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Human Resource Issues in International Business

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  • 0:00 International Business…
  • 1:02 Staffing
  • 2:32 Culture and Communication
  • 3:27 Economic Considerations
  • 4:30 Lesson Summary
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Lesson Transcript
Instructor: Dr. Douglas Hawks

Douglas has two master's degrees (MPA & MBA) and is currently working on his PhD in Higher Education Administration.

From a business perspective, national boarders are disappearing, giving way to free trade agreements and open economies. In this lesson, we'll talk about how that presents new opportunities and challenges for human resource managers.

International Business HR Issues

The idea of international business encompasses many trends, all of which impact human resource management to some degree. It isn't just the trend of companies outsourcing labor, although that is a big part of it. International business includes the trends of growing customer markets to include new nations, finding new suppliers from other countries, and the movement of people around the world to support those trends.

Managers must consider three broad categories of issues when dealing with international business strategies. The first is staffing, primarily where will they source labor and how will they develop that talent. The second is culture and communication, an issue no matter how local or central production may take place. Finally there are the economic considerations - specifically, compensation and taxation issues with local labor or expatriate employees.

Staffing

International business trends present managers and human resource leaders with opportunities and challenges for staffing. Opportunities to outsource, or having people or providers outside the company perform some duties, is common. Specifically, offshoring, or outsourcing jobs to emerging economies while simultaneously getting lower-cost labor, may be a viable solution. Sometimes, offshoring gets a bad reputation, and certainly, if it is exploiting vulnerable populations, that reputation may be deserved. But when managed responsibility, outsourcing can be a benefit to the local economy and the employer.

Some companies may choose to offshore much of their labor, while others may decide to keep production local in their home country. There isn't one right strategy; it depends very much on supply chain capabilities and customer demand. Either way, the staffing and offshoring decisions lead to the need to manage and train those employees.

Often, companies underestimate the cost of training and developing foreign labor. Employees in emerging economies may cost less, but they must still be trained and leading that training may offset lower costs in the form of lower productivity and slower production time. Additionally, companies may encounter higher costs for expatriate managers, those employees from the home country that need to be compensated extra to visit or live in the host country to manage the new workforce.

Culture and Communication

Regardless of the location of the workforce, international business trends have introduced new communication issues into the workplace. These may take place between managers and workers if the manager comes from a different culture than many of the workers, or it may take place between members of a diverse workforce. It includes spoken, written, and nonverbal communication and isn't limited to language barriers.

Cultural and communication challenges may come from different expectations regarding the role of managers and employees, the relationship between employees, and the motivations of employees.

Stopping cultural exchanges from occurring or training everyone in a company to be prepared to handle every situation they may face isn't possible. Instead, human resource managers and supervisors who manage teams of diverse employees must be able to teach sensitivity and cultural awareness.

Economic Considerations

While human resources is a field focused on managing labor, economic considerations in doing so are still important. Compensation is just part of that equation, and dealing with multiple locations in different countries, foreign currencies, and tax laws that differ from country to country, makes that even more complex.

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