Exam 14: Establishing Hrm Practices in Foreign Countries

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When American companies operate subsidiaries overseas, they must train their host-national workers. Many HR professionals simply try to apply successful U.S. training programs. However this is not the best way to conduct a training program. Before setting up a training program in a foreign subsidiary, HR professionals must understand how their culture views the educational process.
Cultural values and norms determine what people consider appropriate remuneration for their labor. The "trick" in designing compensation systems in international environments is to understand what motivates employees in each culture and to design the system around those motivators. Money, praise, or external symbols, although attractive to American employees, may not hold the same attraction for members of other cultures. Simply superimposing American compensation and reward systems onto a foreign subsidiary oftentimes will not only fail to work, but may actually damage the productivity of the workers in that subsidiary.

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International business operations appear in a variety of forms. The most common way medium to large companies "go international" is simply to set up operations overseas that they own; such operations are called wholly owned subsidiaries. In some instances, American firms may join up with foreign firms and create new companies, called joint ventures.
Joint ventures have mushroomed in recent years for two reasons. First, the local laws of some countries do not allow subsidiaries to be wholly owned by foreign companies. Often, such laws require that local operations have at least a 51 percent ownership. Second, joint ventures allow companies to draw on others' expertise: No one company can know everything it needs to know to sell or manufacture products across diverse worldwide business markets.