oWhen it comes to employee termination, the amount of notice with pay to be provided,
continuation of benefits, notification of unions, and minimum length of cervices to qualify for
severance payments vary significantly and can in some cases have a major impact on labour costs.
oHealth and safety laws vary from non-existent to which tightens liability of senior management for
health and safety offences.
•Labour Cost Factors :
oDifferences in labour costs may also produce differences in HR practices. In order to maintain the
competitive advantage of lower labour costs in China, the concept of investing in employees
through training and development is seen as an unnecessary cost. High labour costs can require a
focus on efficiency and on HR practices (like pay for performance) aimed at improving employee
•Industrial Relations Factors :
oIndustrial relations, and specifically the relationship among the workers, the union, and the
employers, vary dramatically from country to country and have an enormous impact on HRM
oIn Germany, codetermination is the rule. Here, employees have the legal right to a voice in setting
company polices. In this and several other countries, workers elect their own representatives to the
supervisory board of the employer, and there is also a vice-president for labour at the top
oLikewise, in many other countries, the state interferes little in the relations between the employers
oIn China, company unions fall under the administration of the local Communist Party committee,
which often shares long-term goals with the company. Thus unions seldom play an effective role
in labour disputes.
oIntercountry variations in culture, economic systems, labour costs, and legal and industrial
relations system complicate the taste of selecting, training, and managing employees abroad. These
variations result in corresponding differences which make the job of expatriate managers much
more complex and difficult than when at home. International assignments thus run a relatively
high risk of failing unless these differences are taken into account when selecting, training, and
compensating international assignees.
Selection for Global Assignments:
International managers can be expatriates, locals, or third-country nationals. Most managerial positions
are filled by locals rather than expatriates in both headquarters and foreign subsidiary operations.
•Advantages for using locals:
oThere are several reasons to rely on local, host-country management talent for filling the
foreign subsidiary’s management ranks.
Many people simply prefer not to work at a foreign country, and in general the
cost of using expatriates is far greater than the cost of using local management
Also, there may also be a fear that expatriates, knowing that they are posted to the
foreign subsidiary for only a few years, may overemphasize short-term projects
rather than focus on perhaps more necessary long-term tasks.
oThere are also several reasons for using expatriates – either parent-country or third-
country nationals- for staffing subsidiaries.
The major reason is technical competence. (Unable to find locals with the
required technical qualifications.)