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International Human ResourcesInternational Human Resources

ManagementManagement

Introduction

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IHRM ?IHRM ?

y

changing characteristics of HR in aninternational context

y planning, recruiting and selecting

y developing and rewarding

y evaluating performance and dismissing

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TermsTerms

MNE

culture shock

emi-etic distinction

HCN

PCN

TCN

NAFTA

UNCTAD

expatriate

inpatriate

HRM

IHRM


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Interrelationships between Approaches to the FieldInterrelationships between Approaches to the Field

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Multinational Enterprise (MNE)Multinational Enterprise (MNE)

y a firm which owns or controls business

activities in more than one foreign

country

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Defining HRMDefining HRM

An organizations HRM activities include

y human resource planning

y staffing (recruitment, selections, placement)

y performance management

y training and development

y compensation (remuneration) and benefits

y industrial relations6


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A Model of IHRMA Model of IHRM

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Defining IHRMDefining IHRM

The interplay among these three

dimensions inFigure 1.2

y

human resource activitiesy type of employees

y countries of operation

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Introduction toIntroduction to InternationalInternational

HumanHuman ResourceResource ManagementManagementy How the world is changing,

y Importance of globalization,

y

IHRM as a key factor in the success ofinternational business.

y An overview of domestic HRM and

discussion on what is different in IHRM.


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International Assignments Create ExpatriatesInternational Assignments Create Expatriates (Figure(Figure1.3)1.3)

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Defining InpatriateDefining Inpatriate

y transfer of subsidiary staff into the parent

country (headquarters) operations

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Differences Between Domestic HRMDifferences Between Domestic HRM

and IHRMand IHRM

IHRM complexity can be attributed to six factors

y more HR activities

y the need for a broader perspective

y more involvement in employees personal lives

y changes in emphasis as the workforce mix of

expatriates and locals variesy risk exposure

y broader external influences

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More HRActivitiesMore HRActivities

International

y taxation

y

relocation and orientationy expatriate administrative services

y host government relations

y language translation services

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More Involvement in Employees PersonalMore Involvement in Employees Personal

LivesLives

Ensure expatriates understand

y housing arrangements

y

healthcarey compensation (cost-of-living allowances, premiums,

taxes)

y

visa requirementsy schooling

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Variables that Moderate Differences BetweenVariables that Moderate Differences Between

Domestic and IHRMDomestic and IHRM

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The Cultural EnvironmentThe Cultural Environment

Defining culture

y a shaping process overtime that generates relative

stability, reflecting a shared knowledge structure

that accentuates variability in values, behavioural

norms, and patterns of behaviour.

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Impacts on MultinationalImpacts on Multinational

ManagementManagement

y Need for flexibility

y Local responsiveness

y Knowledge sharing

y Transfer of competence

IBUS 618 Dr. Yang 20


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Managerial ResponsesManagerial Responses

y Developing a global mindset

y More weighting on informal control

mechanismsy Fostering horizontal communication

y Using cross-border and virtual teams

y Using international assignments



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Important lessons for global firmsImportant lessons for global firms

y The need to manage change

y The need to respect local cultures

y The need to understand a corporations

culture

y The need to be flexible

y The need to learn

Copyright 2003-2006, Chris Chan 22


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Factors that Influence the Global

Work Environment


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Manager can be hired from three groups:

Parent country nationals, host country

nationals, and third country nationals. Parentcountry nationals (PCNs) are residents of the

international businesss home country who are

transferred to one of its foreign operations.

Host country nationals (HCNs) are residents

of the host country, and are the most

common choice for mid-level and lower level

jobs. Employing HCNS are popular becausethey are already familiar with local laws,

culture, and economic conditions.


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Third country nationals (TCNs) are citizens

of neither the firms home country nor of

the host country.TCNs are most likely toemployed in upper-level or technical

positions.

TCNs and PCNs are collectively knownas expatriates (people working and residing

in countries other than their native

country).


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ISSUES IN IHRM:

y Managing International assignments

y Employee and family adjustment

y Selecting the right person for a foreign assignment

y Culture, communication

y Language and communication


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BarriersTo Effective Global HRM:

y Variations : this is due to the world wide variations in

social, political, and economic circumstances. An HRpractice that works in one country may be unacceptablein another. Fluctuations in currency, governmentregulations compensation expectations, job security, andlearning styles are just few examples of the local variations

a global HR professional faces.y Perception of HR : Another global challenge is that the

perceived value of HR function varies across locations. Inone country , HR may be perceived as a true businesspartner, working with high level managers on critical

strategic assessments. In another Country but within thesame company, HR may be viewed as a transactionalpersonnel department that handles administrative work.


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Attitude and actions ofheadquarters toward HR:

These help determine how seriously the HR function is

viewed locally.

Resistance to change : different locations have their own

way of doing things and resisting change. If an HR

initiative that is viewed as a corporate is imposing on the

local HR staff, then it can be difficult to gain acceptance

from the field.Cultural difference in learning and teaching style


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Understanding Culture


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Elements of Culture: Important cultural elements arevalues, norms, attitude, folkways and customs.

y Values provide the context within which a societys norms areestablisher and justified. They may include a societys attitudetowards such concept such as individual freedom, democracy,truth, justice, honesty, loyalty, social obligations, collectiveresponsibility, marriage, gender as so on. People argue , fightand even die for values.

y Norms are further sub divided into two major categories:Folkways and Mores.

Folkways are actions of little moral significance. Rather, they aresocial conventions concerning things such as the appropriatedress code in a particular situation, good social manners, eating

with correct utensils, neighborly behavior etc.people who violate folkways may be thought of as eccentric or

ill mannered, but not evil or bad ones.


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y Mores are norms that are seen as central to the functioningof a society and to its social life. They have much greater

significance than folkways. Accordingly, violating mores can bring

serious retribution and punishment. Mores include such

factors as indictments against theft, adultery, etc.

y Cultural Traits are unique aspects of individual cultures. A

cultural traits may be a customs such as men opening the door

for women, a gesture of Namaste or an idea such as

existentialism, which clearly distinguishes a particular culture.

y Enculturation is the process of acquiring cultural traits. One

acquires cultural traits naturally within ones culture. However,

culture can also be acquired in other ways such as contact with

other cultural groups or living abroad or marriage to someonefrom another culture or even by training.

y Diffusion is the process through which cultures change. Each

society borrows cultural traits from others, particularly if a


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newly learned trait seems better than a traditional one.

New scientific discoveries, innovative technology, and

current media events and films cause cultural change.

However, some sectors of society resist such changes.This

is known as cultural lag.

If contacts between societies are prolonged,

acculturation may occur. Traits that have been borrowed

permanently adopted. For example, Mughal rule in Indiachanged many customs of Hindu society.

Assimilation occurs when immigrants or other

newcomers adopt the culture of the society in which they

have settled.When people leave their own culture to enter another,

they must fight with unfamiliar and unpredictable events,

relationships and objects. Some of this may cause a

phenomenon called cultural shock.


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Convergence ofCultures :y Improvement in transport and communications and a huge

increase in number of people, who visit foreign countryy Globalisation of media, with similar or even same television

programmes newspapers and magazine articles appearing in all

nations.

y Similarities in the tastes and consumption patterns of young

people

y The operation of multinationals across the world, supplying

standardized products and frequently using undifferentiated

marketing strategies.

y

A seemingly worldwide increase in consumers willingness toaccept fresh ideas and try new products.

y Adoption of similar technologies in several countries, creating

common work experience and working method.


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Culture change

Apart from convergence of culture, national cultures

change over time, possibly in consequence of followingfactors:

y Rising livings standards

y Urbanization of population

y

Immigration and emigration, especially if the populationcoming in has a different religion and lifestyle than

members of the existing population.

y Improvement in the education system and increase in

literacy.

y Introduction in new technologies, which necessarilychange working practices and relationships.


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WhyCultural Sensitivity is important for

global business anddiplomacy?y Communicate effectively with customers, suppliers,

business associates and partners in other countries and

with foreign employees

y Predicts trends in social behavior likely to affect the firms

foreign operations,y Understand ethical standards and concepts of social

responsibility in various countries,

y Understand local government policies and influence it for

business promotiony Predict how cultural differences will affect consumer

reactions to advertisements and other promotions.


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HowCulture affects management approaches?

There are many ways of examining cultural differences and their impact

on international management. Culture can affect technology transfer,managerial attitude, managerial ideology and business government

relations. Perhaps most important is how culture affects peoples thinking

and behavior. Following are the ways in which culture directly affects

management.

y CentralizedVs decentralized decision makingy SafetyVs Risk

y IndividualVs.Group Reward

y InformalVs Formal Procedures

y HighVs low organizational loyalty

y CooperationVs competition

y Short-termVs Long-term horizons

y StabilityVs. Innovation


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Cross CulturalTheories1) HOFSTEDE : CULTURE ANDWORK PLACE

He focuses on the 1980,1984, and 1991 versions of his IBMstudies involving 1,12,000 employees in 70 countries and 3regions, namely East Africa, west Africa and Saudi Arabia. Byrestricting research to one company, he tried to eliminate theimpact of changing organizational cultures and analyzed theinfluence of different national cultures.

The finding demonstrated that :

y Work related values are not universal;

y Underlying values persist when a multinational company triesto impose the same norms on all its foreign interests;

y

Local values determine how the headquarters regulations areinterpreted,

y By implication, a multinational that tries to insist on uniformityis in danger of creating morale problems and inefficiencies.


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The four well known dimensions that Hofstede

examined were:

y Power distancey Uncertainty avoidance

y Individualism

y

Masculinity


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y Power Distance:

It is the extent to which less powerful members of

organizations accept that power is distributed unequally. It isthe distance between individuals at different levels of hierarchy.Countries in which people blindly obey the orders of theirsuperiors have high power distance. Examples would Mexico,South Korea and India. In such societies, lower level employeestend to follow orders as a matter of procedures. Even at higher

levels, strict obedience is the practice.this dimensions shows desirability of equality and inequality inthe society or dependence versus interdependence.Organization in low power distance countries are usuallydecentralized and have flatter structures.

The workforce will often consist of highly qualified people inhigh power distance Countries. The salary gap between levelswill be higher. Power will be reflected through status symbols.


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y Uncertainty AvoidanceIt is the extent to which people feel threatened by

ambiguous, and have created beliefs and institutions thattry to avoid these. This dimension measures how farcultures prepare or socialize their members into acceptingambiguous situations and tolerating uncertainty about thefuture.

High uncertainty oriented nation tend to have a highneed for security and a strong belief in experts and theirknowledge. Example would include Germany, Spain, Japan.Members in such countries are more anxiety-prone andhave high job stress.

Employees place high premium on job security, careerplanning, health insurance and retirement benefits. Clearrules are and regulations are highly welcomed andrespected .


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Countries with low uncertainty culture are more

entrepreneurial, innovative and exhibit less emotional

resistance to change.T

he manager breaks formal rulesand bypasses authority if necessary.

Organizations in such countries have less restructuring

activities, fewer written rules and more risk taking

managers.

Organizations encourage personnel to use their own

initiative and to assume responsibility for their actions.

Sweden, US and UK are examples of countries with low

uncertainty avoidance.


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y IndividualismIndividualism is the tendency of people to look after themselvestheir families only. Hofstede measured this cultural difference

on a bipolar continuum with individualism on one end andcollectivism on the other.

Collectivism is the tendency of the people to belong togroups and to look after each other in exchange for loyalty.

Individualist cultures stress individual achievements andrights and expect the individual to focus on his/her needs.

Competition is expected. Americans, high on individualist score,readily go to court against authority and each other to claimtheir rights. Individual decisions are valued over group decisionsand individuals have the right to differ from majority opinion.

Individualism cannot be equated with greed. Distinctionbetween both can be understood by knowing who makes the

decisions, individual or the group, and how this affectsperformance.


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In collectivist cultures children are taught to think in

terms of we . Employer and employee are seen as a

members of one family, relationship prevails over task and

duties. Promotions and advancements are often based on

seniority and loyalty rather than on performance.

Employee performance is better when he/she works in an

in-group than when working alone or in an out-group.

Hofstede found that wealthy countries havehigher individualism scores, and poorer countries have

higher collectivism scores.


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y MasculinityMasculinity is defined by Hofstede as a situation in which

the dominant values in societies are success, money, andthings. Hofstede measured this in dimension on a continuum

ranging from masculinity to femininity. Contrary to some

stereotypes femininity is a situation in which the dominant

values in societies are caring for others and the quality of

life.

Countries with high masculinity index , place great

importance to earning, recognition, advancement and

challenge . Countries with low masculinity index , tend to

place great importance on cooperation, friendly atmosphereand employment security.


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Country Clusters:

NordicNordic

Germanic

Anglo

LatinEuropean

LatinAmerican

Far Eastern

NearEastern

Arab

Finland

NorwayDenmark

Sweden


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Kluckhonn StrodthbeckThis theory is based on the patterns of behavior and

thinking in different cultures. The researchers distinguishand compare cultures based on dimensions are:

S.No. Orientation of People Pattern of Behavior or

Thinking

1 What is the nature of people? Good, evil or mixed

2 What is a persons relationship to

nature?

Dominant, harmony, or

subjugation

3 What is a persons relationship to

other

Hierarchical,collectivist,

individualistic or others?

4 What is the modalityof human

activity?

Doing, being or

containing

5 What is the temporal focus of human

activity?

Future, present or past

6 What is the conception of space Private, public or mixed


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What is the nature ofpeople?This question explores the

assumptions of people in different cultures about human nature,which could be good or evil, or mixed.

The second orientation is about relationship to nature,which relates to locus of control whether it is internal orexternal. Americans with an orientation for being dominant(locus of control - Internal), believe that man can controlnature and spend huge amount on space research, weather

control and biotech and so on. In such dominant countries,conflict is not disapproved of and differences in views areencouraged. Organizational change is easier to implement.

The eastern countries, with an orientation toward harmonybelieve that there should be a peace between man and nature.

Countries in the middle east and India, with an orientation forsubjugation, believe that destiny and God, control every thing.People believe in astrology and assign all success and failure toGod. People generally resist change.


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The Third Orientation a persons relationship to others is aboutthe importance of hierarchy or respect for seniority on the basis of Age,

gender, familial or official position. In countries like Thailand, China and

Indonesia, there is more follower ship than leadership. Organizationstructures are taller and communication is more top-down.

In countries with an orientation towards collectivism, the needs of the

group are uppermost and people are strive towards consensus. In

individualist countries like the US, people strive towards individual

excellence and this is valued by society.

The f ourth orientation - is modality of human activity when it is

towards doing self identification is achieved through action and

performance. Companies spend a great deal on research and

development. Ones achievement should be visible and measureable to berecognized by society.

Where the orientation is towards being people are more philosophicaland spend time in abstract thinking. Status in life is derived from birth,

age gender, family, and social connections more than though ones

achievement. In such culture feeling are more valued than logic.


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y HallsTheory of Cultural Context:

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