International Employee Relations

IHRM Ch07 (student).pptx

Chapter 7

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Learning Objectives

Describe the nature of union membership around the world

Describe the evolution and make-up of global employee relations

Explain the relationship between unions and MNEs.

Describe the various strategies with which MNEs approach global employee relations

Describe the various approaches taken to non-union worker representation

Explain the litigation risks in international employee relations

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Global Union Membership

Comparing union membership in different countries around the world is difficult

The strength of trade unions is usually measured by the size of union membership relative to the number of people eligible to join

In some countries where unions are strong, actual membership is small (e.g., Germany)

In other countries where unions may not be so strong, membership may actually be quite large (e.g., Mexico, Japan)

Absolute union membership is largest in countries like Sweden while absolute membership is lowest in countries like the US.

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Evolution of International Labor Relations and Organizations

Some aspects of the early union movement developed as an international movement in the 19th century

International federations of labor divided into two factions at the conclusion of World War II: a Western-oriented group and a communist-supported group

There is strong interest today in the labor movement to cross borders and join together for the achievement of their common labor-related missions

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Evolution of International Labor Relations and Organizations (cont.)

International Federations and Employee Relations in Organizations

World Federation of Trade Unions (WFTU)

Established in 1945 to bring together trade unions around the world in a single organization modeled after the UN

After a split in 1949, it is now primarily a federation of state-run unions from communist countries

International Confederation of Free Trade Unions (ICFTU)

An international confederation of national trade unions established in 1949 after a split with the WFTU

It grouped the major unions in the western world. The ICFTU was dissolved in 2006 to join the ITUC

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Evolution of International Labor Relations and Organizations (cont.)

International Trade Union Confederation (ITUC)

An umbrella organization of national trade union federations (154 countries and 168 million workers) to defend workers’ rights in the era of globalization

Primary mission is the promotion and defense of workers’ rights and interests, through international cooperation between trade unions

European Trade Union Confederation (ETUC)

Established in 1973 to promote the interests of working people and to represent them in EU institutions

Prime objective is to promote the European Social Model by being actively involved in economic and social policy-making at the highest level, working with all EU institutions

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Evolution of International Labor Relations and Organizations (cont.)

World Confederation of Labor (WCL)

An international trade union confederation inspired by the basic values of Christian humanism

Unites autonomous and democratic trade unions from countries all over the world, but mainly from Third World countries

Trade Union Advisory Committee (TUAC) to the OECD

An international trade union organization which has consultative status with the OECD

Interface for labor unions with the OECD and its various committees

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Evolution of International Labor Relations and Organizations (cont.)

Global Union Federations (GUFs)

An international federation of national and regional trade unions representing specific industrial sectors and occupational groups

Most major unions are members of one or more GUFs

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Unions and Multinational Enterprises

Locate work in countries with lower social protections (no unions or weak unions) and wages and benefits

Force workers facing competition from workers in other countries to “bid down” wages and benefits in order to keep their jobs

Unions view MNEs as being able to:

Restructure operations in countries where the costs of work force adjustments are lowest

Outlast workers in labor disputes because cash flows are maintained by operations in countries where there are no disputes

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Unions and Multinational Enterprises

Barriers to Multinational Bargaining

Widely varying industrial relations laws and practices among countries

No central, international authority for global labor relations or labor law

Major economic and cultural differences among countries

Employer opposition

Reluctance of national level union leaders

Absence of a centralized decision-making authority for unions

Lack of coordinated activities by unions across national boundaries

Differing national priorities

Employee unwillingness to subordinate local concerns to the concerns of foreign workers

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Unions and Multinational Enterprises

Dealing with International Labor Organizations

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What rules will apply to the resolution of disputes?

What rules will apply to the process of negotiations?

What law will cover the negotiations, e.g., between companies in two or more countries or between companies and their unions in multiple countries?

MNE AND LABOR RELATIONS

MNEs must share decision-making power with unions (and/or other representatives of employees, such as works councils) and, often, agencies of government, to greater or lesser

IHR departments within MNEs follow one of these seven approaches to labor/employee relations in the global context (see Exhibit 7.2)

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EVOLUTION OF LABOR RELATIONS IN DIFFERENT COUNTRIES

In some countries (e.g., Canada, the United States, Germany, and Japan), the focus of union activity is basically economic

In other countries, particularly England, France, Italy, and those in Latin America, unions tend to be very political and generally achieve their objectives through political action rather than through direct collective bargaining

All of the questions in Exhibit 7.3 illustrate potentially significant differences between labor relations practices in different countries. This is just one of the many areas of complexity with which IHR managers and MNEs must learn to cope.

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Non-Union Worker Representation

Work Councils

Have the right to receive information and to be consulted relative to decisions the firm makes that will have social and economic consequences for employees

Codetermination

The legal requirement that employees participate on supervisory boards or boards of directors

Requires management to obtain their agreement when major strategic decisions are to be made.

Worker Co-operatives

A third form of employee relations involves worker co-operatives

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Litigation Risks in International Employee Relations

One of the greatest pressures for IHRM and MNEs is the increased possibility of litigation

In recent years there has been a significant upward trend toward holding MNEs accountable in various courts for their protections (or lack thereof) of employee and human rights in their foreign operations

MNEs are being sued in their home jurisdictions on the basis of allegations of breaches arising from the firm’s activities in foreign jurisdictions

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__MACOSX/._IHRM Ch07 (student).pptx

IHRM Ch09 (student).pptx

CHAPTER 9

INTERNATIONAL RECRUITMENT,

SELECTION, AND REPATRIATION

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Learning Objectives

Describe the broad issues involved in staffing subsidiaries with international assignees or expatriates

Describe the various issues involved in recruiting international assignees or expatriates

Describe the general process of selection of international assignees (IAs) for international assignments and the issue of failure in an IA assignment and reasons for it

Describe the characteristics of successful IA selection programs and exemplary practices

Explain the essential nature of repatriation

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recruiting, selecting, and repatriating

Recruiting, selecting, and repatriating traditional PCNs, or expatriates

Recruiting involves searching for and attracting qualified applicants to create a pool of candidates for screening for possible hiring.

Selecting focuses on gathering and analyzing information about applicants in order to select the most suitable person or persons for the job.

Repatriating refers to the process of bringing international assignees (IAs) and their families back “home” from their foreign assignments.

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Staffing With Expatriates or International Assignees: An Introduction

“Historically, the term “expatriate,” as used by companies, referred to employees who were relocated from the parent company or headquarters to foreign subsidiaries or “overseas” operations.

Exhibit 9.1 illustrates the four common options used by MNEs to staff their foreign operations.

Secondment

Transfer of employment

Global employment company,

Dual employment are used less frequently

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The International Recruitment Function

The process of searching for and attracting qualified applicants to create an applicant pool

Begins after an organization’s immediate and long-term labor needs are defined

Several questions should be addressed before the recruiting process starts

How many applicants does the organization need in the short term (less than a year) and the long term (one to three years)?

Does the organization need applicants with short-term commitment or long-term commitment?

Does the organization offer compensation packages below market average, at market average, or above market average?

Does the organization want applicants who are different from the company’s current employees?

What type of competencies does the organization need in new applicants?

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The International Recruitment Function (cont.)

Sourcing

Process of finding candidates from geographically dispersed labor markets

Two broad recruiting sources available to organizations

Internal Recruiting Sources

Find candidates from within the organization

External Recruiting Sources

Find candidates from outside the organization

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The International Recruitment Function (cont.)

Internal Recruiting Sources

Global Talent Management Inventories

In-house Global Leadership Programs

Former/Current Expatriates

Nominations

Internal Job Posting/Intranet

International Succession Planning Programs

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The International Recruitment Function (cont.)

External Recruiting Sources

Employee Referrals

Job Fairs

Company Internet Sites

Executive Search Firms

Professional Associations or Networks

Competing Firms

Global Leadership Programs in Universities and Colleges

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The International Recruitment Function (cont.)

Both external and internal recruiting sources may be used to find candidates for foreign assignments or HCNs

Attracting candidates to work internationally raises an important challenge for MNEs

How to find individuals interested in international work and those interested in permanent international careers

MNEs need to find candidates with high receptivity to international careers

Refers to an individual’s attitude toward international careers

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The International Recruitment Function (cont.)

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Rosemary Morlin (RM) – Change ‘Children education allowance’ to ‘Children’s educatoin allowance’

Receptivity to International Careers

Personality

Cross-cultural competencies

Prior international experience

Age

Family status

Marital status

Education

Destination country

Opportunities for career support

Company culture

Career and repatriation planning

Gender

Length of the foreign assignment

Overseas health care plan

Income tax equalization policy

Host country housing assistance

Spouse job assistance

Spouse’s willingness to travel overseas

Children education allowance

The International Recruitment Function (cont.)

An important challenge for MNEs, especially if recruiting candidates from an external labor market, is to develop an employer reputation that attracts candidates to the organization.

Employer reputation (also known as employer brand) refers to the evaluation by potential candidates of an organization as a desirable place of work and to seek international experience.

Another challenge for MNEs is to manage talent shortages that occur when employers cannot find workers with the needed competencies.

Talent shortages occur in countries during times of economic boom, as well as in times of economic uncertainty. This is more serious in in the service sector, especially when economic conditions improve

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The International Selection Function

Selection

Refers to the process of gathering and analyzing information about applicants to select the most suitable person(s) for the job

The selection decision for international assignees is critically important. Errors in selection can have major negative impact on the success of overseas operations as well as on the careers of relocated managers.

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The International Selection Function (cont.)

Selection Decisions

Successful expatriate experience

From the perspective of HQs, an important consideration in making good selection decisions is to fully understand the process of a “successful expatriate experience” (see Figure 9.1)

Shortage of Potential IAs

Increasingly the problem of selection of international assignees involves finding employees with the necessary skills to function successfully in the new “global” environment and convincing them to take on the assignment

Competency Profile

The competency profile of an assignee is an important aspect of the selection decision making process. Exhibit 9.2 lists the skills that are being cited as important for the twenty-first-century expatriate manager

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Rosemary Morlin (RM) – Insert em-rule after ‘Cultural requirements’ in A

The International Selection Function (cont.)

Critical Selection Criteria for International Assignments

Cultural Adaptability

Job Suitability

Desire for Foreign Assignment

Candidate for International Assignment

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The International Selection Function (cont.)

International Assignee Selection Methods

Selection Methods

Self-Selection

Job Posting and Bid

Recommendations

Interviews

Formal Assessment

Committee Decision

Career Planning

Assessment Center

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Mistakes and Failures

International Assignment Failures

Dropout

Turnover upon repatriation

Types of Failures

Finishing the assignment but without cultural adaptation or acceptance of the local experience

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Mistakes and Failures (cont.)

Definition of Expatriate Failure (See Exhibit 9.3)

Usually defined in terms of early return home or termination, but could also be defined in terms of;

Poor quality of performance in foreign assignment;

Employee not fully utilized during assignment;

Personal dissatisfaction with experience (by expatriate or family);

Lack of adjustment to local conditions;

No acceptance by local nationals;

Damage to overseas business relationships;

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Mistakes and Failures (cont.)

Exhibit 9.3 Reasons for Expatriate Failure

Inability of spouse/partner to adjust or spouse/partner dissatisfaction

Inability of expatriate to adjust

__MACOSX/._IHRM Ch09 (student).pptx

IHRM Ch01 (student).pptx

Chapter 1

The Internationalization of Human Resource Management

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Learning Objectives

Describe the many drivers of the internationalization of business

Describe the growth and spread of internationalization

Describe the different settings of international human resource management

Discuss the development of international human resource management

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International Human Resource Management

The study and application of all human resource management activities as they impact the process of managing human resources in enterprises in the global environment.

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The Drivers of the Internationalization of Business

Many enterprises, large and small, from all countries (developed economies and emerging) are already global—or are in the process of going global. There are many drivers of this internationalization of business

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Drivers

Trade Agreements

Search for new markets and reduced costs

Rapid and extensive global communication

Rapid development and transfer of new technology

Improving global education and a global talent pool

Increased travel and migration

Knowledge sharing

E-commerce

Homogenization of culture and consumer demands

TRADE AGREEMENTS

Trade between countries and within regions of the world is constantly increasing on a global basis, regionally, and thorough bilateral trade treaties between two countries

Decreased trade barriers and open markets have resulted in faster-growing economies throughout the world

Local and national governments support and encourage growing cross-border trade and foreign investment

The center of global trade is moving away from the developed countries of Western Europe, North America, and Asia Pacific to China, South Asia, and even Latin America, Eastern Europe, the Middle East, and Africa

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SEARCH FOR NEW MARKETS AND REDUCED COSTS

Global competition comes from anywhere and everywhere

Competition forces organizations to search for new markets and revenues and lower costs, often best found in other countries

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RAPID AND EXTENSIVE GLOBAL COMMUNICATION

The technological revolution (e.g., the internet) has made global communication much easier, quicker, cheaper, and more varied

Enables the spread of information (on a global basis) about

How people live

What they think

What they want

Creates global expectations for an ever-increasing quality of life

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RAPID DEVELOPMENT AND TRANSFER OF NEW TECHNOLOGY

New technologies are developed around the world and are made available everywhere

New technologies make it possible to grow and manufacture products and deliver services with world-class quality and prices everywhere

Modern education and information technology allow every country to play a part in this global economy

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IMPROVING GLOBAL EDUCATION AND A GLOBAL TALENT POOL

Improving education around the world is enabling firms everywhere to produce world-class products and services

No country or set of countries has an overriding advantage in the global economy

There is now a global talent pool that allows firms to operate almost anywhere in the world today

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INCREASED TRAVEL AND MIGRATION

International travel has become easier, quicker, and cheaper

Hundreds of millions of people travel across national borders every year, for business and pleasure

They see how people in other countries live and experience goods and services that are available, all of which may be better than what is known at home

Millions of people move to other countries to work

Relocate, usually for a limited time

Fill jobs for which there are not enough local workers

Flee natural disasters or political conflicts

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KNOWLEDGE SHARING

Firms operating internationally “export” their management philosophies and techniques to their foreign subsidiaries

Spread their knowledge and their company cultures everywhere

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E-Commerce

The World Wide Web and global transportation and logistics services have made it possible for large, as well as small, firms to conduct business virtually

If a business or an individual has a website, its business is global—anyone, from anywhere in the world who has access to the web has access to that website

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HOMOGENIZATION OF CULTURE AND CONSUMER DEMANDS

Integration of cultures and values have led to common consumer demands for some types of products and services throughout the world

Distinct differences in culture across countries remain

Firms operating internationally need to be sensitive to these local differences

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THE GROWTH AND SPREAD OF INTERNATIONALIZATION

Internationalization vs. globalization

Both terms refer to the ever-increasing interaction, interconnectedness, and integration of people, companies, cultures, and countries

The United Nations estimates (2010) that there are more than 82,000 large multinational enterprises (referred to by the UN as transnationals) with more than 870,000 affiliates that employ more than 77 million people worldwide (not counting sub-contractors and outsourcing).

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THE GROWTH AND SPREAD OF INTERNATIONALIZATION (CONT.)

Business rankings found in publications such as Fortune Global 500 and Bloomberg Business Week focus on the largest global firms

Rankings focus on large, publicly traded firms

Findings illustrate that the global economy increasingly involves all kinds of products and services from around the world

IHRM plays an important role in attaining ranking

HR is called upon to recruit, select, develop, and retain work force talent that can achieve internationalization and global competitiveness

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THE GROWTH AND SPREAD OF INTERNATIONALIZATION (CONT.)

The United Nations Conference on Trade and Development (UNCTAD) tracks the world’s Transnational Corporations (TNCs), analyzing how important these firms are to the global economy.

UNCTAD developed the TNI—Transnational Index, based on the composite of a firm’s average percentage of its foreign assets, foreign sales, and foreign employment to its total assets, sales, and employment, which identifies the relative importance of foreign business activity to the world’s largest firms.

See Exhibit 1.2

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DIFFERENT SETTINGS OF INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Internationalization of HRM occurs in many different settings

HRM managers will confront at least some aspects of internationalization

“No place to hide” for HRM professionals

HRM professionals must become competent in IHRM issues in almost every job setting .

Four specific settings:

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Headquarters of multinationals

Home country subsidiaries of foreign-owned firms

Domestic firms

Government agencies and non-governmental organizations

HEADQUARTERS OF MULTINATIONALS

HRM professional work in the central or regional headquarters of the traditional MNE

This setting is most common for HR managers

Headquarters use parent company HRM policies/practices to its foreign subsidiaries or use those that are common in host countries

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HOME COUNTRY SUBSIDIARIES OF FOREIGN-OWNED FIRMS

HR managers works in their home country but are employed by a local subsidiary of a foreign MNE

HR manager will have to integrate a local culture and organizational culture into the operations

Different communication styles, worker motivation philosophies, and organizational structures set in place by the parent company can cause major problems for the local HR manager

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DOMESTIC FIRMS

Confront many complexities of international business, particularly as they relate to IHRM

Referred to as “domestic multinationals”

Hiring—or recruiting—of immigrants can lead to many of the same internationalization concerns as those faced by traditional MNEs

Can establish small offices in other countries or recruit talent “overseas” in order to meet needs for specialized skills

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GOVERNMENT AGENCIES AND NON-GOVERNMENTAL ORGANIZATIONS

Government agencies, their embassies, and the hundreds of non-governmental organizations (NGOs) are also global in scope

Send hundreds of people from parent countries to overseas operations

Employ many local and third country people to staff their activities around the globe

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DEVELOPMENT OF INTERNATIONAL HUMAN RESOURCE MANAGEMENT

HRM managers are being called upon to contribute increasing expertise to internationalization

Several IHRM-related questions need to be answered within each multinational entity

The success or failure of an enterprise is often a function of how it handles IHRM issues

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International HRM vs. Domestic HRM

IHRM is responsible for more HR functions

IHRM is responsible for a broader expertise and perspective

IHRM is responsible for greater involvement in people’s lives

IHRM is responsible for dealing with and managing wider mix of employees

IHRM is responsible for more external factors and influences

IHRM is responsible for a greater level of risk

DEVELOPMENT OF INTERNATIONAL HUMAN RESOURCE MANAGEMENT (CONT.)

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Establishment of Global Professional in Human Resources (GPHR) certification by the Human Resource Certification Institute (HRCI) in 2003 was turning point in the professionalization of IHRM

Field continues to grow as a business discipline and academic field of study

As organizations have internationalized, so has IHRM

EVOLUTION OF THE INTERNATIONAL HUMAN RESOURCE MANAGEMENT PROFESSIONAL

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__MACOSX/._IHRM Ch01 (student).pptx

IHRM Ch06 (student).pptx

Chapter 6

International Employment Law, Labor Standards, and Ethics

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Learning Objectives

Describe the three major legal systems and their key differences

Describe international labor law and standards and explain their impacts

List and describe the goals of the various international trade agreements

Describe how EU directives impact IHRM.

Identify the major issues impacting IHRM with regard to immigration/visas, personal data protection, anti-discrimination and harassment, termination and reduction in force, and intellectual property

Integrate existing employment laws and regulations, ethical standards, CSR, and corporate governance into IHRM policies and practices

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The Institutional Legal Context of International Business

Common law

A constitution enunciates a few, long-standing, general principles to which everyone is subject. The law, then, is based on tradition as stated in the constitution

Civil code or law

Based on an all-inclusive system of written rules, of which there are three types: commercial, civil, and criminal

Religious law

Most common of which is Islamic law, or Sharia, which refers to the “way” Muslims should live or the “path” they must follow

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Establishment of Labor Standards By International Institutions

ILO Declaration on Fundamental Principles and Rights at Work

Freedom of association and the effective recognition of the right to collective bargaining;

elimination of all forms of forced or compulsory labor;

effective abolition of child labor;

elimination of discrimination in respect of employment and occupation.

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International Organizations

United Nations

Plays a relatively insignificant role in establishing employment laws or standards

Until recently, the UN only operated in this domain through agencies such as the International Labor Organization

International Labor Organization (ILO)

Primary goal is to improve working conditions, living standards, and the fair and equitable treatment of workers in all countries

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International Organizations

The Organization of Economic Cooperation and Development(OECD)

Focus is broader than that of the ILO

Coordinates economic policy to address globalization issues through the promotion of economic, environmental, and social policy among its members

World Bank and International Monetary Fund (IMF)

Research on the relation between trade policy reform and labor markets (wages, unemployment, etc.)

Protection of “social safety nets” during structural reforms of economies

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International trade organizations and treaties

World Trade Organization (WTO)

Replaced General Agreement on Tariffs and Trade (GATT)

Defers to ILO for pursuit of global labor standards

European Union (EU)

Social Charter sets out 12 principles of workers’ fundamental rights

Established the European Social Fund to promote worker mobility

Adoption of employment standards prevents locating of MNE in pursuit “softer” employment standards

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International trade organizations and treaties (cont.)

North American Free Trade Agreement (NAFTA)

North American Agreement on Labor Cooperation (NAALC)

Bilateral agreements linking liberalization of trade and labor standards

Latin American and Asian trade agreements

A number of trade treaties have been organized and signed among countries in Latin America and Asia

Mercosur/Mercosul (e.g., Argentina)

The Andean Community (e.g., Bolivia)

The Association of South-East Asian Nations (ASEAN) (e.g., Cambodia)

Asia-Pacific Economic Cooperation (APEC) (e.g., Australia)

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Commercial Diplomacy

An emerging interdisciplinary field that refers to the processes of influencing foreign government policy and regulatory decisions that affect global trade

Involves

Trade negotiations (e.g., tariff and non-tariff trade barriers)

Impact of policy on decision-making (e.g., business interests)

Government regulations (e.g., affecting banking)

Legislation (e.g., anti-trust/competition law)

Standards (e.g., health, safety)

Industrial subsidies (e.g., agricultural, R&D)

Corporate conduct (e.g., corruption and bribery)

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Global Legal/Regulatory Context of MNEs

What IHR Managers must do:

Comply with the laws of the countries in which it operates

Requires knowledge of local laws and regulations

Comply with international standards and supranational regulations

Requires knowledge of international labor standards and supranational binding regulations

Comply with the extraterritorial laws of its own country

Requires knowledge of extraterritorial laws

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Global Legal/Regulatory Context of MNEs (cont.)

National Laws and Regulations

Employment laws vary significantly among countries

IHR should use local HR practitioners when possible

Supranational Laws

Laws that are either directly binding on member states or indirectly binding on employers

Directives seek to harmonize (reduce the legal diversity of) legislation among member states

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Global Legal/Regulatory Context of MNEs (cont.)

Extraterritorial Laws

Are laws that apply beyond the sovereign territory of the nation that enacted them

Apply only if they do not conflict with host county laws (foreign compulsion defense)

Examples of US Laws with Extraterritorial Intent

Title VII of the Civil Rights Act

Age Discrimination Act

Americans with Disabilities Act

Foreign Corrupt Practices Act

Sarbanes-Oxley Act

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Global Legal/Regulatory Context of MNEs (cont.)

Integrated Enterprise Test

Interrelation of Operations

Common Ownership or Financial Control

Common Management

Centralized Control of Labor Relations

Factors Determining Integration

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Global Legal/Regulatory Context of MNEs (cont.)

Application of National Law to Local Foreign-owned Enterprises

Apply to local foreign-owned commercial enterprises

Friendship, commerce, and navigation (FCN) treaties make exceptions for key parent-country personnel of commercial entities

Foreign government-owned are exempted from national laws and civil claims

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Comparative Law

Immigration and Visas

Personal Data Privacy/Protection

Termination and Reduction in Force

Intellectual Property

Anti-discrimination

Major Issues for IHRM

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The International Framework of Ethics and Labor Standards

What is right and wrong in business conduct across borders and the impact of cultural (country and company) variances on ethical conduct of MNEs

International ethics deals with issues of corruption and bribery, and the various ethical dilemmas that MNEs face in the conduct of their international activities

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International Ethics and Culture

Difficulties in understanding and working with another country’s practices are unavoidable

Differing country cultures view various employment and business conduct issues, such as bribery, gifts or favors, tax evasion, or child labor, differently

In the area of global ethics, even the best-informed, best-intentioned executives often have to rethink their assumptions

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International Ethics and Culture (cont.)

Ethical Relativism

Suggests that what is right is whatever a society defines as right

This definition may be at the individual (individual relativism) or at the societal (cultural relativism) level

Ethical Absolutism

Takes the view there is a single set of universal ethical standards or principles, which apply at all times, in all circumstances, in all cultures

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Ethical Dilemmas in IHRM

Example:

An employment practice that is illegal or viewed as wrong in the home country but is legal or acceptable in the host country

Tolerating Cultural Diversity While Avoiding Moral Recklessness:

Why is the practice is acceptable in the host country but not at home?

Is it possible to conduct business successfully in the host country without undertaking the practice?

Is the practice a violation of a fundamental right?

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Ethical Dilemmas in IHRM (cont.)

Assurance of Ethical Behavior and Conduct

Develop a clear set of core values as the basis for global policies and decision making

Train international employees to ask questions that will help them make business decisions that are both culturally sensitive and flexible within the context of those core values

Balance the need for policy with the need for flexibility or imagination

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Corporate Social Responsibility (CSR), Corporate Governance, and Sustainability

Is the continuing commitment by business to:

Behave ethically and to contribute to the economic development of their communities

To improve the quality of life of their work forces, their families, as well as society at large

Makes MNEs aware that they produce both benefits and harm when operating globally

Can be viewed on a continuum of providing value from stockholder to external stakeholder

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Corporate Social Responsibility (CSR), Corporate Governance, and Sustainability (cont.)

Umbrella of CSR Programs

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Corporate Social Responsibility (CSR), Corporate Governance, and Sustainability (cont.)

Implementing a CSR Program

Develop a global CSR policy

Obtain a high level of support

Communicate CSR activities and policy

Create a CSR culture

Provide adequate training

Install reporting and advice mechanisms

Include CSR in management’s performance management

Lead by example

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Corporate Social Responsibility (CSR), Corporate Governance, and Sustainability (cont.)

Corporate Governance

Refers to the basis upon which decisions are made in organizations

Involves the structure and relationships that determine how corporate objectives are met and regulated by the different performance monitoring mechanisms—the management team, board of directors, investors, and shareholders

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Corporate Social Responsibility (CSR), Corporate Governance, and Sustainability (cont.)

Corporate Sustainability

Is defined as meeting the needs of the present without compromising the ability of future generations to meet their own

Determining Sustainability

Is the decision fair to employees?

Is the decision sustainable in the long run?

Is the decision green in terms of the carbon footprint?

Is the decision-making process transparent and open for scrutiny?

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Corporate Social Responsibility (CSR), Corporate Governance, and Sustainability (cont.)

Development of a Strategic Global Code of Conduct Policy

MNEs need to develop strategic policies to establish a code of conduct that defines acceptable behavior in terms of employment relations

Codes of conduct should be defended as the “company culture”

Remove the possibility of managers disagreeing with certain practices because they perceive them to go against local or national cultural practices

The decision to abide by certain labor standards is based on the defined company culture and policies, not on any given individual biases or preferences

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__MACOSX/._IHRM Ch06 (student).pptx

IHRM Ch02 (student).pptx

Chapter 2

Strategic International Human Resource Management

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Learning Objectives

Describe the development of SIHRM and the process of international strategic management

Describe the evolution of the MNE in terms of various stages of internationalization and the methods firms use to enter international markets

Describe the process for developing MNE strategy and IHRM strategy and the relationship between the two

The extent and nature of research into the practice of SIHRM

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Diamler-Benz loses $20 billion on chrysler

Strategic International Human Resource Management

SIHRM focuses on creating and implementing IHRM policies and practices that help achieve an MNE’s international strategy

Involves the strategic management of the IHR function and department itself

In an ideal world, a firm conducting international business will be actively engaged in strategic planning and strategic management process on a global basis (see Figure 2.1).

A strategy signals an organization’s commitment to specific markets, competitive approaches, and ways of operating

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Evolution of the Multinational Enterprise

As a firm internationalizes, it moves through stages

In each stage it must make a choice of methods for market entry

With each stage, the degree of international activity increases and IHRM responsibilities become increasingly complex

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Internationalization Process and Methods for Market Entry within the Five Stages

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MNE Business Strategy

Provides a direction for managing various subsidiaries

Primarily guided by the extent of integration and/or local responsiveness required by the firm to manage its worldwide operations

Integration

Defined as the extent to which the subsidiaries and the headquarters develop a unified whole

Local responsiveness

Defined as the extent to which subsidiaries respond to local differences

Why do you need to be “integrative” or “locally responsive”?

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Types of strategic business approaches

Global Unified strategy implemented for all countries regardless of their cultural and national differences	Transnational Maximizes responsiveness and integration by being global and multi-domestic at the same time
International Simplest business strategy, requiring limited local responsiveness and limited integration	Multi-Domestic Responds to the high needs, values, and demands of a local market

Integration

Local Responsiveness

GE, Toyota, Total, Royall Dutch Shell, ExxonMobile, Vodafone Group

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GE, Toyota, Total, Royall Dutch Shell, ExxonMobile, Vodafone Group successfully transnational strategy as right now

Headquarters’ International Orientation and MNE Business Strategy

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Ethnocentrism: 民族优越感

Poly-centrism or Regio-centrism：多中心主义或区域中心主义

Geocentrism: 地心说

The Orientation of Senior Executives

Degree of domination of the MNE headquarters over subsidiary management and HR practices as compared to the degree of localization of subsidiary practices

Ethnocentrism

Geocentrism

Poly-centrism or

Regio-centrism

The Orientation of Senior Executives

Ethnocentrism

Managers use a home-country standard as a reference in managing international activities

Nissan (Nissan’s earliest exports were cars and trucks that had been designed for mild Japanese winters; the vehicles were difficult to start in many parts of the United States during the cold winter months)

Polycentrism or Regiocentrism

Host-country cultures and practices assume increased salience显著 for managers

Geocentrism

Managers’ outlook is one of creating a global network among various elements of the global organization

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Types of Staffing Policy

Ethnocentric

Key management positions filled by parent-country nationals

Polycentric

Host country nationals manage subsidiaries; parent company nationals hold key headquarter positions

Geocentric

Seek best people regardless of nationality

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IHRM Strategy

IHRM Strategy Formulation

Central trade-off pits pressures for centralization集权 against the need for decentralization下放

Centralization is very similar to the notion of integration 集成/综合

Decentralization is similar to the notion of local responsiveness 响应能力

Convergence 合流

Use of parent-company policies and procedures throughout a firm’s global operations

Divergence分歧

Cultural and institutional differences play a role in the matter

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IHRM Strategies and MNE Business Strategies

The overall effectiveness of an IHRM strategy is contingent on the context in which it is used

An IHRM strategy’s effect on organizational effectiveness is always dependent on how well the IHRM strategy fits with, and supports, a MNE’s business strategy

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IHRM Strategies and MNE Business Strategies (cont.)

Receptive Each subsidiary is tightly connected with headquarters with very little freedom to adapt to the local conditions.	Active A MNE with this type of IHRM strategy is more likely have a transition HR function with considerably more control over HR decision making than autonomous IHRM strategy but less than in a receptive IHRM strategy.
	Autonomous Each subsidiary has the freedom to develop and implement its own IHRM policies and practices that support local rules and conditions

Integration

Local Responsiveness

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Research on SIHRM

Existing Research on SIHRM

Local culture and national managerial orientation influence the nature of HR practice

The degree of global mindset influences the nature of an MNE’s global strategy

Global strategy influences the degree of global focus in the HR strategy

Appropriate global HR practices are associated with better organizational performance

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Models/Frameworks for Understanding SIHRM

In an effort to understand the role of IHRM in MNEs, scholars and researchers have suggested several SIHRM models or frameworks.

The model has five parts:

Strategic MNE components

Exogenous factors

Endogenous factors

IHRM issues, functions, and policies and practices

MNE concerns and goals

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__MACOSX/._IHRM Ch02 (student).pptx

IHRM Ch05 (student).pptx

Chapter 5

International Human Resources Management and Culture

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Learning Objectives

Define and explain the concept of culture

Explain the importance of culture in IB

Describe the basic research findings of G. Hofstede and F. Trompenaars

Explain the importance of culture to IHRM

Describe the importance of culture and the difficulties encountered in IHRM research

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The Nature and Importance of Culture: An Introduction

Every country has at least some variances from all others, e.g., history, government, and laws.

The more countries with which an MNE interacts, the more complex and difficult conducting business becomes

One central cause of difficulties has to do with the critical nature of the differences between the national cultures of these various countries

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A Definition and Description of Culture

Culture is the characteristic way of behaving and believing that a group of people have developed over time and share in common

A group’s culture:

Gives a sense of who they are, of belonging, of how they should behave

Provides the capacity to adapt to circumstances and to transmit this knowledge to succeeding generations

Affects every aspect of the management process

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Understanding culture as layers of meaning

Surface or explicit culture (the outside layer): things that can be readily observed, such as dress, food and ways of eating, architecture建筑, and customs习俗

Hidden culture (the middle layer): values, religions, and philosophies about things like child rearing, views of what is right and wrong

Invisible or implicit culture (the core): the culture’s universal truths, the bases for all of a culture’s values and beliefs

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The important in developing what is referred to as “cultural competency.”

See Figure 5.2

Understanding culture as layers of meaning

Increasing Transnational Competence

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Awareness

Respect

Reconciliation

Country and Regional Cultures

An increasing number of researchers are assessing whether or not the wide variety of cultures around the world can be reduced to a more limited set of cultures with similar characteristics

Research of Geert Hofstede

Fons Trompenaars and Charles Hampden-Turner

Global Leadership and Organizational Behavior Effectiveness (GLOBE): Cultural Dimensions

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The Research of Geert Hofstede

Cultural Dimensions

Power distance Individualism or collectivism

Individualism or Collectivism

Uncertainty avoidance or tolerance for ambiguity

Masculinity versus femininity

Long- term versus short-term orientation

Pragmatic versus normative orientation

Indulgence versus restraint

Research Findings

Countries consistently showed similarities and difference based on these characteristics

MNEs should not attempt to impose parent country managerial practices and organizational systems on their foreign subsidiaries

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The Research of Fons Trompenaars and Charles Hampden-Turner

Cultural Factors

Universalism versus particularism (emphasis on rules versus relationships)

Individualism versus communitarianism (the individual versus the

group)

Neutral versus emotional (range of emotions expressed)

Specific versus diffuse (range of involvement with other people)

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The Research of Fons Trompenaars and Charles Hampden-Turner (Cont)

Cultural Factors

Achievement versus Ascription. (Basis for according status to other people).

Sequential time versus synchronous time (how people manage time)

Internal direction versus outer direction (how people relate to their environment

Research Findings

Persons act and respond as their cultures have taught and influenced them to behave

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Global Leadership and Organizational Behavior Effectiveness (GLOBE): Cultural Dimensions

Since the reporting of these studies by Hofstede and Trompenaars and Charles Hampden-Turner, other researchers and consultants have reported similar findings or developed alternative ways to categorize cultural values.

The Global Leadership and Organizational Behavior Effectiveness (GLOBE) research project is an example.

See Exhibit 5.3

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Country Cultural Clusters

The results of several studies suggest groupings of the following countries, based on their cultural similarities:

Anglo: Australia, Canada, Ireland, New Zealand, South Africa, United Kingdom, United States

Arab: Abu-Dhabi, Bahrain, Kuwait, Oman, Saudi Arabia, United Arab Emirates

Far Eastern: Hong Kong, China, Indonesia, Malaysia, Philippines, Singapore, Vietnam, Taiwan, Thailand

Germanic: Austria, Germany, Switzerland

Latin American: Argentina, Chile, Colombia, Mexico, Peru, Venezuela

Latin European: Belgium, France, Italy, Portugal, Spain

Near Eastern: Greece, Iran, Turkey

Nordic: Denmark, Finland, Norway, Sweden

Independent: Brazil, India, Israel, Japan, South Korea

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The Observations of an Experienced practitioner

Gesteland observed that variances in four general patterns of cross-cultural business behavior provide critical help in understanding international marketing, negotiating, and managing

Deal focus versus relationship focus

Informal versus formal cultures

Rigid-time (monochromic) versus fluid-time (polychromic) cultures

Expressive versus reserved cultures

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Dangers of Oversimplification

Concern that the focus on country differences falls short on two levels:

It provides little explanation of within-group differences, i.e., it treats countries or cultures as homogeneous wholes, with everyone within the country or culture being alike

It provides little understanding of how cultures change, i.e., it tends to treat cultures as a given—impermeable and static

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Country Culture Versus MNE Culture

Countries develop unique patterns of

values

norms

beliefs

acceptable behavior

For many firms, these organizational values take precedence over country cultures, particularly when there is a conflict between the two

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Cultural and Globalization

Divergence

The strong influence exerted by countries’ cultural values and practices on a MNE’s business and HR practices

Convergence

Adoption of similar “best practices”

Cross-vergence

The intermixing of cultural systems between different countries

Glocalization

The optimal trade-off between globalization and localization

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Research in IHRM

Criticisms of IHRM Research

Lacks analytical rigor

Relies too heavily on description of organizational practices and not critically evaluating such practices

Suffers from expediency in research design and planning

Lacks the sustained effort needed to develop case material and other types of longitudinal studies

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Research in IHRM

Factors Limiting IHRM Research

Expense: multinational or cross-border or cross-cultural research is expensive

Time and travel: requires more time and travel than domestic research

Knowledge: requires skills in multiple languages and sensitivity to multiple cultures

Cooperation: requires more cooperation among numerous individuals from different countries, companies and, often, governments

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Research in IHRM

Problems Frustrating IHRM Researchers:

Inconsistent/vague definitions of terms such as culture

Inaccurate translation of key terminology

Difficulties in obtaining representative or equivalent samples of research subjects

Difficulties in isolating variables of interest in different cultures

Difficulty in isolating cultural differences—versus identifying cultural characteristics common across varying cultures—amid varying national economic and political realities

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Forms of IHRM Research

Cross-Cultural

Descriptive

IHRM Research

Multicultural

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Cross-Cultural Research

Universal

Convergent

Basic Forms of Cross-Cultural Research

Situational

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Specific Difficulties of IHR Research

Focus of Research

Emic: identifying culture-specific aspects

Etic: identifying culture-common aspects

Language Problems

Measurement/Methodological Problems

Equivalence Problems

Metric (stimulus) equivalence

Conceptual equivalence

Functional equivalence

Subjectivity of the research topic and concept

Factors other than culture

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Impact of Culture on IHRM

Situations in which particular cultural influences on IHRM are important include:

Recruiting and hiring practices

Building business relationships

The role and use of multiple languages and communication

Perceptions of organizational justice

Decision-making

Performance evaluations and feedback

Management and leadership development

Development of a global mindset

Varying perspectives on careers across cultures

International Employee Relations

IHRM Ch07 (student).pptx

__MACOSX/._IHRM Ch07 (student).pptx

IHRM Ch09 (student).pptx

__MACOSX/._IHRM Ch09 (student).pptx

IHRM Ch01 (student).pptx

__MACOSX/._IHRM Ch01 (student).pptx

IHRM Ch06 (student).pptx

__MACOSX/._IHRM Ch06 (student).pptx

IHRM Ch02 (student).pptx

__MACOSX/._IHRM Ch02 (student).pptx

IHRM Ch05 (student).pptx

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