denote a serial
expatriate who moves frequently between international assignments,
performing poorly and therefore disenfranchising himself or herself from
both superiors and colleagues.

glopatriates Expatriates who have lost their identification with their home
country.

The term has also been used to describe the sense of de-identification

260
that some expatriates experience in relation to their home country after
spending time away. Such expatriates may perceive re-entering their home
country as more difficult (for personal or family reasons) than accepting
another expatriate assignment (McPhail et al., 2012). This perception
becomes stronger the longer the expatriate and their family are away from
their country of origin (Suutari & Brewster, 2003). Yeoh and Huang
(2011) focus on the careers of transnational elites from the Asia–Pacific
region and refute the existence of ‘perfect global citizens’, who Salt (2008)
describes as floating ‘effortlessly’ between cities. Citing the cases of
Chinese transnationals who choose to shuttle between Hong Kong and
Vancouver, while managing their businesses in Asia, rather than to
relocate to Canada, Yeoh and Huang (2011) argue that we must understand
such careers in the context of broader cultural–political concerns about
moving and belonging to a place, and in the light of tensions between
flexibility, citizenship and nationality.
The scant research that focuses on repatriation in the Asia–Pacific
region reports similar problems to those found elsewhere. For example,
Newton, Hutchings and Kabanof (2007: 308) note ‘a lack of
comprehensive and multifaceted reintegration programmes being offered
in Australian organisations’. Companies are increasingly referring to
reintegration in preference to repatriation (Nery-Kjerfve & McLean, 2012;
Leblang, 2013), reflecting the need for policies that address employees’
needs beyond mere physical resettlement, including the need for their
emotional and social engagement with their new community. Yet, as Cho,
Hutchings and Marchant (2013) have identified in the case of poor cultural
and linguistic support for Korean expatriates returning from Australia,
there is little evidence that reintegration policies are commonly adopted
across the Asia–Pacific.

Conclusion
In this chapter, we have discussed the importance of developing an
awareness of the different recruitment and redeployment strategies
organisations can adopt in managing staffing for the Asia–Pacific region.
We looked at the implications of the movement of talent to, from and
within the Asia–Pacific region and analysed the macro-, meso- and micro-
level push/pull factors that influence the management of globally mobile
talent in the region. Finally, we examined major theoretical and empirical
issues in relation to expatriation and repatriation in the region, before
noting the need for organisations to pay further attention to employees’

261
needs in the light of an increased emphasis on repatriation.

Take-home messages
It is important to be aware of the different recruitment and
redeployment strategies organisations can adopt in managing staffing
for the Asia–Pacific region.
It is essential to have a sound understanding of the macro, meso and
micro-level push/pull factors that influence talent flows in and around
the region.
HR professionals should always critically evaluate the difficulties and
challenges of expatriating and repatriating staff to and from the
region.
HR professionals can use a range of strategies for supporting talent
flows in the region.

Closing the learning loop

1. What key issues should an organisation consider when it plans to:
a) expatriate an employee between countries in the Asia–
Pacific region?
b) repatriate an employee to his or her home country in the
region?
2. Which macro-, meso- and micro-level push/pull factors influence
the movement of talent?
3. How might HR professionals facilitate expatriation and
reintegration processes in the Asia–Pacific region?

Case study 10.1 Aglionby expands in the Asia–Pacific

Aglionby is a large MNC, with a global presence in 65 countries around
the world. The agricultural commodities sector, in which the company is a
market leader, is volatile because of produce seasonality and other factors
relevant to agricultural production (e.g. weather, pests, disease), and
agricultural crop prices are inherently unstable (Haile, Kalkuhl & Von
Braun, 2013). Aglionby is a diversified conglomerate that grows through
acquisitions and joint ventures. Its corporate strategy relies on
collaboration with other Aglionby organisational units around the world

262
and with its external customers, as it works to create new ingredients and
new food-processing methods and to manage its supply chains. Aglionby
is now expanding its business operations in the Asia–Pacific region to take
advantage of the expanding market for their products and plans to set up a
hub in Singapore.
Case study questions
1. What staffing strategies would you suggest for Aglionby, based on the
information in the case study?
2. What issues does a firm such as Aglionby need to take into account
when recruiting for the Asia–Pacific region?

Case study 10.2 No place like home?

Chengdu Construction Industry, established in 2003, is a building
company that focuses on large-scale construction projects. In line with its
global image, it has recruited a large number of expatriates not only from
Asia but from Australia, the United Kingdom and the United States. The
company has recently expanded in the Asia–Pacific region and now needs
to attract enough talented managers to meet the demand of 10 forthcoming
construction projects. It has offered open-ended secondment contracts to
candidates for expatriate roles, which will secure their future in the
company. While on assignment, each assignee will receive a localised
compensation and benefits package, aligned with local managers working
at the assignee’s level in the region where they are working. The company
has decided not to develop a repatriation policy, in the belief that it is
unnecessary because all expatriates will be assigned to new locations on
completion rather than repatriating.
Case study questions
1. To what extent may a company’s ‘nomadic’ (Inkson, 2006) global
mobility policy negatively affect talent management?
2. In what ways can a company benefit from employing ‘glo-pats’ (Kirk,
2010)?

Activity
Group report
Read case study 10.1 and then break into teams of three or four.
Imagine that you are management consultants appointed to advise

263
 Aglionby on its new venture in the Asia–Pacific. Aglionby has decided
to move its Asia–Pacific operations from Singapore to Vietnam, but
has no experience of operating in Vietnam, nor of moving production
in the Asia–Pacific region. You must advise Aglionby on appropriate
international HR considerations and processes for this situation.
Working as a team, produce a report detailing how Aglionby may be
able to manage the move to Vietnam. Identify potential staffing
problems that the company may encounter, and offer solutions.
Discussion questions
1. What barriers may Western employees face in seeking an expatriate
assignment in the Asia–Pacific region?
2. Why might gaining an expatriate assignment have become more
challenging recently?
3. How can HR professionals facilitate expatriates’ cultural adjustment
to the Asia–Pacific region?

Online resources
For instructors: answers to activities; long media article with
questions; additional questions and answers.
For students: further reading; answers to case studies; IHRM in
practice.

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 11 Balancing inflows and outflows in the
European context
Joana Vassilopoulou, Barbara Samaluk and Cathrine Seierstad

Learning objectives
To provide a deep understanding of international labour relations.
To provide an overview of migration theories and their various levels
of analysis.
To illustrate forms of migratory inflows and outflows and their
consequences for IHRM.
To highlight that understanding the migratory experience and agency
of immigrants is crucial in developing IHRM theories and practices.
To demonstrate the role of employment agencies in sourcing and
supplying migrant workers from Accession 8 countries to the UK and
to explain its consequences for IHRM in organisations.

Learning outcomes
After reading this chapter, students will be able to:

understand the relevance to IHRM of migratory inflows and outflows

to and from multinational companies
discuss how the globalised labour market is changing and explore the
challenges and relevance of such change for IHRM
explain why comprehensive and ethical IHRM strategies are needed
in relation to migration
understand the need to explore migration from multiple levels and
through a combination of different theories of IHRM
understand the impact that migratory inflows and outflows can have
on local labour markets and migration policies, with reference to a
case study from the European context.

Introduction

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The effective international management of HR is a key element of success
and failure in international business. Changes in the labour market – the
result of globalisation, multiculturalism and altered migration patterns –
present important opportunities and challenges for IHRM in organisations,
particularly for multinational companies (MNCs), in the light of skilled
labour shortages. Comprehensive and adaptive IHRM strategies and
practices that consider, for example, the implications of employing
migrant labour, are essential for the success of international business. This
is true of a variety of areas of HR practice, such as recruitment and
selection, training and development, cross-cultural management, HR
planning and diversity management. To develop such IHRM strategies and
practices, HR practitioners must first understand the multifaceted nature of
migratory inflows and outflows and how it can influence their work. For
example, the shortage of skilled labour has become an increasing problem
for MNCs, and so HR practitioners need to develop innovative strategies
for identifying and managing the supply of labour. To do this well, HR
practitioners need to understand internationalised labour relations and
labour mobility and grasp how IHRM links with law, society, unions,
culture, migration patterns and migratory inflows and outflows of labour.
Any HR practitioner who aims to utilise migration as a workforce planning
tool needs this understanding.

migration The movement of people.

In this chapter, we focus mainly on skilled labour, providing a deep

understanding of internationalised labour relations and migratory inflows
and outflows, which we link to labour mobility and supply. We also
explain how HRM practices are changing in organisations that employ
migrant workers. The chapter starts with an overview of migration
theories, which offer a range of levels of migration analysis. This is
important because HR practitioners need to understand influences on the
mobility of workers: for example, factors that influence individuals to
move from one country to another (see also chapter 10). A description of
different forms of migration follows. We then explore the impact of
migration theories at macro-, meso- and micro-levels, recognising that
migration at all levels is embedded in, and influences, organisations.

macro-level migration International perspectives and global perspectives on migration,

theories such as analysis of global labour trends.

meso-level migration National and local perspectives on migration, such as analysis of

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theories how communities and households influence migration.

micro-level migration Individual perspectives on migration, such as analysis of individual

theories agency in people’s migration decision-making.

At the macro-level, we illustrate some difficulties that organisations,

governments and HR practitioners may face as a result of skills shortages.
We also show how governments try to resolve such shortages by altering
their migration policies, as in, for example, the United Kingdom’s
inclusion of European Union Accession 8 (A8) labour in its migration
policy (the A8 countries are the eight post-socialist Central and Eastern
European countries that joined the EU in 2004 – Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia). At the meso-
level, we explore how the transformation of labour markets and migration
affects the nature of IHRM in the organisational context. At the micro-
level, we discuss the migratory experience of individuals, an
understanding of which is crucial to the development of HR practices. In
conclusion, we offer a case study from Europe, which explores the role of
employment agencies in sourcing and supplying migrant workers from A8
countries to organisations in the UK. The case study highlights some of the
difficulties organisations can face when employing migrant labour without
considering the migratory experience of migrant individuals.

Accession 8 The eight post-socialist Central and Eastern European countries

that joined the European Union in 2004 (Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia).

Migration theory
To understand the mobility and supply of labour and the complex nature of
migratory inflows and outflows, we must understand why people move. A
number of academic disciplines research migration, from geography to
economics and sociology and, as a result, the field of migration research is
spread across disciplinary boundaries. Different disciplines often approach
migration research from diverse perspectives, each trying to understand
aspects of migration (for example the causes of migration) relevant from
its own perspective. In doing so, they use a range of theoretical models and
frames, developed in isolation from the other disciplines (Massey et al.,
1993). Further, such theoretical approaches offer different levels of
analysis. Macro-level theories aim to explore migration in its broadest

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sense, for example, through study of global labour trends. Meso-level
explanations focus on social aspects; for example, through study of how
communities and households influence migration. Micro-level theories
focus on individual agency; for example, through study of how people
make their migration decisions. Some theories also combine these levels of
analysis. Below, we provide an overview of different migration theories.
At the turn of the 20th century, an English geographer named Ernest
Ravenstein, now widely regarded as the earliest migration theorist, used
census data from England and Wales to develop his ‘Laws of Migration’
(1889). The main argument of his theory was that migration is based on
what he called a push/pull process. Unfavourable conditions in one place,
such as oppressive laws or high unemployment rates, push people out;
conversely, favourable conditions, such as better economic opportunities
in an external location, pull them in.

push/pull factors Factors that encourage (pull) or compel (push) people to move
from one location to another.

Analysis of the push/pull process enables a focus on macro-level causes

of migration. For example, internal migration in the EU has changed due
to the current economic and financial crisis. The crisis has particularly hit
countries such as Greece, Italy, Portugal and Spain, all of which are
experiencing high unemployment, particularly among young people and
immigrants. As a result, we can now see increased immigration from
countries such as Spain and Greece to countries such as the UK and
Germany, which the economic crisis has affected less. In terms of the
push/pull theory, this example illustrates how high unemployment in a
country pushes individuals to seek work in other countries that enjoy more
favourable labour market conditions. Considering this example, we can see
that Ravenstein’s theory has some explanatory power, although his theory
has been criticised for being an outdated commentary on 19th-century
British migration, which fails to cover the complexities of contemporary
migration (Pooley & Turnbull, 2005). Indeed, the theory has some
shortcomings, since it bases its explanations solely on macro-level causes,
leaving out individual factors, for example. However, Ravenstein’s
findings inspired other scholars to amend and build on his theories,
resulting in an enormous body of work. Lee (1966) draws on Ravenstein’s
theory but emphasises micro-level analysis of the push factors. He points
out that dimensions such as age, gender and social class influence people’s
choices in the migration process. In his view, such dimensions affect how

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people respond not only to push/pull factors, but also to difficulties they
experience in the course of migration.
Further variants of the push/pull theory, which set out to explain
international migration patterns, include neoclassical economic theory
(Sjaastad, 1962; Todaro, 1969), currently the dominant theory explaining
the causes of migration. Neoclassical theory investigates migration by
elaborating macro-level causes of migration, and focuses on wage and
income differentials. This theory understands international migration as
depending on the global supply and demand for labour. Nations facing
skills shortages will have high wages. The high wages are seen as the pull
factor, pulling immigrants in from nations that have a surplus of labour.

micro-level analysis of A reading of the push/pull process that emphasises that dimensions
push/pull such as age, gender and social class influence people’s choices in
the migration process. Such dimensions affect how people respond
to not only push/pull factors but also difficulties they experience in
the course of migration.

neoclassical economic A migration theory that sees migration as depending on the global
theory demand and supply for labour. Countries that face skills shortages
offer high wages, which pull immigrants from nations that have a
surplus of labour.

Other recent macro-level migration theories are the segmented labour

market theory and the world systems theory. The first (Piore, 1981)
suggests that developed economies are dualistic. Developed economies are
segmented in a primary market of secure, well-paid work and a secondary
segment of low-paid work. Immigrants are then recruited to fill the low-
paid segment, which the native-born population avoids. The world systems
theory (Sassen, 1988) views international migration as a byproduct of
global capitalism. The current direction of international migration patterns
is from poor to rich nations, due to industrial development in developed
economies, which individuals in developing economies see as a push
factor. Again, this theory does not account for meso- and micro-level
causes of migration.

segmented labour A migration theory that sees developed economies as segmented

market theory into two markets. In developed economies, the home-country
population is attracted to a primary market of secure, well-paid
work, while immigrants are recruited to a secondary market of
low-paid work.

world systems theory A migration theory that sees international migration as a

byproduct of global capitalism. The direction of migration is from

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 poor to rich nations, due to the industrial development in
developed economies, which individuals in developing economies
see as a push factor.

However, not all macro-level migration theories try to explain migration

patterns and causes based only on macro-level aspects. For example,
neoclassical economic macro-level theory has been transferred to the
micro-level of analysis, looking also at individual choices of migrants
(Todaro, 1969). In this theory, known as the human capital theory,
sociodemographic characteristics of individuals, such as age, gender,
occupation and educational background, influence the migration decision
and outcome of migration (Sjaadstad, 1962). Such characteristics influence
people’s decision-making about their migration and choice of receiving
country: for example, individuals from the same country may choose
different receiving countries depending on their own occupation and skills.
The central concept here is that individuals move in order to maximise
profits. Hoffmann-Nowotny (1981) has introduced another micro-level
theory of migration, which particularly takes into account what happens to
migrants in the receiving country. He argues that individuals migrate in
order to achieve a higher status in the receiving country than they held in
their home country. However, migrants often take on the lowest positions
in the receiving country, so they do not achieve an improved status and
may even experience a lower status. For instance, in Germany the degrees
of highly skilled migrants (SMs) are often not recognised; this applies in
particular to migrants whose home countries are outside the EU. As a
result, trained doctors sometimes work as taxi drivers in Germany.
However, in the light of skills shortages across various sectors, including
the medical sector, Germany has now introduced a law to ensure that the
degrees of migrants are recognised (Mechan-Schmidt, 2013).

human capital theory A theory that recognises that sociodemographic characteristics,

such as age, gender, occupation and educational background,
influence the migration decision and the outcome of migration.

social systems theory A theory that sees migration as the result of tension between
structural (power) questions and anominal (prestige) questions.
Individuals migrate with the aim of achieving a better status.

skilled migrant A well-educated individual who moves from a developing to a

developed country for work.

The major meso-level migration approach, social capital theory,

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highlights the importance of social capital, institutions and networks in
encouraging or hindering people’s migration decisions (Faist, 2000).
Social capital is a resource that is acquired through different kinds of
relationships (Bourdieu & Wacquant, 1992); that is, social networks and
social capital in households, neighbourhoods, communities and more
formal organisations can help individuals in the migration decision
process.

social capital theory A theory based on the idea that social networks and social capital
in, for example, households, neighbourhoods, communities and
formal organisations can help or hinder individuals in decision-
making about migration.

Finally, a recent contribution to the area of international mobility is the

study of transnational migration and transnationalism (Portes,
Guarnizo & Landolt, 1999; Vertovec, 2001). Transnationalism refers to the
phenomenon according to which ‘increasing numbers of people move and
live in a transnational space, and which assumes that belonging to a nation
state has been loosened’ (European Commission 2008: 33). According to
Portes, Guarnizo and Landolt (1999: 1–2), transnational migrants are those
who ‘live dual lives: speaking two languages, having homes in two
countries and making a living through continuous regular contact across
national borders’. Due to globalisation, a new social field of transnational
migration is emerging (Basch, Glick Schiller & Szanton-Blanc, 1994;
Smith & Guarnizo, 1998).

transnational migrant A person who works in two nations, making continuous and
regular contact across national borders.

transnationalism A trend towards people living and working in a transnational

space, accompanied by a weaker sense of belonging to a nation
state.

As these theories demonstrate, much theoretical work has focused on a

single level of analysis, whether macro, meso or micro. However, in
contemporary migration scholarship there are increasing calls to overcome
disciplinary boundaries and to engage with the complexity of migration
research by combining multiple levels of analysis and theoretical
approaches (Healy & Oikelome 2011, Samaluk, forthcoming-a).

Types of migration and implications for IHRM

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The concept of migration refers to the movement of people. With changes
in migration, employers can draw from a broader and more diverse labour
market, with a larger potential candidate pool. Most IHRM literature
focuses on two categories of migrants: traditional expatriates whose
company assigns them abroad, and self-initiated expatriates (SIEs) who
do not have an organisational assignment. The literature often ignores
migrant individuals from less developed countries. We know that people
decide to move for a number of different reasons and not always because
an organisation assigns them. Each migrant’s circumstances and
motivations are different, ranging from poverty to adventure, calculation
and desperation. For example, economic migration commonly occurs
when people move to find work, but can also happen among people who
are refugees and those seeking lifestyle changes. Migration includes
movement both between countries (international migration) and within
countries (domestic migration), and so has spatial dimensions.

self-initiated expatriate A person who moves abroad for work on their own initiative.

economic migration Migration that occurs when people move to find work.

international migration The movement of people between countries.

domestic migration The movement of people within a country, as in the movement of

people from rural areas to big cities.

spatial dimensions of Migration is spatial because it includes movement both between

migration and within countries.

Domestic migration takes place within a country, as in the movement of

people from rural areas to big cities (Heery & Noon 2007). International
migration is a growing feature of the global economy and important in
terms of labour supply in the business environment. International
migration increased dramatically during the 20th century, becoming more
significant for most countries. In 2000, as few as 11 out of 187 countries
globally had around zero in net migration (also known as the ‘balance of
migration’) in comparison with the 1950 and 1960s, when the balance of
inflows (immigration) and outflows (emigration) of international
migrants was around zero in 53 countries (UNPD, 2000). In 2005, 191
million people lived outside of their home country, in comparison with 75
million in 1960 (Heery & Noon, 2007).

net migration The balance of migration.

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immigration Inflows of migrants or returning locals to a country.

emigration Outflows of migrants and locals from a country.

Migration can be permanent or temporary. In fact, a large and growing

share of migration is temporary. Heery and Noon (2007) describe several
types of temporary migration:

circulatory – migration between the host and home country (often

connected with seasonal work)
transient – migration between several host countries, after which the
migrant settles in one of them
contract – migration to a host country for a fixed period, often
determined by a residence permit or job contract
return – migration back to a migrant’s own country, often after a
considerable period spent working in a host country.

HR practitioners should understand the types of temporary migration, and

particularly the time restrictions on groups of migrants, for workforce
planning purposes. Humphries, Brugha and McGee (2012) argue that in
the case of Ireland ‘the assumption that international nurse recruitment had
“solved” the nursing shortage was short lived and the current presumption
that nurse migration (both emigration and immigration) will always
“work” for Ireland overplays the reliability of migration as a health
workforce planning tool’ (p. 44). Moreover, temporary migration is
widespread among highly skilled migrants from, for example, Asia,
Eastern and Western Europe and the United States (Mayr & Peri, 2008).
Again, an HR manager can use this knowledge to determine the reliability
of using migrant labour as a workforce planning tool.
Migration can further be classified into two types: emigration and
immigration. The term ‘immigration’ describes inflows of migrants or
returning locals to a country and the term ‘emigration’ describes outflows
of migrants or locals from a country. This chapter focuses for the most part
on different aspects of immigration, as noted in the end-of-chapter case
study.
Migratory outflows are often discussed in relation to the brain drain
phenomenon. This is widely debated in the light of the loss of skilled
labour from sending countries, which are predominantly emerging
economies. There are particular concerns about the emigration of highly
skilled workers from developing countries and the associated ‘exodus of

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talent’ in many regions. The brain drain is a challenge for national
governments (Tatli, Vassilopoulou & Özbilgin, 2013), some of which have
reacted by promoting better alignment between their education provisions
and employment practices.

brain drain Net loss of skilled labour away from a region or country.

Brain drain causes labour shortages in many vital industries, such as the
Central and Eastern European Region, since developed countries continue
to poach talented and skilled staff from this region. As a result of brain
drain, there is a severe shortage of skilled managers in all sectors within
the former socialist bloc countries (Ellerman, 2006). Poland has
experienced a brain drain after its accession to the EU, for example, borne
out by the number of Polish emigrants. Although most people migrating
have vocational education, the proportion of university graduates has risen
significantly. In particular, the United Kingdom attracts Polish university
graduates, who commonly seek employment in the UK straight after
graduation (Fihel & Okolski, 2009). Such knowledge can be very useful
and interesting for HR managers who use migration as a workforce
planning tool. An HR manager in a MNC could use the information to
develop tools and measures aimed for the attraction of talent; for example,
by recruiting Polish students through attendance at university careers fairs
in that country. This shows how relevant it is for HR managers to
understand and keep up with current migration patterns, inflows and
outflows.
There has also been some return migration among highly skilled
workers in recent times. The IHRM literature calls this ‘brain gain’. Mayr
and Peri (2008: 3) argue that highly skilled migrants are more likely to
return than the less skilled. However, this is not the case for poorer
countries and cannot yet be described as a dominant trend (World
Economic Forum, 2010). The development is interesting for HR managers
in MNCs, however, in relation to strategic workforce planning. HR
practitioners need to develop measures and practices to support the return
of talent, in particular to countries facing severe skills shortages.

brain gain Net gain of skilled labour into a region or country.

Migratory inflows and outflows remain a major challenge for national

governments, organisations and multiple stakeholders at work.

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Multinational and national firms must be more proactive in transcending
national regulatory and institutional arrangements and identifying
competitive practices. This means that organisations and HR managers
have to put serious thought into how to attract, retain and develop talent.
IHRM policies are needed to successfully address brain drain. The
development of comprehensive training and talent management strategies
can be one way to avoid the loss of valuable talent.

Macro-level implications of United Kingdom

migration policy on A8 labour
In this section, we examine the inclusion of A8 labour into the UK’s
migration policy, which forms an important part of the macro-level
background for our end-of-chapter case study. Organisations are
influenced by, and embedded in, the external business environment. While
economic and political influences are important, the legal business
environment also directly affects organisations; that is, the legal
framework of rules and regulations that affect migration inflows and
outflows at national, European and broader international scales. A
company’s failure to respond to national and international legal
requirements can have severe consequences, and its workforce planning
depends highly on the legal framework in each country where it operates,
since the legal framework sets many conditions, for example, regarding
working visas for highly skilled migrants. Organisations, and HR
managers in particular, must be familiar with laws related to migration.
For example, the rights and regulations that affect international migrants
are considerably different from those of domestic migrants. It is important
to acknowledge that international agreements, national legislation and the
relationship between home and host country also affect the handling of
international migrants. National regulation varies dramatically from
country to country, shaped by the unique historical context of each country
and by global labour market developments (Vassilopoulou, 2011; Tatli et
al., 2012). International HR managers should be particularly aware of such
variations in migration law. International regulations, such as those set
within the EU, often guide national migration policies. The importance of
the EU’s legislative role in regulating migration means that IHRM
practitioners must know EU regulations to operate in a country in the
region.
An important regulation in the EU and the single market is that of the
‘four freedoms’ – the free movement of people, goods, services and

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capital. Although the four freedoms in principle give individuals from an
EU country the right to reside and work in another member state,
transitional measures restricted the movement of A8 workers. Transitional
measures finally resulted in four different regimes being put in place in the
EU 15 member states (Vaughan-Whitehead, 2003).
Since 2004, organisations in the UK rely heavily on migrant labour
coming from the A8 member states to perform services and work at the
lower end of the economy (Wills et al., 2010). The UK opened its borders
to workers from A8 countries to gain economic benefits from the
enlargement and address national labour shortages (Lippert et al., 2001).
Trade unions and employers’ organisations welcomed the wider pool of
potential employees, which supported the government’s decision (Heyes,
2009). The government emphasised the economic benefits of free
movement, based on arguments that workers from new member states
would help to fill job vacancies, work legally and therefore pay taxes
(Home Office, 2009). In this context, the government adopted the Worker
Registration Scheme (WRS) to allow A8 nationals to work in the UK. This
policy change aligned with government plans to limit non-EU/European
Economic Area (EEA) labour migration, which was first achieved through
the UK-managed migration scheme and then extended through the
introduction of stricter transitional measures for nationals from the
Accession 2 (A2) countries that joined the EU in 2007 (Bulgaria and
Romania) and additional limits on non-EU/EEA country nationals
(UKBA, 2010; Anderson, Clark & Parutis, 2006). The restriction of low-
skilled workers from A2 and non-EU/EEA countries was based on the
government’s rationale that the continuing flow of A8 workers would be
sufficient to satisfy demand for workers in low-skilled jobs in sectors that
were experiencing labour shortages (Anderson, Clark & Parutis, 2006).
Ciupijus (2011) argues that the UK’s migration policy was not about
enabling people to exercise EU citizenship rights of free movement but
‘about filling the low-pay, low-status niche in the UK labour market’. For
example, although a large proportion of Polish workers in the UK are
highly qualified and skilled, they tend to fill jobs in low-skilled and low-
paid jobs (Coleman, 2010). This indicates that their talent is underused,
which could be seen as a result of badly planned and implemented
strategic workforce planning.

low-skilled migrant A migrant who does not possess work experience or tertiary
education.

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 This can also be seen as a result of the fact that migration policy, the
tabloid press and employers have heavily stereotyped A8 workers as
originating from ‘poor’ and ‘less developed’ countries and being suitable
for, and willing to take up, low-skilled and low-paid jobs (Fox &
Morosanu, 2012). Such stereotypes have detrimental effects on A8
workers, particularly the highly skilled, whose skills are often devalued
and who often receive lower pay than others in the UK labour market
(Currie, 2008; Samaluk, forthcoming-b). However, this also indicates an
unnecessary loss of talent for MNCs. Moreover, A8 workers are more
likely given temporary work and are less likely to be on a standard
employment contract, which means that they may not receive important
employment rights (McKay, 2009). This has been further intensified in the
post–Global Financial Crisis period.
So, it is crucial to take into account how internationalised policies and
markets affect migrant workers, organisations and their IHRM practices.
We will explore these issues further in the end-of-chapter case study.

Meso-level implications of the transformation of

labour markets and migration
The significant transformations in the labour market over recent decades
have affected the nature of HRM. Transnational production, labour
outsourcing and international migration (associated with growing
multiculturalism in organisations) characterise today’s contemporary,
globalised economy (Vassilopoulou et al., 2013). These changes have
produced new challenges for managerial practices in organisations that are
characterised by a mobile and diverse workforce, as well as challenges for
individuals in organisations. Skills shortages (that is, when the demand for
a particular skill outstrips supply) are a global phenomenon. However, the
trend is felt in different ways across the Asia–Pacific, Americas, Europe
and the Middle East (ManpowerGroup, 2008). A number of Western
European countries are facing increasing labour shortages (Esping-
Andersen, 2001) due to demographic change (Healy & Schwarz-Woelzl,
2007). For instance, in the UK and Germany, demographics are changing,
in particular in terms of an ageing population. Skill shortages are a concern
for various countries as well as IHRM in organisations. In the near future,
it will become more difficult for HR professionals to fill vacancies with
local workers. Migrant labour will be one means to address the skills
shortage and will provide HR practitioners with a useful workforce

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planning tool. HR practitioners will need a deeper understanding of
migration patterns and migratory inflows and outflows to effectively
address this challenge. Several countries already rely heavily on migrant
labour in order to meet skill shortages. For example, a study by Groutsis
examines:

the complex and stratified nature of the health care profession in

Greece, which is increasingly staffed . . . by female migrants. The
research explores how immigrant labour is drawn on to fill the most
urgent needs in the lower end of the nursing care sector, how
immigrant labour gains access to these jobs, the implications of the
recruitment process and the effect of these factors on the local labour
market structure (2009: 49).

Groutsis’ study highlights how important it is for HR managers to focus on

the recruitment of migrant labour to address labour shortages. It also
shows that HR practitioners should always be informed about mobility
issues, including inflows and outflows of workers, from a migration and
labour perspective.
What remains consistent across these regions is that skills shortages are
an ongoing challenge for employers, which are not likely to disappear in
the short term. Organisations that limit their pool of talent and fail to
respond to the needs of their staff are likely to face difficulties in recruiting
and retaining talent. Imbalance of this kind is common in many European
economies now. One of the main reasons for this is the inadequacy of both
education and training systems, which has significant effects on the
economy. In particular, meeting employer demand for skills is a key
component for economic growth. So, a skill shortage might negatively
affect the finances of an organisation or the economy of a country. In
pursuit of effective ways to address the reported shortage of talent
(ManpowerGroup, 2010), companies have developed various innovative
practices, including outsourcing, cross-border and on-demand employment
practices, and governments have made changes in educational practices
and migration policies (World Economic Forum, 2010). It is
acknowledged that there is an increasing need for SMs in developed
countries, in particular in Europe (Al Ariss et al., 2012a; Al Ariss et al.,
2012b).
Given the increased recognition of skills shortages globally, increased
demand for skills internationally – often referred to as the global ‘war for
talent’ (Michaels, Handfield-Jones & Axelrod, 2001) – means that

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migration is now an essential part of employers’ recruitment planning.
Organisations are actively sourcing workers from other countries to fill
skills shortages. For instance, organisations in the UK have been using
employment agencies in Poland to source workers in recent years (Currie,
2008). The use of migrant labour is quite often a result of exploitation of
global inequalities between regions or nations (Albert & Standing, 2005).
Host countries that experience an increase in migrant workers can benefit.
For instance, in the UK, SMs ‘often make a positive contribution to
performance and innovation’ (George et al., 2012). This is particularly the
case when the SM’s host country has a shortage of labour. However, there
can be negative effects as well. For example, employers can exploit
migrants, and an increase of migrant workers may lead to lower wages for
host-national employees. Despite the obvious need for immigration to fill
labour gaps, immigration remains a controversial topic in most countries.
However, it is also crucial for developing HR practices to understand the
migratory experience of immigrants. It is problematic for individual
workers when employers do not take into account their particular
backgrounds, and this can also affect the quality of services, which is
ultimately bad for organisations. Migrants may not know yet how to search
for housing, access basic financial services, find local support or adopt
local working practices. For instance, work-related tasks that locals often
take for granted might not be as obvious to migrant workers. Their
understanding of what is required might be very different from the host’s
views. IHRM thus demands a frame that takes into account the diversity of
workers in an organisation.

Micro-level: agency and the individual’s

migratory experience
Understanding the agency of migrants in their individual migratory
experiences is crucial for developing HR theories and practices. Agency
can be understood as the power and influence an individual holds and uses
to change his or her conditions of life and work. A person’s level of
agency depends very much on his or her position in terms of social and
economic relations (Bourdieu & Wacquant 1992). Examining the agency
of migrant workers allows us to perceive how individuals shape their
career choices and outcomes and how they deal with barriers, such as
discrimination, that they may face in a receiving country’s labour market.
The end-of-chapter case study explores the situation of a UK organisation
that has developed HR practices without considering the migratory

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experience of Polish workers who have joined the firm. Interestingly, this
is not a one-off incident. Agency is more often ignored when it comes to
migrants, who come from ‘less developed’ countries. The dominant body
of literature in IHRM focuses on the traditional expatriate who moves to
another country on an organisationally assigned expatriation for an
unspecified duration. Another in the HR literature’s category of migrants
are SIEs, who move on their own initiative and not because of an
organisational assignment. Agency is discussed in the context of these two
categories of internationally mobile individuals, but less so when it comes
to the ‘classical’ migrant. Interestingly, as Al Ariss and Crowley-Henry
(2013: 80) observe:

when expatriates come from less developed countries they are most
frequently labelled as ‘migrants’ or ‘immigrants’. No rational
theoretical or methodological foundation is given to explain such
terminology. Instead, this terminological distinction comes to
replicate and support a stereotyped image of migrants who are less
advantaged in terms of their originating country and ethnic origins.
The literature positions ‘migrants’ in stark contrast to, for example,
expatriates from developed countries.

agency The power and influence an individual holds and uses to change
the conditions of his or her life and work. The level of power and
influence they have depends on his or her position in terms of
social and economic relations.

expatriate An employee who is assigned to an international, cross-border or

cross-cultural job.

Moreover, current research in IHRM focuses largely on the barriers that

migrant workers experience (Pio, 2005), such as administrative barriers in
the form of visa and work permits (Syed, 2008). Other studies examine
discrimination against migrants in institutional and organisational settings
(Laer & Janssens, 2011) and the ways in which their education and
professional experiences are discredited (Vassilopoulou, 2011; Al Ariss et
al., 2012b), both of which often lead to migrant underemployment and
unemployment (Carr, 2010).
Most studies do not examine the agency of, for example, SM workers in
European labour markets (Al Ariss et al., 2012a; 2012b). Drawing on two
field studies – one examining the career experience of highly skilled
migrants in France and the other focusing on the experiences of highly

285
skilled ethnic-minority workers in Germany – Al Ariss and colleagues
(2012a; 2012b) have shown the relevance of agency to the career
development of highly skilled migrants. In France, they found,
discrimination and structural barriers are hindering the career development
of highly skilled Lebanese migrant workers. However, these migrants used
various strategies, often successfully, to overcome these barriers and
further develop their careers. In the German case, the researchers found
that the agency of ethnic-minority workers is much more restricted. The
majority ethnic group undermines the abilities and skills of ethnic-minority
workers across various job criteria. As Vassilopoulou (2011) has observed,
this means that most highly skilled migrants are denied access to positions
commensurate with their skills and qualifications, which limits the agency
of these workers and means that organisations and HR practitioners may
miss out on utilising ethnic-minority talent in Germany. That is
unfortunate, given that German-based organisations face severe skills
shortages across different sectors. Such studies indicate the importance of
diversity management for IHRM in general and for HR practitioners in
particular.

Employment agencies and A8 labour in the UK

Labour market intermediaries such as transnational employment agencies
play an important role in sourcing and supplying migrant workers. The
number of these agencies has mushroomed in A8 countries, and Poland
particularly during the transition period (Currie, 2008). Employment
agencies act as intermediaries, providing HRM services for employers on
an international level (Ward et al., 2001) such as sourcing and supply of
workers; opening offices in A8 countries; organising job fairs and
advertising positions in A8 countries, online or in local media (Currie,
2008; Samaluk, forthcoming-b). Intermediaries’ practices tend to make
migrant workers vulnerable and can also cause problems for organisations.
For example, there may be a lack of fit between organisations and agencies
on the matter of how the selection and screening process of candidates
should be managed to secure the right people at the right time. For
example, managers in organisations are often unhappy with agencies they
used, while poor agency performance directly affected the performance of
workplaces (Ward et al., 2001).
As we will see in the end-of-chapter case study, HR practitioners in
organisations need to be more careful when using such agencies. Quality
checks of agencies and their services could be one mean to address such

286
problems. We also highlight the fact that migrant workers need specific
managerial approaches, for instance in orientating new migrants to local
work processes. Organisations should not see migrants merely as assets,
but rather as human beings who have specific needs, and should provide
assistance to help workers achieve a smooth transition to a new country
and workplace. Shifting, vague responsibilities and disregard for the
migrant worker’s condition are thus not only unethical and problematic for
workers, but ultimately also bad for organisations. Agencies and HR
practitioners must take migrant workers’ specific needs into account if
they wish to avoid employee dissatisfaction and lower service quality.

Conclusion
In this chapter, we showed how disciplinary boundaries divide the field of
migration research. Distinct disciplines deploy a range of theoretical
models and frames, which offer multiple levels of analysis; the theories
have often developed in isolation from each other. There are different
ways of classifying migration, ranging from economic, permanent and
temporary migration to migration caused by flight from persecution or
natural disaster. In fact, a large proportion of migration falls into the
‘temporary’ category, with its variety of subgroups. The rights and
regulations concerning international migration are considerably different
from those for domestic migration. It is important to acknowledge that
these rights and regulations also vary according to the terms of
international agreements and national legislation and the nature of the
relationship between home and host country. National regulation can vary
dramatically from country to country and depends to a large extent on the
historical context of a country, as well as on globalised labour market
developments (Vassilopoulou, 2011; Tatli et al., 2012). National migration
policies are often guided by international regulations, such as the EU,
which is an important body in terms of regulations of migration in Europe.
Skills shortages challenge many countries and organisations around the
world, and migration inflows are one means of responding to such
shortages.

Take-home messages
Migration can be explored from multiple levels and by combining
various theoretical approaches in relation to IHRM.
Changes in the labour market, the result of globalisation,

287
 multiculturalism and new migration patterns, present important
opportunities and challenges for IHRM in organisations and
particularly in MNCs, in the light of skilled labour shortages.
Comprehensive, adaptive and ethical IHRM strategies and practices
that consider, for example, the implications of employing migrant
labour, are essential to success in international business.
HR professionals must understand internationalised labour relations
and labour mobility and the links between IHRM effectiveness, law,
society, unions, culture, migration patterns and migratory inflows and
outflows of labour. Such understanding supports HR practitioners in
using migration as a workforce planning tool.
Developing HR practices must take account of the migratory
experiences of immigrants and their particular backgrounds and
contexts; not to do so causes problems for migrants and can affect the
quality of their services, which is bad for organisations.

Closing the learning loop

1. Compare and contrast the migration theories you have learnt about
in this chapter.
2. What is the difference between a ‘push factor’ and a ‘pull factor’?
3. What are the different types of temporary migration and how are
they relevant to HR workforce planning?
4. What do the terms ‘brain drain’ and ‘brain gain’ mean? Why is
brain drain a problem for some countries?
5. Why do you think that highly qualified Polish workers in the UK
still tend to be utilised for lower skilled and paid jobs?
6. What can organisations do to address skills shortages? Give some
examples.
7. What barriers may migrant workers experience in the receiving
country and in particular at work?

Case study 11.1 Digifor faces labour shortages

Digifor, a large telecommunications services provider in the United
Kingdom, was facing labour shortages in their customer call centre. Since
the company found it hard to source local workers, it decided to recruit
migrant workers from Poland. In doing so, it used migration as a
workforce planning tool and opted to recruit through an employment
agency called Transnational Workforce. The agency selected, interviewed

288
and brought in workers for Digifor, and was also charged with providing
new migrants with accommodation on their arrival in the UK. However,
when Polish workers arrived to take up their call centre roles, they
discovered that the accommodation provided was substandard and had to
find more suitable places to live, without the agency’s help.
In the meantime, Digifor’s management organised a two-week training
program for the new employees. Their role was to provide customer
support and advice on service problems, payment methods and new
product and service information. The training consisted of general advice
on how to answer customer phone calls, address customers and meet sales
targets. The training was essentially the same as that provided for local
Digifor employees. When the new migrant employees started work, many
of them lacked familiarity with common payment methods and the local
organisation of telecommunications and some did not have sufficient
English language skills. This led to problems as they could not adequately
respond to customers about problems or give advice or information.
Digifor received several customer complaints and also faced public
scrutiny over its customer services.
Case study questions
1. How can an organisation such as Digifor ensure that its recruitment of
migrant workers is ethical and responsble?
2. What considerations should organisations take into account when using
the services of an employment agency to recruit migrant workers?
3. How should Digifor’s management have handled the selection process
and ensured the smooth transition of its Polish employees?
4. How might the company have better supported its new employees to
reduce the risk of customer service problems when they started work?

Activity
Group presentation
Overview
Comprehensive and adaptive IHRM strategies and practices that
consider the implications of employing migrant labour are essential to
international business success. This is true of a range of HR fields.
Task
Break into small groups. Each group should pick an area of IHRM, for
example:

289
 recruitment and selection
training and development
cross-cultural management
HR planning
diversity management strategies.

Discuss the implications of employing migrant labour for the area

chosen and develop recommendations for good practice. Present the
results of the group discussion.
Group discussion questions
Break into small groups and discuss the following questions.
1. Why is it important to overcome disciplinary boundaries and to
engage with the complexity of migration research from multiple
levels? How might you combine various theoretical approaches and
levels of analysis?
2. ‘The United Kingdom’s migration policy is more about filling the
low-pay, low-status niche in its labour market than about enabling
European Union citizens’ rights of free movement.’ Debate this
statement, based on what you have learnt about A8 migration to the
UK in this chapter.
3. Why is it important to examine the agency of migrant workers?
Discuss with reference to the German and French examples described
in this chapter.

Online resources
For instructors: answers to activities; long media article with
questions.
For students: further reading; answers to case study; IHRM in
practice.

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 12 Self-initiated expatriation: case study
lessons from Africa and the United States
Ahu Tatli, Daphne Berry, Gulce Ipek and Kurt April

Learning objectives
To outline the key debates on self-initiated expatriation.
To explore the complex, multilevel dynamics of self-initiation,
including the factors behind decisions to migrate.
To examine the role of context in shaping the self-initiation process.
To explain the diversity of career opportunities and barriers faced by
self-initiated expatriates.

Learning outcomes
After reading this chapter, students will be able to:

critically assess what is meant by self-initiated expatriation

identify the dynamics of self-initiation at multiple levels, including
factors that influence decisions to migrate
discuss the complex role of context in shaping the self-initiation
process
understand the diversity of self-initiated mobility in terms of careers,
opportunities and barriers.

Introduction
Organisations today generally have a more diverse workforce, in terms of
country of origin, than in the past. As the capital and labour markets
continue to globalise, growing numbers of people move across national
boundaries to work in different parts of the world. The aim of this chapter
is to introduce and explore the conditions and dynamics that characterise
this self-initiated expatriation (also known as self-initiated migration).
We start by discussing the concepts of migration and self-initiated
expatriation. Next, we explore the factors affecting mobility decisions and

297
identify the challenges of moving and working abroad. In the final part of
the chapter, we offer two case studies from different national contexts: the
United States and South Africa. The case studies focus attention on the
perspectives and lived experiences of globally mobile workers themselves
and highlight the challenges of cross-border migration and the barriers to
integration both within and outside the workplace.

self-initiated In international management and business studies, the concept

expatriation refers to individually initiated international mobility in pursuit of
cultural, personal and career development.

Definitions of self-initiated expatriation and

migration
Since the mid-20th century, the globalisation of trade and production, the
formation of regional supranational alliances such as the European Union
(EU), the emergence of regional skill shortages and the talent needs of
multinational companies (MNCs) have all contributed to the movement of
labour across borders. In the literature, scholars discuss international
mobility using three terms: self-initiated expatriation (Jokinen, Brewster &
Suutari, 2008; Suutari & Brewster, 2001), corporate expatriation
(Brewster & Scullion, 2007) and international migration (Al Ariss et al.,
2012; Berry & Bell, 2012).

corporate expatriation In international management and business studies, the transfer of

an MNC employee to another country on a temporary work
assignment.

international migration In migration studies and human geography, long-term movement of

people across national borders.

Each of these terms refers to the process of movement of people across

international boundaries predominantly for work reasons. Berry and Bell
(2012) explain that scholars in migration studies use the terms ‘corporate
expatriate’ and ‘self-initiated expatriate’ interchangeably with ‘economic
migrant’ in referring to people who move abroad for work. Interestingly,
the IHRM literature tends to draw an implicit line of distinction between
migration and expatriation, focusing almost exclusively on the experiences
of expatriates defined as workers whose MNC employer moves them to
another country on a temporary work assignment (Berry & Bell, 2012). As

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a result, management research attends to the experiences of a specific
minority of a relatively privileged group of people, who make up only a
fraction of the international workforce. However, migrants in less
privileged class positions move across national boundaries for work too.
They also contribute to the labour market of the host country and are also
often employed by MNCs just as their corporate expatriate counterparts
do. In a similar vein, others argue that the predominant focus of
international management research on corporate expatriation left us with a
gaping hole in terms of our understanding of self-initiation. The
experiences of self-initiated expatriates remain almost a hidden aspect of
the international labour market (Jokinen, Brewster & Suutari, 2008). Self-
initiated expatriation is defined as ‘long-term individually initiated travel
to other countries to pursue cultural, personal and career development
experiences’ (Suutari & Brewster, 2001: 435).

economic migrant A person who moves abroad for work.

Although a considerable number of people move to another country to

work and live, studies on this group of people are limited (Suutari &
Brewster, 2001). However, the self-initiated expatriation literature is
criticised for drawing an artificial distinction between migrants and self-
initiated expatriates (SIEs). In this literature, the term ‘migrant’ implicitly
carries negative connotations and is often associated with individuals from
ethnic-minority groups and, more importantly, groups that suffer from
negative ethnic stereotypes, while SIEs are framed in more positive terms,
including highly skilled, motivated individuals who interact with host-
country nationals (HCNs) (Berry & Bell, 2012). In fact, a scholar’s choice
of terminology stems from ideological and disciplinary commitments
rather than empirically substantiated differences in the processes of
mobility for these supposedly different groups. In this chapter, we refer to
SIEs for the sake of consistency, although we recognise that the conceptual
differentiation between migrant and expatriate is largely artificial.
The chapter is designed to introduce, explore and exemplify the process
of self-initiation and the experiences of SIEs. In the next section, we offer
a multilevel overview of self-initiation. Then, we will look at the reasons
people choose self-initiation, the role of context in self-initiation decision-
making and, finally, issues related to managing a self-initiated career.
Table 12.1 summarises the issues that we introduce and discuss in this
chapter and underlines links to student learning outcomes.

299
Table 12.1 Summary of topics, key issues and learning outcomes

Self- Key issues Link to learning outcomes

initiation
topic

Reasons Push/pull You will be able to identify

for factors the dynamics of self-
migration Individual initiation at multiple levels,
circumstances including factors that
Career influence decisions to
aspirations migrate.

Contextual Macro- You will be able to discuss

influences economic the complex role of context
conditions in shaping the self-initiation
Governmental process.
immigration
policies
Labour
market
context
Industry or
sector-related
labour
shortages
Organisational
strategies on
utilising and
integrating
migrant
labour

Careers Diversity of You will understand the

career diversity of self-initiated
expectations mobility in terms of careers,
and outcomes opportunities and barriers.
Demographic
diversity of
SIEs

300
 Type of self-
initiated
careers,
including
boundaryless
career
paradigm

Self-initiation as a multilevel phenomenon

Self-initiation is a complex process that social, organisational and
individual-level dynamics shape, and that is always context-specific; in
other words, each self-initiation is embedded in a certain geographical
location, at a certain time in history. So, an in-depth understanding of the
self-initiation process and the experiences of SIEs requires us to
understand the context. The context of self-initiation is generated by
influences located at multiple levels of analysis. Table 12.2 presents a
multilevel frame of self-initiation.

Table 12.2 Self-initiation: a multilevel framework

Level Issues

Macro International issues: globalisation; regional and

national immigration policies and legislation; macro-
economic, social and cultural conditions in home and
host countries; labour market policies; anti-
discriminatory policies (e.g. Berry, 2011; Berry &
Bell, 2012).

Meso Sectoral issues: supply and demand for labour and

specific skills; practices and policies of responding to
self-initiation; traditions of anti-discriminatory policies
and practices (e.g. Leutz, 2010; Lewin Group, 2008).
Organisational issues: demand for international
workforce; workforce demographics; HR policies,
strategies and practices in talent utilisation, inclusion
and integration of diverse workforce; equality and

301
 diversity policies and programs (e.g. Altman &
Baruch, 2012; Oikelome & Healy, 2007).

Micro Individual issues: human capital; social networks and

support structures; career expectations, aspirations and
outcomes; strategies to overcome structural barriers;
demographic and cultural diversity (e.g. Al Ariss,
2010; Jokinen, Brewster & Suutari, 2008).

The overarching level of self-initiation is the macro-level, which refers

to the macro dynamics in global, international, regional and national
contexts. Macro trends such as global labour market trends, macro-
economic circumstances in the home and host countries and population
dynamics affect demand for and supply of international workforce in
different sectors of the economy (see case study 12.2). The most
influential macro-level trends on self-initiation are:

the globalisation and internalisation of labour markets and the

business environment
macro-economic circumstances in the home and host countries (e.g.
economic growth, stagnation, recession)
conditions in the labour market (e.g. demand for and supply of labour,
skills shortages)
national legislation (e.g. laws on labour, anti-discrimination and
immigration)
governmental immigration policies and discourses
regional and international policies, agreements, standards and
guidelines with respect to the international mobility of workers.

At the meso-level, there are two sets of influences on self-initiation:

sectoral and organisational. Sectoral issues that influence self-initiation
patterns and processes include demand and supply for labour, skill
shortages, history of working with and drawing on international
workforce, practices and policies that are developed to respond to self-
initiation and generic traditions of anti-discriminatory policies and
practices. Organisational issues that help shape companies’ response to
self-initiation include demand for international workers, skill and talent
gaps and shortages, demographics of and diversity in the internal
workforce. The organisational benefits of employing SIEs are clear,

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including the widening of the talent pool and other benefits associated with
having a culturally diverse workforce. However, false conceptions and
discriminatory and exclusionary practices and cultures may prevent
companies fully responding to IHRM challenges in retention and
integration.
At the micro-level, a complex set of individual factors affect the process
and outcomes of self-initiation and, as our case studies from Africa will
later demonstrate, the experiences of SIEs are very diverse. A range of
individual-level factors influence SIE experiences, including the SIE’s
individual human capital, demographic characteristics and social networks
and the support structures that are available in his or her home and host
countries.
Although it is possible to use therory to delineate multiple levels of
influence on self-initiation, in practice the distinctions between macro-,
meso- and micro-levels of analysis are not always clear cut. In fact,
different levels of influence intersect with and affect each other. As we
demonstrate in the remainder of the chapter, all three levels of influence
are at play in shaping reasons for self-initiation, the contexts for decision-
making about migration and the careers of SIEs. The three case studies we
offer in the following sections illustrate key issues in each of these
important topics.

Reasons for self-initiation

In this section, we introduce our first case study (12.1), an account of self-
initiation in Africa. Movement across national boundaries has multiple
triggers, including global economic needs, corporate talent management
practices (such as expatriate management) and individuals’ interest in
navigating career and employment opportunities in different organisations
and national settings (Berry & Bell, 2012). Espenshade (1995) explains
international migration by referring to push/pull factors (see chapter 9 for
discussion of the origins of these concepts). According to neoclassical
theory, international migration is driven when there is a mismatch between
demand for and supply of labour. Demand for products or services changes
over time and this instability may raise concerns over job insecurity in the
secondary economic sector, low wages and little prospect of upward career
movement. This may lead workers to seek job opportunities abroad.
Neoclassical theory suggests that individuals make migration decisions on
the basis of income maximisation, in which they anticipate financial gain
from moving to a new destination. This view assumes that the direction of

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migration is from developing to developed countries; that is, that migrants
come mostly from less developed countries to developed countries to
maximise their economic resources, such as pay and benefits. As a result,
there are fewer studies of movements of skilled labour from developed
countries to less developed countries. Further, the neoclassical model is
based on a model of human decision-making, which ignores non-economic
drivers for migratory movement and focuses on rational, economic factors
alone.
While the immigration literature focuses on macro-level contextual
issues such as brain gain, brain drain and push/pull factors (see chapters 9,
10 and 11), the literature examining self-initiated mobility tends to
emphasise individual-level factors in decision-making about migration (Al
Ariss & Özbilgin, 2010). However, the experiences of SIEs are very
diverse, in terms of opportunities and constraints, available career paths
and structural barriers. The migrant labour force is composed of men and
women from diverse races, ethnicities, economic and social backgrounds.
Further, MNCs, as major receivers of migrant labour, significantly
influence the experiences of SIEs as migrant workers. For example,
gendered and racialised organisational structures in MNCs, coupled with
the uneven effect of globalisation on different segments of the labour
market, generate a wide array of self-initiation experiences. SIEs access
diverse opportunities and experience different degrees of exposure to
advantage, disadvantage, inequality and discrimination (see the discussion
of ‘inequality regimes’ in Acker, 2006). In this context, the self-initiation
literature suffers from a number of limitations. First, in common with the
traditional international migration literature, the literature focuses on
movement from developing to developed countries and ignores the
experiences of individuals who move from developed countries to
developing countries. Second, it does not acknowledge the relationship
between ethnicity and career experiences of internationally mobile
individuals. Third, the literature does not discuss the barriers that
internationally mobile individuals face. Finally, the literature needs to pay
more attention to the interconnected nature of immigration, immigration
policy and SIEs’ experience of self-initiation (Al Ariss, 2010).
To summarise, there are gaps in the literature’s framing of the
international mobility of workers across borders. The focus of the
international migration literature on macro-level factors leads to neglect of
the diversity and agency of SIEs, particularly so at the meso-level of the
workplace. Due to an overemphasis on structural constraints, the agency of
individual SIEs is often ignored, and they are depicted as having no ability

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to act strategically in order to overcome the structural barriers forced on
them in their home and host countries (Al Ariss et al., 2012; see also
chapter 11 on agency). The literature, on the other hand, fails to address
the diversity of SIEs and the equality outcomes of difference across
gender, race and ethnicity lines. SIEs are seen as having the agency and
ability to move across national boundaries for work and able to make
career choices. A major limitation in this approach is the lack of
consideration for the contextual and structural factors that frame career
choices and opportunities for SIEs (Al Ariss & Özbilgin, 2010).
Hardy (1975) and Lawler (2008) remind us that, as humans, we
endlessly tell stories about our lives, both to ourselves and to others, and it
is through such stories that we make sense of our old and new worlds, of
our old and new relationships to those worlds and of the relationship
between ourselves and other people. Narratives relating to self-initiated
migration tend to be context and culture-specific. Case study 12.1
demonstrates the multiplicity and diversity of SIE experiences and the
complexity of the decision-making processes that lead up to a person’s
migration.

Case study 12.1 Self-initiation in Africa

A study of 120 SIEs in Africa demonstrates a diverse range of experiences
and expectations among SIEs. On initial investigation, researchers were
told that SIEs experience three main phases when moving into a new
country in Africa:

1. Excitement, living in a new country, meeting new people, working

in new jobs, around new cultures and accents: in this phase, SIEs
shift from only associating with people similar to themselves to
making friends in the new location.
2. Disillusionment, which takes place 12–18 months after arrival,
when the SIE’s initial excitement turns to disappointment: ‘People
weren’t as nice as I thought, or at least it seemed they did not like
foreigners especially those from Africa at the workplace.
Basically, reality kicked in.’
3. Adaptation: ‘I got used to the way of doing things, the people and
the work. I was able to adapt to the environment, understand the
citizens a bit more and know how to interact with them, and enjoy
myself again.’

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The most obvious issues that arose in talking to research respondents were
bureaucratic obstacles (e.g. work permits, landed immigrant status, visitor
visas for family); the cost of living and affordability; schooling for
children; technological challenges; and healthcare issues. Distant
relationships with family and with spouses, girlfriends or boyfriends and
partners appear to become strained. The weather seemed to be important
when moving from a hot home country to a colder host country (or vice
versa), or from a wet home country to a drier host country (or vice versa).
Even food (e.g. food types, habits, practices) was mentioned as a
challenge, with additional difficulties for migrants who required specific
food types for ethical or religious reasons (e.g. kosher, vegetarian, halal).
Workplace challenges included underutilisation of SIEs’ skills at their
current jobs and ranks, lack of formal and informal networks and lack of
opportunities to socialise with co-workers, particularly with higher ranking
colleagues. Financial capital (or its lack) was also frequently mentioned in
our conversations. For instance, an individual or family’s available funds
when they move to a new country; access to (and/or the lack of) credit and
bank loans. Different educational systems are in place across Africa and so
we heard of many instances where an individual’s home-country
qualifications were not recognised in the host country. Consequently, they
had to work in low- or non-skilled jobs and experienced financial distress.
The multiple languages spoken across Africa appear to create barriers to
entry or feelings of exclusion for many SIEs. Often, such language
challenges exist within a country as well as regionally: for example, South
Africa has 11 official languages and Nigeria has 520 documented
languages spoken across its 36 states. Akin to the language differences are
the cultural difference and range of diversity both within a country and
across the continent. Research respondents spoke of accommodating their
new identities by, for example, sometimes suppressing their old identities
and cultural norms to fit in better with their new environments; they also
spoke of sifting through intracultural identities, looking for bits of the new
environment and cultures which they can relate to in hopes of become
accepted.
A Cameroonian respondent made three claims about moving to South
Africa:

1. ‘I have been passed over for jobs I qualified for because I would
not have been able to relate in Zulu or another local language.’
2. ‘Whites have also turned me down because I did not form part of

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 the Black Economic Empowerment government policies for local
blacks.’
3. ‘For the longest of time, black South African ladies wouldn’t date
me, because I was a foreign black guy.’

A female respondent from Botswana explained that ‘not understanding the

local humour kept me on the periphery, and I could not add to the banter
. . . which made me feel even more marginalised’. For some who
overcome the challenges, it makes them more sensitive to the needs of
foreigners/others in host countries. One SIE from the Netherlands said:

I’ve moved to South Africa about 5 years ago, and hadn’t had any
logistical trouble really, because I didn’t entirely leave the
Netherlands in my head . . . As for the working environment, my
main problem was how people seem to value polite ‘nothingness’
here. Asking ‘How are you?’ but not really being interested in the
answer, as well as being offended when people read me as blunt and
when I tell them the way they see things very narrowly. I’ve adapted
quite well though and I am far less blunt or direct now . . . Socially I
had no trouble accommodating, as Cape Town has an extremely
friendly international crowd. Getting through to locals properly was a
lot harder, especially the white community which has what we would
call a ‘boarding school mentality’ – they only seem interested to form
bonds with the people they went to kindergarten and school with.

Interestingly, the significance of challenges associated with self-

initiation seem to change over time and so do SIEs’ accounts of their
experiences, depending both on their age as well as the time spent in the
host country. As one correspondent noted:

[The v]arious challenges I faced changed with the amount of time I

spent in my new country. The first few years were affected by
cultural differences, financial issues and, the development of
significant friendships. However, the later years were affected by my
level of achievement, the effectiveness of the new contact networks
and the degree of personal relationships.

As the years pass, many SIEs experience weakened or lost ties and
networks in their country of origin, a transition captured in the following:
‘You lose your cultural links to your old networks, as they do not

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understand . . . or do not want to understand, who you have become, and
are still becoming.’
SIEs’ family and cultural support structures in the new country vary case
by case, and family-related concerns have an important impact on the
migration decision as well as the quality of work and private life in the
host-country context. We were informed by a Somali respondent that
‘leaving one’s home country by choice gets more difficult with age – as
one gets older, there is more reluctance to engage new uncertainty and the
unfamiliar, and there is far less flexibility on the individual’s part’. A
Brazilian SIE to South Africa claimed that the ‘self-initiated’ decision to
migrate depended on the individual’s psycho-social and emotional comfort
in answering the following questions:

Will this be an enriching experience for my family? Will the place we

are going, be interesting? Are we willing to live with the risks of the
new place of settlement? (e.g. safety risks, health risks, economic
risks etc.)? Will we be earning reasonable earnings to support a
certain lifestyle? Will this experience give me/us more employability
in the future?

It appears that an individual’s ability to adapt depends largely on pre-

migration resilience factors, such as the person’s age, depth of his or her
spirituality or sense of purpose and psycho-social and emotional state.
Case study questions
1. What do you think are the key difficulties for SIEs, and how do
contextual and individual circumstances change the specific challenges
SIEs face?
2. After reading this case study, what key factors do you think affect an
individual’s decision to migrate?

The context of self-initiation

In this section, we introduce a second case study (12.2), drawn from the
direct care (in-home) sector in the United States. People from immigrant
communities move to the United States for a range of reasons and often
learn of the availability of direct care jobs from family, friends and others
within their communities (Leutz, 2010). Political, social and legal factors
converge to influence both the relatively high representation of SIEs as
direct care workers (home health aides and others paid to provide hands-on

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care for the elderly or people with disabilities) and the persistence of low
pay for these jobs. We begin with an overview of the trends and contextual
factors influencing the self-initiated migration of these workers to the
United States.
According to the International Organization for Migration (IOM), as of
2011 there were more than 57 million international migrants in the
Americas, 50 million of them in the United States (IOM, 2012). A number
of trends in self-initiation are associated with the context in which the
movement occurs both in home and host countries. Among these trends are
the trafficking of humans for labour and sexual exploitation and movement
related to the Global Financial Crisis (2007–2008) and associated
economic crises in developed countries that contributed to reductions in
the numbers of available jobs. The economic crisis has also fuelled anti-
immigrant sentiment, as fear of ‘the other’ becoming more acute and SIEs
have increasingly become targets of intolerant attitudes (Al Nasser, 2011),
causing some SIEs have returned to their home countries. However, there
are still large numbers of people from Latin America and the Caribbean
living in North America (and Europe) and who send money home
(totalling in the tens of billions of dollars) to support people in their home
countries (IOM, 2010). The Institute for Women’s Policy Research notes a
general lack of civic and political institutional support for immigrant
populations in the US in response to immigration growth (Hess, 2009).
Conversely, SIEs of colour have been the recipients of anti-immigration
sentiment in the US for some time. In the 21st century, people from Latin
America are often presumed to be undocumented and so often become
targets of local efforts by law-makers (e.g. Illegal Immigration Reform and
Immigrant Responsibility Act, 1996), law enforcement and sometimes
vigilantes who seek to reduce immigration (Bell, Kwesiga & Berry, 2010;
Esses et al., 2001).
The US Government categorises immigrants into four main groups:

1. lawful permanent residents form the largest legally admitted group

and includes those who enter as part of family reunion and
employment
2. humanitarian migrants
3. unauthorised immigrants
4. legal temporary residents who come as students or temporary
workers (DHS, 2012).

Economic and labour market conditions affect migration flows in various

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ways. For instance, some jobs are seasonal. Others are for jobs labelled
‘speciality’ in areas related to technology and healthcare. Some of these
are highly sought after and highly paid; others, while highly sought, are
not highly paid relative to US pay standards. Work in the in-home care
industry, performed by direct care workers such as home health aides, fits
the latter description. Although US unemployment has accompanied an
extended economic recession and may steer workers toward industries
where many jobs are available, some workers are unwilling to fill jobs that
they find unattractive from economic, social or other viewpoints (Leutz,
2010). Consequently, SIEs in the US can readily find work in categories
that are low wage and seen as undesirable. The care work industry is one
in which SIEs have helped to alleviate labour shortages. Despite problems
related to language, culture and low compensation, this industry is
expected to remain a magnet for some SIEs (Leutz, 2010; Lewin Group,
2008). For that reason, in the next section we examine in more detail SIE
experiences in the in-home care sector.

Care work and self-initiated migration to the United

States
In the United States, home health aide and similar jobs are readily
available to SIEs, and overall, SIEs fill 20–25 per cent of positions (Lewin
Group, 2008). Just as there are observed trends in migration flows between
North America and the rest of the Americas, there are also trends
regarding the heavy presence of female SIEs in the care work industries. A
large proportion of the people who immigrate to the region are women (49
per cent of migrants overall) who work in the rapidly growing care
industries in the US. Since many immigrants live in urban areas, the
percentage of direct care workers who are SIEs is often even higher in
cities. For example, in the Miami area, more than 70 per cent of workers
are foreign-born, and SIEs account for approximately 66 per cent of care
workers in the New York City and north-eastern New Jersey area and 63
per cent in the Los Angeles area.
Case study 12.2 examines the experiences of female SIEs in the US care
industry (excerpts adapted from Berry, 2011). Roles in this sector include
certified nursing assistants, home health aides, personal care assistants,
direct support professionals and a range of other positions. Care workers
provide support for people who are ill, injured, disabled, elderly or infirm.
Those who work in clients’ homes allow people who might otherwise be
institutionalised to be able to stay in their homes. While this type of long-

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term care (in the home setting) is utilised more in Canada than it is in the
US (IOM, 2010), the relative number of elderly (and those with
disabilities) receiving in-home care is growing due to client preferences in
the US and cost savings realised by supporting institutions. A number of
contextual trends shape SIE experiences in the home care industry, as we
will identify here.
While the economic crisis contributed to fewer jobs not only for
immigrants but also for native-born workers, the home health aide industry
has grown rapidly and so experienced a labour shortage. In the period
2006–2030, the number of elderly people in the US is projected to nearly
double (Leutz, 2011), while the number of women in the age group from
which these types of care workers are usually drawn will increase by less
than 10 per cent (PHI, 2011). Because the numbers of ageing people in
comparison to the native-born number of people who normally perform
paid care work is so skewed for the US (IOM, 2010), those responsible for
care of the elderly are increasingly relying on female SIEs to fill the gaps.
Many problems in the care work industry affect employees, employers
and care recipients. The industry is characterised by low wages and poor
working conditions: according to the US Bureau of Labor Statistics (BLS),
this type of care work attracts low wages (at poverty level in some cases),
is physically and emotionally exhausting and earns minimal benefits such
as health insurance and paid earned leave (BLS, 2012; IOM, 2010). The
low skill levels of the women who perform care work are often used to
explain the low wages and poor working conditions. However, there are
variations in the skill and education levels of the workers: 54–58 per cent
have a high school education or less, while others have a college degree
and some even have nursing or medical practitioner credentials from their
native countries and work as home health aides or other direct care
workers while they seek US credentials (Berry, 2011; Lewin Group,
2008). Other explanations include the constrained budgets of governments
who often fund this care for those in society who cannot and the fact that
women have traditionally performed care work, either without or for very
low financial remuneration (Dresser, 2008; Folbre, 1995; IOM, 2010).
Employers cite the great work ethic of immigrant women as a reason why
employers are willing to hire them, but from the perspective of female
SIEs, they are willing to work in such poor conditions mainly because they
do not perceive alternatives for other work and because the environment
does not support them in making complaints about these conditions. Such
conditions may well contribute to growth in the number of female SIEs
and to the shortage of home-country workers willing to work in the

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industry.
To summarise, the labour of female SIEs is sorely needed by the rapidly
ageing societies in the US (IOM, 2010). Large and increasing numbers of
self-initiated women perform care work, due to a combination of poverty
in SIEs’ home countries; a lack of alternative work options in the US; the
care industry’s readily available jobs; and a lack of institutional supports.
Some in the US have recognised the need to address the labour shortage in
the industry and the lack of adequate compensation and other supports
both for the women who perform this work and for their families. Case
study 12.2 presents real-life experiences of three migrant in-home care
workers in the US (Berry, 2011).

Case study 12.2 Female SIEs and in-home care in the United States*
A nurse moved to the United States from Jamaica. After first trying to find
work as a nurse, she applied for a job in New York City as a home health
aide. She worked as an aide for three years while she retrained as a nurse,
since her home-country nursing credentials were not acceptable for this
work in the US Government regulations also require that home health
aides receive a certain amount of training per year, delivered by a certified
medical professional. The nurse then became a trainer for a home health
aide organisation. Since qualified nurses are often required to perform
home health aide training, one route out of the in-home care job for self-
initiated women is as a nurse-trainer. This nurse commented on her
experience and expertise as a SIE as follows:

I was an aide so I understand what these aides are experiencing

working in people’s homes. That’s why I do so well at it. They know
that I understand . . . Because of my prior education, I thought that I
could do this and found out what more was required for me to be a
nurse-trainer here.

A doctor from a Latin American country moved to the US with her

spouse. This former medical doctor and nurse-trainer also worked as a
home health aide before becoming a US-credentialed nurse who provides
training to home health aides. Her training in her home country did not
qualify her to practice in the US but it did allow her to become easily
certified as a trainer of care workers. She is bilingual, a great asset for
administrators and educators in this industry, as many workers are from
Latin American countries. On career experience as a home care worker,

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she said:

I was afraid of going into clients’ home in some of the

neighbourhoods but I had to go until I could get this job. Because
some of the other aides also live in the neighbourhoods, I don’t think
they were as afraid as I was or at least they had to go. I was happy to
have this job instead.

A nursing assistant from an Asian country moved to the US and found

work in a long-term-care institutional setting. She narrates the difficulties
she has experienced as a self-initiated home care worker and as an
immigrant trying to fit in:

My job is so difficult. The elderly people are mean sometimes and

don’t like people of colour. They call names and even hit you . . .
There [are] not enough staff on our floor and sometimes we are not
allowed to take breaks. If someone calls in sick, it is worse for the rest
of us . . . I am going to school at night to try to get an associate’s
degree so I can do something else. I’m taking English-as-a-Second-
Language classes . . . Sometimes I have to miss [work] because of my
family but I can’t quit because my husband doesn’t always have
work.

* Excerpted and adapted from Berry (2011).

Case study questions
1. How do contextual factors influence the experiences of SIEs in the care
sector? In discussing this question, consider the context across multiple
dimensions including the sociopolitical environment, economic context
and sector- and industry-specific needs and demands.
2. What do you think are the potential challenges SIEs may experience in
their new work context, based on the information in this case study?
3. How can organisations and policy-makers help to improve the
experiences of SIEs, to ensure their full contribution to society and the
economy?

The challenges of self-initiated careers

In this section, we introduce our third and final case study (12.3), about a
career journey in South Africa. The international migration literature
explores the difficulties SIEs often experience when they enter the labour

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market of a new country. These difficulties include joining the
economically active labour force and finding suitable and rewarding jobs.
The challenges in establishing a career in a new organisational and social
setting may stem from restricted access to information, limited knowledge
of the labour market context of the host country or inadequate or
inappropriate human capital resources, such as language proficiency and
cultural orientation (Raijman & Semyonov, 1997). However, the self-
initiated labour force is made up of diverse groups with diverse career
experiences and challenges. The extant migration literature focuses on
economic migration from non-Western to Western countries, including
exploration of gendered experiences and consequences of migration
(Phizacklea, 1983; Basavarajappa & Verma, 1990). Yet matters of ethnic
and class difference, and the experiences of skilled migrants (SMs), are
often neglected. Aranda (2007) found that the kinds of capital SIEs bring
with them from their home countries influence their social outcomes in the
host country. For example, the experiences of middle-class Puerto Ricans
on the US mainland showed that this group represented the colonial
migrants from privileged economic and citizenship backgrounds.
Consequently, the self-initiation experiences of such groups while they are
in process of moving to, and settling in, a new country are likely to be
substantially different from the experiences of migrants from less
privileged social classes.
In general, SIE careers are an underexplored area of the migration
literature. As we pointed out earlier, this literature focuses on obstacles
that low-skilled SIEs face, and yet the self-initiated careers of SMs also
need to be understood if organisations are to utilise their human resource
potential. The corporate expatriation literature considers a career to be an
organisational process in which the organisation and individual share
responsibility (Seak & Enderwick, 2008). The self-initiation literature, on
the other hand, takes an individual centred approach to careers (Altman &
Baruch, 2012). As such, the notion of self-initiation fits well with the
neoliberal framing of workplace relations as individualised, in which
national and international careers are seen as a consideration for
individuals rather than for organisations. As a result, individual workers
are deemed to have the predominant responsibility for managing their
careers and welfare (Al Ariss et al., 2012). The individualisation of
responsibility has important implications for the career experiences of
SIEs, as it may lead to lack of the kind of organisational and state-that
would support their integration into the labour market and work context of
the receiving country.

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 SIEs arguably operate in a boundaryless career paradigm more than
any other group of employees. In comparison to corporate expatriation,
where the company takes an active role in managing the process of an
employee’s movement to the new social, organisational and career context
(Baruch, Steele & Quantrill, 2002), the burden and responsibility of career
management in self-initiation heavily falls onto the individual expatriate.
Whether an SIE is moving short-term or long-term, the traditional
organisational career paradigm does not apply because self-initiation
requires active career management in the host-country context, without the
benefit of organisational support, at least during the early stages. In the
traditional career paradigm, individuals are expected to be employed in the
same organisation until they achieve seniority in terms of time and age
(Arthur, 1994). On the other hand, in the case of boundaryless careers,
individuals are seen as having full responsibility for successful
performance in their career (Becker & Haunschild, 2003), and they
typically move outside the company or to another country for career
development reasons (Arthur, Khapova & Wilderom, 2005, Defillippi &
Arthur, 1994). Sullivan and Arthur (2006) highlight the interdependence of
physical and psychological changes in work arrangements, arguing that
varying levels of physical and psychological mobility characterise the
boundaryless career. Studies on the boundaryless career tend to reflect
individual’s independence of the traditional career arrangements and
traditional organisation of migration.

boundaryless career A model that sees individual careers as independent of

paradigm organisational career structures and systems and that places sole
responsibility for active career management on individuals.

organisational career A traditional model that sees individual careers as dependent on

paradigm organisational career structures and systems and that places
shared responsibility for active career management on the
employer and employee.

However, the concept of the boundaryless career fails to address the

complexity of self-initiated careers. SIEs’ career development choices are
made in the context of, for example, organisational structures (Schein,
1971); the varied resources at their disposal (Inkson, 2006); and their past
employment history (Rodrigues & Guest, 2010). Oikelome and Healy’s
(2007) research into the experiences of overseas qualified doctors in the
UK demonstrates that organisational and sectoral structures significantly
influence individual career outcomes for SIEs in a wide range of issues

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related to reward, workload, autonomy and morale. As the authors
conclude, organisational and sectoral boundaries may create career
structures that systematically disadvantage some portions of the
workforce, such as SIEs. Further, SIEs’ family and broader community
attachments, their links to the home country, and their demographic
characteristics – such as gender, age, ethnicity, sexual orientation,
nationality, occupation, disability and social class – are important in
drawing the very boundaries of their presumably boundaryless careers
(Parker, Arthur & Inkson, 2004). Organisations that employ an
international workforce must look beyond boundaryless and individualistic
career approaches to understand SIEs and to acknowledge their own
positive and supportive role in engaging this group of workers. To ensure
the full contribution of their international workforce, organisations need to
equip themselves with tools and support structures to respond to the
unique experiences of SIEs. In this sense, the scope of IHRM approaches
to expatriate management needs to be widened to include SIEs (Altman &
Baruch, 2012).

Case study 12.3 A career journey in South Africa

SIEs encounter a number of challenges, ranging from bureaucratic and
financial obstacles (e.g. visa requirements, expenses, accreditation of
qualifications) to difficulties related to culture and social relations (e.g.
adapting to a new culture, lack of networks, being away from family and
friends). This case study draws on a written account by a SIE to Africa
provided to us, in which he explains the key challenges he faced before,
during and after his migration to South Africa. The following is an excerpt
from his account.
Typical challenges I faced:

Visas (obvious, and can be expensive).

Sense of belonging – you need to know who you are, what your roots
are, etc. In my new city anything goes, while it offers immense
opportunities, it is also essential to understand that many of these
opportunities are dangerous if you’re not strongly grounded. I’ve seen
pretty normal people going off the radar and ending up in very dark
places.
Networking – very important, especially if the plan is to stay for
several years. This is useful for work opportunities, but also for
socialising and travelling. I found the churches useful in instilling a

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 sense of community and [for] general assistance in networking.
Appreciation of cultures – being from a small town in the
countryside, moving to a cosmopolitan city introduced so many new
cultures, religions and languages. You cannot isolate yourself,
especially in the workplace. I used this as an educational opportunity
to enrich my knowledge of people and their values, which was an
amazing experience.
Being challenged about intentions of leaving my home country (e.g.
many of my new country colleagues assumed that I left South Africa
because of my dissatisfaction with the new post-apartheid
government [ . . . ], that I’m a racist). These talks often surface in a
professional environment, and it is useful to be prepared in whatever
your opinions are. The challenge lies in the fact that those challenging
you are actually very racially orientated anyway.
Comfort zones and sacrifices – you are bound to move outside several
boundaries of comfort, be it family, friends, and simple logistical
issues such as location-driven securities (ease of shopping, doctors,
schools, gyms, safe walking/cycling routes). Also, sacrificing things
like scenery and surroundings, weather, car (I [was] without a car for
the first five years; it is not the end of the world, but it does restrict
you in some luxuries).
Keeping in touch with friends and family back home – while internet
tools such as Facebook and Skype [are] great for keeping in contact,
these facilities can be somewhat virtual, and require both ends
committing equally. My biggest challenge came after several years
when great friends had moved on (married, [had] kids, etc.) and
gradually our reference frameworks started deviating and we lost
common ground.
Being independent – no more support and care offered through
friends [or] financial support through parents.
Starting from scratch (depending on the timing of your move) – I had
to start a professional and social life from scratch, prove myself, had
no reputation to fall back on and mostly no introduction when putting
myself out in the market.

Case study questions

1. What challenges may self-initiated migrants face in their career
journeys?
2. How should these challenges be addressed?

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Conclusion
In this chapter, we used discussion and examples to demonstrate the
complexity of the process of self-initiation and the diversity of the
experiences of SIEs. Earlier in the chapter (table 12.2), we provided a
summary of the key trends that affect the self-initiation process at multiple
levels. In this conclusion, we will briefly discuss possible policy and
practice solutions to address the issues we have identified. In table 12.3,
we identify policy and practice recommendations for self-initiation,
adopting the multilevel framework that has been used throughout this
book.

Table 12.3 A multilevel frame of self-initiation

Policy or practice
Level Trends and issues
recommendations

Macro Globalisation; regional and Supranational bodies

national immigration have a role to play in
policies or legislation; regulating the
macro-economic, social and international
cultural conditions in the movement of workers
home and host countries; as well as treatment of
labour market policies; anti- SIEs in the host
discriminatory policies. country.
Host countries
receiving migrant
labour need to have
policies, regulation
and support structures
that enable inclusion
of the SIEs in the new
society and the labour
market.
International and
national legislation
should tackle
discrimination against
SIEs.
Positive discourse that

318
 emphasises the
contribution of SIEs to
the society and
economy needs to be
developed.

Meso Sectoral level: supply and Sectoral good practices

demand for labour and and guidelines can be
specific skills; practices and developed to ensure
policies of responding to full utilisation of SIE
self-initiation; traditions of labour.
anti-discriminatory policies Organisations need to
and practices. develop strategies to
Organisational level: prevent
demand for international underemployment of
workforce; workforce SIEs due to false
demographics; HR policies, conceptions and
strategies and practices in assumptions.
talent utilisation, inclusion Equality and diversity
and integration of diverse programs are
workforce; equality and important in raising
diversity policies and awareness among
programs. employees on the
contribution of SIEs
and the benefits of
internationally diverse
workforce.
HR policies need to
ensure full utilisation
of self-initiated
worker’s talent, their
full inclusion in the
organisation and their
fair treatment.

Micro Human capital; social SIEs need to

networks and support familiarise themselves
structures; career with the host-country
expectations, aspirations and context and get their
outcomes; strategies to education and skills

319
 overcome structural barriers; converted or
demographic and cultural recognised.
diversity. They need to develop
strategies to overcome
structural barriers in
the host country. These
barriers may reside at
macro–social, sectoral
or organisational
levels.
Support networks are
important in solving
bureaucratic issues; in
overcoming day-to-
day and domestic
challenges; gaining
awareness of
workplace rights; and
sharing experience in
general.

Important policy solutions at macro-level may help to improve the

experiences of SIEs. To start with, supranational bodies have a role to play
in regulating the international movement of workers as well as the
treatment of SIEs in the host country. Further, international and national
legislation can be used to tackle discrimination against self-initiated
workers. The receiving country should have policies, regulation and
support structures in place to ensure that SIEs feel included and welcome
in the new society instead of feeling disempowered, marginalised,
excluded and unwanted. Finally, it is crucial to tackle anti-immigrant
sentiments in the society, which often arise during the times of economic
stagnation or recession. Therefore, it is important that the government and
other stakeholders (including employers and trade unions) develop positive
discourses that emphasise the contribution of SIEs to the society and
economy.
The meso-level of self-initiation includes two sub-levels, within sectors
and organisations. Representative bodies and umbrella organisations at the
sectoral level have a significant role to play. They may be instrumental in
spreading good practice across the sector and in developing guidelines and

320
codes of conduct to ensure that companies use the skills and talent of SIEs
to the full. At the organisational level, international HR managers, as the
people responsible for the effective management of organisation’s human
resources, have responsibility in effective management and utilisation of
the skills and talent of SIEs. In that context, the international HR managers
need to develop strategies to ensure that SIEs are not underemployed
because of false conceptions and assumptions. HR policies also need to
ensure that SIEs’ talents are appropriately used and that the organisation
includes SIEs fully and treats them fairly. Equality and diversity programs
are particularly important in raising awareness among employees about the
contribution of SIEs and the benefits of an internationally diverse
workforce.
As we have seen through the discussions and case examples in the
chapter, SIEs are a very diverse group in terms of their background,
individual circumstances and resources. As a result, SIEs display great
diversity in terms of both their career expectations, aspirations and
outcomes and their strategies for overcoming barriers they face in the
receiving country. Some individual-level practices may also help SIEs to
improve their experience of assignments, including the development of
strategies for overcoming structural barriers in the host country. These
barriers may reside at macro–social, sectoral or organisational levels. For
instance, one of the key challenge SIEs face is that their qualifications and
skills are not recognised in the new country, which leads them to be
underemployed. Before they relocate, SIEs need to familiarise themselves
with the host-country context and have their education and skills
recognised, or converted to equivalents, in the destination country. Further,
support networks are essential in solving bureaucratic issues; overcoming
day-to-day and domestic challenges; gaining awareness of workplace
rights; and sharing the expatriate experience in general.

Take-home messages
SIEs decide to migrate for a wide range of reasons, including
perceived opportunities and constraints in the home and host
countries, individual and domestic circumstances and career
aspirations.
An understanding of the context is key to handling the process of self-
initiation successfully. The national, sectoral and organisational
contexts, and responses to and demands for self-initiation within
them, frame the experiences of SIEs.

321
 Career issues in self-initiation can be complex. SIEs have diverse
career experiences and they are also a diverse group, in terms of
human capital, age, gender, ethnicity, social class and so on.

Closing the learning loop

1. What are the key self-initiation issues and trends at macro-, meso-
and micro-levels? Explain with reference to the case studies
presented in this chapter.
2. Why do you think people choose to migrate across national
borders?
3. In what ways does context affect the experiences of SIEs,
considering sectoral, national and international contexts?
4. To what extent can the careers of SIEs be described as
‘boundaryless’? Explain your answer.
5. What policy and practice actions may governments and
organisations take to improve the process of self-initiation?
6. What kinds of strategy may SIEs employ to overcome potential
career obstacles in the host-country context?

Activities
Group discussion
Break into small groups and debate this statement:
Differences between migrants, expatriates and self-expatriates are
rarely significant.
Present arguments for and against this proposition.
Small group role-play
SIEs can contribute significantly to both national economic and
organisational success. However, there are some barriers to effective
and full utilisation of the self-initiated workforce. Below is a list of key
actors who may influence the self-initiation process.
Break into small groups and choose an actor to represent from the
list below. Each group should discuss effective policy and practice
solutions that the actor they represent may put into action to improve
the self-initiation process.

Company owner or shareholder

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 Employers’ association (e.g. Britain’s Confederation of British
Industry [CBI])
Government immigration department
International HR manager
Sectoral representative body or umbrella organisation
SIE interest group
Supranational or international body (e.g. EU, International
Labour Organization, North American Free Trade Agreement,
United Nations)
Trade union

Online resources
For instructors: answers to activities; long media article with
questions; additional questions and answers.
For students: further reading; answers to case studies; IHRM in
practice.

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 Conclusion
Mustafa F. Özbilgin, Dimitria Groutsis and William S. Harvey

The international business context is changing rapidly, driven by

international mergers, cross-border alliances and joint ventures, with
consequent demands and increased competition for readily available,
skilled and qualified labour to staff emergent global business needs. In
such a dynamic context, the role of IHRM has grown more important and
complex and yet arguably remains undervalued. This book has set out a
multilevel framework for recognising, explaining and understanding the
important role of HR in an international context, forming an introduction
to IHRM for those new to the field.
The contributors have shown how multiple scales of analysis are
connected, through the lenses of macro-, meso- and micro-level contexts,
and in doing so they have challenged the dominant approaches of the
academic literature on IHRM, with its tendency to silo work into a focus
on country, region, city, industry, organisation, group or individual. The
bulk of the scholarship has largely neglected the role of multiple
stakeholder arrangements, with the focus placed almost exclusively on
IHRM processes. For example, there has been much emphasis on the
context of particular countries and on the perspective of employing
organisations, but this has largely neglected prominent literatures around
key concepts such as ‘boundaryless careers’, the ‘war for talent’, the
importance of ‘reputation’ and new labour market ‘intermediaries’.
Equally, the electorates of national governments and supranational
organisations continue to debate IHRM issues and, accordingly, we find
their legislation surrounding the attraction and retention of foreign talent
alters through changing immigration and citizenship policies. Such
policies affect what types of worker can move into a country and therefore
the types of worker international HR managers can access. The examples
depicted throughout this book highlight that while it is valuable to
understand IHRM in the context of organisations, there are other
significant actors who affect and are affected by the attraction, recruitment,
retention and development, performance management and reward of
international assignees. Finally, the book has also demonstrated the unique
regional challenges and opportunities by presenting dedicated discussions

328
of regions and countries, particularly the Asia–Pacific, Europe, Africa and
the United States.
To aid readers’ navigation through the important and complex role of
IHRM in today’s era of economic globalisation, we have developed a
unique approach which has encouraged consideration of multiple levels of
analysis and recognition of how different actors are interconnected. Figure
13.1 demonstrates our emphasis on the significance of, and relationships
between, multiple levels of analysis, all of which can make important
contributions to our understanding of the multiple dimensions of IHRM.

Figure 13.1 The relationships between macro-, meso- and micro-levels

Every chapter has drawn on this multilevel framework to provide an

introduction to the opportunities and challenges associated with managing
people in an international and cross-cultural context. Here, we review the
contribution of each chapter.

Chapter review
Global trends in IHRM
Chapter 1 provided valuable context to IHRM, including the challenges
and opportunities for organisations of managing global and domestic

329
talent. Rofcanin and Zingoni argued that greater international competition,
major technological advances, shifts in demographic trends, ebbs and
flows in financial circumstances, the growth and decline of organisations,
the different stages of international development and greater sensitivity
towards workforce diversity, are just a few of the many factors which have
heightened the importance of sound HR policies for countries and
organisations as a means by which to operationalise and achieve
competitive strategy. The authors also argued that talented employees are
becoming more proactive in adapting to changing economic circumstances
through job crafting, employer negotiations, voicing concerns with their
employers and investing in their personal development. Finally, Rofcanin,
Imer and Zingoni argued that talented workers are now becoming more
engaged with ethical, social and environmentally sustainable issues within
their organisations, which relates to Harvey’s argument in Chapter 9
concerning the heightened importance of reputation in the context of
IHRM.

Cross-cultural management and managing cultural

diversity
Chapter 2 introduced the well-trodden but poorly understood areas of
cross-cultural management, cultural diversity and diversity management
strategies and initiatives. Groutsis, Ng and Ozturk argued that
understanding these areas is important in the context of attracting and
retaining workers from different ethno-cultural and linguistic backgrounds.
They also argued that cross-cultural management and the management of
cultural diversity are vital for countries and organisations seeking to
integrate these internationally mobile stocks of workers. They rightly
argued that a ‘one size fits all’ approach to managing diversity is not
appropriate and what may prove effective in one regional setting may be
inappropriate in another setting. The authors claimed that current
approaches to cross-cultural management and cultural diversity in the
context of IHRM have largely been dealt with separately. The result is that
scholars of IHRM are given a one-dimensional and at best partial
understanding of the challenges of managing, attracting and retaining
internationally mobile stocks of skilled workers. They emphasised the
need to appreciate the connection between cross-cultural management and
diversity management initiatives.

Key players in IHRM

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Chapter 3 outlined the main actors in the IHRM space. Hollinshead,
Forson, Rocha-Lawton and Calveley claimed that many accounts have
assumed that individuals within Western institutions have dominated the
practice of global organisations. However, they found that individuals
from diverse regions are now holding a growing influence with global
organisations. As larger pools of talent emerge from countries such as
China and India, so have the philosophies, policies and practices of home
and host countries as well as multinational companies (MNCs). The
authors went beyond the dominant categories of the IHRM literature,
including expatriates, host-country nationals (HCNs) and third-country
nationals (TCNs). The authors concluded by arguing that the key players
in IHRM are diverse in terms of their identities and there is no orderly
structure to current trends, but rather contestation, power struggle and
misunderstandings. They argued that global organisations will do better if
their policies diverge from old-fashioned Western practices and embrace
today’s more diverse workforce.

Recruitment and selection in the international context

Chapter 4 discussed the role of recruitment and selection in the
international context. Potočnik, Latorre, Dereli and Tacer extended the
analysis set out in chapter 3 by drawing our attention to the breadth of
potential employees in the international space. The authors argued that
greater analysis of job specifications is needed for organisations to
establish exactly what type of workers and skills they need. They
contended that a single organisational policy for promoting worker
adjustment may not be as effective as a tailored approach, highlighting that
international HR managers must go beyond a ‘one size fits all’ approach to
managing international stocks of mobile workers. The authors showed
what organisations can do to enable the integration of employees and their
families to the new cultural environment, including socialisation programs
and HCN mentoring. The authors concluded by arguing that a company
incurs high social and economic costs when it does not recruit and select
effectively – so, greater investment in sound practices is warranted.

Cross-cultural training and development for overseas

assignments
Chapter 5 argued that the nature of international career management, such
as employee orientation, training and development, has altered
significantly in recent years. Berber, Rofcanin and Fried stated that

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employees expect greater levels of flexibility with their work as well as
individualised work arrangements and career plans. Employee orientation
and training has focused on increasing the task effectiveness and skills of
workers, whereas employee development programs are focused on the
individual development needs of workers and not necessarily on increasing
levels of job efficiency. The authors argued that conducting training and
development programs for international assignees should be sensitive to
the cultural context. They further claimed that career planning,
management and development programs are geared towards enabling
employees to make the best career choices in different country and cultural
contexts, matching the skills of employees with the requirements of the
company.

International reward
Chapter 6 built on the foundations of international rewards and
demonstrated the diversity and complexity of international reward
practices in MNCs. Jenkins argued that a number of effective approaches
can be applied and it is important to consider the value for organisations of
international assignees working abroad, and hence the potential
consequences if they are not rewarded appropriately to their expectations.
Cross-country reward practices are valuable for practitioners and students
of international reward to reflect on what constitutes good practice in
particular contexts; value and recognise international assignees; and
evaluate the challenges involved in the process of reward, including
coordinating financial and non-financial components and international tax
arrangements. Organisations can use this to help them critically reflect on
the nature and meaning of their reward practices and amend their reward
systems accordingly.

Employee retention
Chapter 7 focused on the value for organisations of retaining workers.
Balta argued that organisations are able to retain workers through various
strategies including job satisfaction, motivation, competitive remuneration
packages as well as the provision of training and development
opportunities. Job satisfaction and motivation can be promoted through
providing employees with autonomy, clear task requirements and
organisational policies, professional interaction as well as a positive status
associated with their role. Competitive remuneration is important for
attracting talented workers in the first place as well as retaining them, and
it is an important means of satisfying and motivating local and global

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talent. Good working conditions as well as training and development
opportunities are other important methods for retaining talent because they
enable workers to feel satisfied with their physical surroundings and
content with the level of opportunities to invest in new skills. This is
particularly important in the international context because some skills
which are relevant in certain contexts may not be relevant in other
contexts. The increasing global and national surveys on employers of
choice means that organisations need to ensure that they keep up to date
with the needs of their existing and future employees to both attract and
retain them.

International labour relations

Chapter 8 argued that international labour relations operate through multi-
actor and multilevel arrangements. Özbilgin found that there has been a
historical transformation of labour relations in the international context,
with examples of increases and decreases in labour activity. There are
clear demonstrations of growing struggles for power and influence over
standards of labour as well as the terms and conditions of work. Although
labour standards are often defined at a global level, they are interpreted
and enacted at a local level, meaning that such global standards continue to
be aspirational and highly contested. This reinforces the role of the macro-,
meso- and micro-levels of analysis in international labour relations, with
respect to how different actors create, change, implement and monitor
particular standards. Özbilgin concluded by arguing that there are three
different approaches to adopting international standards: principled,
solidaristic and voluntary.

Reputation in the context of IHRM

Chapter 9 introduced the important emerging field of reputation, which is a
collective assessment of an institution, organisation, group or individual
compared to its competitors. Harvey argued that reputation is significant
for different stakeholders because, while it is an intangible asset, it can
also provide tangible results, both positive and negative. For example, an
organisation with a positive reputation compared to its competitors will
better enable it to attract and retain workers compared to its less reputable
competitors. Potential and existing employees are becoming increasingly
concerned with the reputation of organisations, including its leaders, hence
reputation is an important HR domain for organisations to focus their
attention, particularly at a time when there is an international ‘war for
talent’. Finally, Harvey argued that because so much talent is moving

333
across international borders, it is not only the reputation of organisations
and their leaders, but also the reputation of countries, regions and cities,
which may determine where they decide to move. In short, reputation is a
multifaceted phenomenon that is becoming more widespread and
significant for individuals, organisations, cities and countries. As such, the
chapter provided scholars of IHRM with a new and important
consideration in facilitating the attraction and retention of a talented
workforce, who are increasingly aware of and influenced by reputation.

Expatriation and repatriation in the Asia–Pacific

region
Chapter 10 focused on the theoretical and empirical issues related to the
mobility of talent to, from and within the Asia–Pacific region. Caven, Kirk
and Wang-Cowham argued that macro-, meso- and micro-level push/pull
factors affect the management of globally mobile talent within and
between Asia–Pacific countries. They raised the major issues that affect
expatriation and repatriation across the region, including various
contextual factors that constrain and enable mobility. The chapter
summarised the various approaches to global mobility from the
perspective of talented individuals as well as employers. Finally, the
authors provided valuable insights for the IHRM scholar by focusing on
mobility in the region and emphasising the value of understanding various
cultural, economic, political and social contexts.

Balancing inflows and outflows in the European

context
Chapter 11 argued that understanding international migration has been
understood differently across academic disciplines and through the use of
many theoretical approaches, frameworks and levels of analysis.
Vassilopoulou, Samaluk and Seierstad argued that there are many types of
migrant, some of whom move permanently while others move temporarily.
The rights of migrants also vary depending on the country, historical and
labour market context as well as the category of migrant moving to a host
country. In contrast to the EU, the authors highlight that national policies
are often guided by international guidelines, but this does not necessarily
translate into consistent policies across countries. The experiences of
migrants therefore will vary according to these policies, which will vary
over different time periods. The authors argued that IHRM practices need
to account for the varying experiences of migrants to ensure that the needs

334
of talented workers are addressed.

Self-initiated repatriation: case study lessons from

Africa and the United States
Chapter 12 began by defining and critically assessing what is meant by
self-initiated expatriation, particularly compared to other groups such as
migrants and expatriates. Tatli, Berry, Ipek and April identified multiple
factors that determine whether and why people migrate, examining points
such as global economic needs, employment opportunities, the functional
requirements of MNCs, professional and social interests and the wishes of
individuals. The authors presented two case studies from Africa and one
from the United States to demonstrate the broad range of factors that can
affect international mobility, and emphasised some of the major challenges
that people can experience when moving across international borders,
including the sociopolitical environment, economic context and sector-
and industry- specific needs and demands.

Closing words
Throughout this book, the authors have deliberately developed the
discussion beyond the traditional and well-trodden sources of staff in
IHRM, including: expatriate, HCNs and TCNs, extending the categories to
also consider the importance of the skilled migrant and/or self-initiated
expatriate. While the latter have not been a traditional source of labour for
organisations, they have increasingly come to play a significant role in
staffing international business concerns as organisations continue to
expand their customer base, operations and supply chains internationally.
In addition, countries and companies around the world are caught in an
international tussle to attract and retain skilled and qualified workers, at
the same time that these individuals are seeking to move abroad for work
and lifestyle reasons, often independently of organisational secondments
and intra-firm transfers. While in the past many skilled workers were
moving from Western countries such as the US and the UK, we are
experiencing a much greater diversity of international mobility from a
broader range of countries, including emerging economies, as well as a
growing number of women, dual career couples and younger workers
moving for work purposes. In short, there has been a rise in the diversity of
international mobility which has opened-up opportunities and challenges
for host and home countries, institutions, organisations as well as for those
individuals who are moving.

335
336
 Index
Accession 2 (A2) countries 202
Accession 8 (A8) countries
inclusion in EU 195
and UK immigration policy 201–3
achievement 133
agency
and career development of highly skilled migrants 206
defining of social spaces 57
definition 57, 205
and individuals’ migratory experiences 205–6
Aglionby, case study 181, 189
alignment 114
Apple 168
Asia–Pacific region
challenge of labour management 180
definition 180
factors influencing global talent flows 182–3
push/pull factors 183–6
repatriation 186–7
staffing 186
talent flows 181
assertiveness 33
assessment centres (ACs) 79, 80
autonomy 132

Bangalore, information technology cluster 173

basic pay 110–11
BBC 173
benefits
definition 137
and employee retention 137–8
for overseas assignees 111–12
bicultural engagement 52–3
biculturals 52
Boots, case study 141–2
boundary spanning 49

337
boundaryless career paradigm 227
boundaryless careers 13–14, 171
brain circulation 181
brain drain 181, 200–1
brain gain 181, 201
Branson, Richard 169
British Petroleum (BP) 168
business case for diversity 29

career development 138–9

case studies
Aglionby expands in the Asia–Pacific 189
Boots 141–2
career journey in South Africa 228–9
career in textile design 102–3
Chengdu Construction Industry 189
death of Ahmet Yildiz 161
Digifor faces labour shortages 206, 207–8
expatriate adjustment in India 38–40
female SIEs and in-home care in US 225–6
international labour standards 161–2
Krewe Marketing 17
Marikana massacre 161–2
Mercator Group 85–6
mineral mining in a developing country 175
R & D Discovery China 59
reluctance to relocation 122–3
self-initiation in Africa 220–2
celebrity CEOs 169
celebrity firms 169
Chengdu Construction Industry, case study 189
Chile, technology talent 172
Civil Society Organisations (CSOs) 155
coercive comparisons 57, 58
competitive advantage, and corporate reputation 168
completion 132
conformance 114
contract expatriates 51
corporate expatriation 215
corporate mandates 49
corporate reputation

338
 as an intangible asset 167
and celebrity CEOs 169
celebrity firms 169
and competitive advantage 168
consequences of positive and negative reputations 168
consistency over time 169
context 166
definition and nature of 166
importance of 167–9
international assignees and skilled migrants 171–3
and labour market reputation 170–1
multilevel approach to 166–7
negative reputations 168
role among employees 170–1
role of employees 171
role of intermediaries 173
and status 169
corporate strategy
adaptive orientation 116
alignment of reward system 114
exportive orientation 115
cross-cultural adjustment 36
see also cultural adjustment
cross-cultural diversity management
cultural dimensions 30–4
macro-level dimensions 29
meso- and micro-level dimensions 34–6
multilevel approach 29
cross-cultural management
business case 26–8
definition 24
overview 24–6
cross-cultural models 29
cross-cultural socialisation 96
cross-cultural training, definition 94
cross-cultural training and development 97–100
cross-cultural training and development programs
differing needs of inpatriates and expatriates 95–6
during early arrival period 99–100
in latter stages of arrival phase 100
need for 94

339
 in pre-departure period 98–9
cultural adaptation, definition 77, 95
cultural adjustment
capacity for 76–7
conformist stage 100
cross-cultural adjustment phase 100
culture shock phase 99–100
ethnocentric phase 98–9
expatriate adjustment in India 38–40
facilitation by HR practices and policies 71–4
individual factors 83
phases of 98
cultural carriers 49–50
cultural dimensions
country clusters 33
criticisms of Hofstede and GLOBE Project 32–4
cross-cultural diversity management 30–4
GLOBE Project 31–2
Hofstede’s six cultural dimensions 30–1
Japan compared to US 31
ranking of national cultures 33
UK compared to Malaysia 32
cultural distance 25
cultural and linguistic diversity, and diversity management 35–6
cultural values 11
culture, defining 28–9
culture shock
definition 95
management of 99–100

demography, changes in workforce demographics 11–12

diversity, and international mobility 53–6
diversity management
at workplace level 36
cultural and linguistic diversity 35–6
definition 27
diversity management policy 27
domestic migration 199
Domino’s Pizza 171
dragon companies, definition 9
dual-career perspective 77

340
economic environment, trends in 8–9
economic migration 199, 215
emerging multinational companies (EMNCs)
definition 10
and FDI flow 9
emic model 29
emigration 199, 200
employee proactivity 14–15
employee retention
Boots case study 141–2
causal model for turnover 134
and cross-cultural adjustment 36
definition 25, 129
importance 130
and inpatriation 139
and job satisfaction 132–6
as major issue for organisations 129
management 130–1
and nationalisation 139
nature of 129–30
as a priority for organisations 129
recruiting and training valuable staff 131–2
and remuneration and benefits 137–8
and repatriation 139
strategies 136–40
and teamwork 130
training and development interventions 138–9
and working environment and conditions 136–7
employee turnover
causal model 134
and job satisfaction 135–6
employment agencies, and A8 labour in UK 206, 207–8
employment contracts, changing nature 14–15
ethnocentric companies 10
ethnocentric organisations
definition 115
reward system 115
ethnocentrism, definition 8, 48
etic model 29
European Union (EU)
Accession 2 (A2) countries 202

341
 Accession 8 (A8) countries 195
‘four freedoms’ 202
internal migration 196–7
labour standards 157
regulations covering A8 workers 202
expatriates (‘expats’)
characterisation 48
contract expatriates 51
as cultural carriers 49–50
definition 49, 95
differences from inpatriates 95
from less developed countries 205
reward systems 118–20
expatriation
alternatives to 50–3
corporate expatriation 215
definition 11, 180
female participation 53–5
increase in 10–11, 49
major purposes 50
strategic significance 50
experience, as selection criterion 78
exportive strategic orientation 115
external equity, reward systems 113–14
external recruitment
definition 75
of parent-country nationals 75–6
extrinsic rewards 109, 137, 138

family and couple adjustment 82

family situation, as selection criterion 77
financial benefits 138
see also benefits
financial environment, trends in 8–9
flexipatriates
advantages and disadvantages of 70
definition 71
tasks 70
floor of rights 112
focal firms 8
foreign direct investment (FDI)

342
 definition 9, 10
and emerging multinational companies 9
foreign postings 48
franchising 9
fringe benefits 111–12
future orientation 33

gender egalitarianism 33
Generation X, definition 12
Generation Y, definition 12
geocentric organisations, reward systems 117
geocentrism 8, 49
Germany, recognition of qualifications of skilled migrants 198
global commodity changes (GCCs) 56
global companies, definition 9
global compensation strategy 117
global financial crises 9
global mindset 24
global reward strategy 117
Global Unions 154
global value chains (GVCs) 56–7
global virtual team members
advantages and disadvantages of 71
definition 71
tasks 71
globalisation, definition 7
GLOBE Project
country clusters 33
criticisms of 32–4
cultural dimensions 31–2
glopatriates (‘glo-pats’) 187
Goldman Sachs 171
Google 169

Hofstede’s six cultural dimensions 30–1

comparison of Japan and US 31
comparison of Malaysia and UK 32
criticisms of 32–4
ranking of national cultures 33
home country 7
host country 7

343
host-country nationals (HCNs)
advantages and disadvantages 51–2, 69, 186
in Asia–Pacific region 186
definition 8
international recruitment 76
support for parent-country nationals (PCNs) 82
human agency see agency
human capital theory 198
human resource consultancies, cooperation with 80
human resource management (HRM)
definition 7
differences from IHRM 7
human resource professionals, competencies for international recruitment
and selection 71–4
humane orientation 33

idiosyncratic deals (i-deals) 15

immigrants see migrants
immigration 199, 200
in-group collectivism 33
India, case studies of expatriate adjustment 38–40
individualism (IDV) 30
indulgence orientation (IO) 31
inpatriates (‘inpats’)
as biculturals 52
definition 52, 95
differences from expatriates 95
socialisation process 97
inpatriation, and employee retention 139
institutional collectivism 33
intermediaries, and corporate reputation 173
internal equity, reward systems 113
internal migration, in European Union 196–7
internal recruitment
definition 75
of parent-country nationals 75–6
international assignees
attraction to and influence on reputation 171–3
definition 172
and international labour standards 158–9
phases of cultural adjustment 98

344
 reward systems for expatriates 118–20
training following arrival 99–100
training in pre-departure period 98–9
types 51
international assignments
expatriates and inpatriates 95–6
socialisation process for 97
international business travellers
advantages and disadvantages of 71
definition 71
tasks 71
international careers, nature of 13–14
international commuters 51
international companies
nature of 7
staffing 10–11
international division of labour 56–7
international employees
alternative contemporary types 70–1
categories of 69–71
international human resource management (IHMR)
definition 2
differences from HRM 7
interplay of levels 3
macro-level concerns 2
meso-level concerns 2
micro-level concerns 3
multilevel approach 2
nature of 7
study of 2
international human resource management (IHMR) process
key aspects 7–8
use of technology 12–13
international human resource managers, implications of international
labour standards 159
International Labour and Employment Relations Association (ILERA) 154
International Labour Organization (ILO)
conventions on labour standards 113, 153
establishment, aims and functions 153
international labour relations (ILR)
definition 149

345
 historical context 149–50
macro-level stakeholders 153–4
micro-level stakeholders 155
multilevel model 152–6
multilevel model, stakeholders and focus 156
study of 149
international labour standards (ILS)
case studies 161–2
compliance issues 151–2
definition and nature of 151
enforcement of compliance 156–7
implications for international assignees 158–9
implications for international HR managers 159
key actors in debates 151
meso-level stakeholders 154–5
principled approach 156–7
rational institutional approach 152
reasons for adoption 152, 156–8
sociological institutional approach 152
solidarity approach 157
voluntary approach 158
International Lesbian, Gay, Bisexual, Trans and Intersex Association
(ILGA) 155
international migration 198, 199, 215
international mobility
and diversity 53–6
self-initiated expatriation, migration and ethnicity 55–6
skill levels of individuals 56
women 53–5
international organisations, key actors 49–50
international recruitment and selection
advantages and disadvantages of using categories of employees 69
approaches 69–71
challenges 68
competence profile for recruitment and selection managers 73–4
and corporate reputation 170–1
costs of failure 83, 94
determining competencies of HR professionals 71–4
ethnocentric approach 69
evaluation of process 81–3
four-stage process model 72

346
 geocentric approach 69
indicators of success 82–3
planning 68
polycentric approach 69
process model 71–83
recruitment 74–6
regiocentric approach 69
selection 76–81
and stage of internationalisation 72–3
international selection
final selection decision and job offer 81
issues in selection methods 80–1
selection criteria 76–9, 94
selection methods 79–80
self-selection tools 80–1
International Trade Union Confederation (ITUC) 153–4
international transferrees 51
internationalised companies, growth of 9–10
interviews 79
intrinsic rewards 109, 138

Japan, cultural dimensions compared to US 31

Job Descriptive Index (JDI) 133–4
job satisfaction
defining 133–4
definition 130
and employee retention 132–6
and employee turnover intention 135–6
measuring 133–4
and organisational commitment 134–5
and pay 133
and promotion 133
job status and recognition 132
jobs, changing nature 14
joint ventures 9

Krewe Marketing, case study 17

labour market reputation 170–1

labour market transformation, and migration 203–5
labour relations

347
 differences in laws and practices 13
see also international labour relations
labour shortages, Digifor case study 206, 207–8
labour standards, international context 151
Lee Hsien Loong 172
legal environment, migration laws 201–2
licensing 9
linguistic ability, as selection criteria 77
long-term orientation (LTO) 31
low-skilled migrants 202

McKinsey & Company 168

macro-level migration theories 195
Malaysia, cultural dimensions compared to UK 32
mandates 49
Marikana massacre 161–2
masculine cultures 81
masculinity (MAS), cultural dimension 30
Mercator Group, case study 85–6
meso-level migration theories 195
micro-level migration theories 195
micro-politics 57, 58
migrant labour, and skills shortages 203–4
migrants
agency in migratory experiences 205–6
definition 51, 55
nature of migratory experience 204–5
use of term 205
migration
definitions 215–16
economic migration 199, 215
internal migration 196–7
and labour market transformation 203–5
macro-level causes 196–7
push/pull factors 172–3, 182–3
push/pull model 185
push/pull process 196–7
spatial dimensions 199
transnational migration 198–9
types and implications for IHRM 199–201
migration law, national and international requirements 201–2

348
migration theory
approaches 196
human capital theory 198
levels 195–6
macro-level 195–6, 197–8
meso-level 195, 196, 198
micro-level 195, 196
micro-level analysis of push/pull process 197, 198
and neoclassical economic theory 197, 198
overview 196–9
segmented labour market theory 197
social capital theory 198
world systems theory 197–8
migratory experiences
and agency of migrants 205–6
understanding nature of 204–5
mining, case study in developing country 175
multinational companies (MNCs)
conceptual departures and notions of social spaces 56–7
governance systems 57
nature of 7, 48

nationalisation, and employee retention 139

neoclassical economic theory, and migration theory 197, 198
net migration 199
North American Free Trade Agreement (NAFTA) 158

offshoring 11
Olympus 171
organisational career paradigm 227
organisational commitment
definition 134
and job satisfaction 134–5
organisational cultures
components 34–5
and nature of business arrangement 35
overseas assignees see international assignees
overseas assignments see international assignments

parent-country nationals (PCNs)

advantages and disadvantages 69, 186

349
 in Asia–Pacific region 186
definition 8
external recruitment 75–6
international recruitment 75–6
performance orientation 33
person–organisation fit 79
personal growth 132
personality traits, as selection criterion 78
Poland, brain drain 200
polycentric companies 10
polycentrism 8, 49
power distance 33
power distance index (PDI) 30
proactive employee efforts 15
promotion, and job satisfaction 133
psychometric tests 79
push/pull factors
in Asia–Pacific region 183–6
operation of 172–3
push/pull model, organisational perspective 185
push/pull process, micro-level analysis of 197

R & D Discovery China, case study 59

Ravenstein, Ernest 196, 197
recruitment
definition 68
see also external recruitment; internal recruitment; international
recruitment and selection
recruitment practices 74–6
recruitment and training 129
regiocentric companies 10
regiocentric organisations, reward systems 117
regiocentrism 8
relational job design 14
relational rewards 109, 110
relocation, case study of reluctance 122–3
remuneration
definition 137
employee retention 137–8
repatriation
in Asia–Pacific region 186–7

350
 definition 14, 180
and employee retention 139
reputation see corporate reputation
retention see employee retention
returnees 52
reverse brain drain 52
reward system design
alignment with corporate strategy 114
approaches reflecting alignment and conformance 115–18
balance-sheet approach to expatriate rewards 119–20
expatriate role and international assignments 118–20
external equity 113–14
federal approach 116–17
global reward strategy 117
going-rate approach to expatriate rewards 120
hybrid approaches 117–18
imperial approach 115–16
internal equity 113
legal compliance 112–13
macro-level implications and concerns 112–13
meso-level implications and concerns 113–18
micro-level implications and concerns 118–20
reward systems
basic pay 110–11
benefits 111–12
classification of rewards 109
and employee retention 137–8
goals 109
key elements 110
‘new pay’ approach 109
variable pay 109, 111

salary and wages 130

basic pay 110–11
and employee retention 137–8
and job satisfaction 133
‘new pay’ 109
variable pay 109, 111
segmented labour market theory 197
selection
definition 68

351
 see also international recruitment and selection; international
selection
self-initiated careers
boundaryless career paradigm 227
challenges of 226–9
complexity of 227–8
self-initiated expatriates (SIEs)
advantages and disadvantages 69
careers 215, 226–9
definition 11, 26, 55, 68, 199
management of diversity 26
reasons for migration 215, 218–22
self-initiated expatriation
in Africa 220–2
contextual influences 215, 222–6
definition 215–16
focus of studies 55–6
migration and ethnicity 55–6
multilevel framework 217
as multilevel phenomenon 216–18
policy and practice recommendations 230
self-initiated migration, and care work in US 223–6
Shea, Nicholás 172
short-term assignees
advantages and disadvantages of 70
definition 11, 71
tasks 70
Silicon Valley 173, 181
Singapore, foreign workers 172
skilled migrants (SMs)
advantages and disadvantages of recruiting 69
attraction to and influence on reputation 171–3
definition 26, 68, 172
management of diversity 26
push/pull factors 172–3
recognition of qualifications 198
skills shortages, and migrant labour 203–4
Smith, Greg 171
Social Accountability International 158
social capital theory 198
social spaces 57

352
soft skills 78
South Africa, case study of career journey 228–9
South Korea, Indian workers 172
spatial dimensions of migration 199
staffing
international organisations 10–11
strategies in Asia–Pacific region 186
Start-Up Chile 172
status 169
strategic human resource management 7
subcontracting 9

talent flows
in Asia–Pacific region 181
definition 181
triangular talent flows 181
teamwork, and employee retention 130
technical competencies, as selection criterion 79
technological improvements, impact of 12–13
temporary migration 200
tests, as selection method 79
textile design career, case study 102–3
third country, definition 7
third-country nationals (TCNs)
advantages and disadvantages of recruiting 52, 69, 186
in Asia–Pacific region 186
definition 8
international recruitment 76
Toyota 169
trade sanctions 156–7
trade unions 153–4
trailing spouses 54
training and development, and employee retention 138–9
transactional rewards 109, 110
transnational companies (TNCs) 9
transnational migrants 198–9
transnational migration 198–9
transnationalism 198–9
transpatriates 120

uncertainty avoidance 33

353
uncertainty avoidance index (UAI) 30
United Kingdom
cultural dimensions compared to Malaysia 32
employment agencies and A8 labour 206, 207–8
inclusion of A8 labour in migration policy 195, 201–3
stereotyping of A8 workers 203
United States
care work and self-initiated migration 223–6
categorisation of immigrants 223
contextual influences on self-initiation 222–6
cultural dimensions compared to Japan 31

variable pay 109, 111

virtual international employees 51

Welch, Jack 169

Woodford, Michael 171
work design, changing nature 14
Worker Registration Scheme (WRS) 202
workforce diversity
definition 12
impact of 12
working environment and conditions, and employee retention 136–7
world systems theory 197–8
World Trade Organization (WTO) 153

Yildaz, Ahmet, death of 161

Zhongguancun high-technology region (Beijing) 173

354
目录
Half title page 2
Title page 3
Copyright page 4
Dedication 6
Contents 7
Contributors 9
Acknowledgements 12
Introduction: a multilevel approach to international
13
human resource management
1 Global trends in international human resource
19
management
2 Cross-cultural and diversity management intersections:
41
lessons for attracting and retaining international assignees
3 Key players in international human resource
76
management
4 Recruitment and selection in the international context 104
5 Cross-cultural training and development for overseas
138
assignments
6 International reward 156
7 Employee retention 182
8 International labour relations 210
9 Reputation in the international context 232
10 Expatriation and repatriation in the Asia–Pacific
250
region
11 Balancing inflows and outflows in the European
270
context
12 Self-initiated expatriation: case study lessons from
297
Africa and the United States

355
 View publication stats

Conclusion 328
Index 337

356