International Human Resource Management MGMT3025

What are HRM Activities?
Human resource planning,
staffing (recruitment, selection, placement),
performance management,
training management,
training and development,
compensation & benefits,
industrial relations
What is Morgan’s 3-D definition of IHRM
1. The Hr activities of procurement, allocation & utilization
2. The countries where IHRM occurs
a. Host-country where subsidiary may be located
b. Parent country where firm is headquartered
c. Other-countries that may be source of labour finance & inputs
3. The employees of an international firm (HCNs, PCNs, TCNs)
What is the difference between international HRM and Domestic HRM?
1. IHRM is more complex than domestic
– More HR activities,
– broader perspective,
– personal lives matter more,
– changes of emphasis,
– more risk exposure
– broader external influences
2. International HR activities
a. International taxation
b. International relocation
c. Orientation
d. Administrative services
e. Host-gov relations
f. Language translation
What does international relocation involve?
– Arranging for pre-departure training
– Providing immigration & travel details
– Providing immigration & travel details
– Providing housing, shopping, medical care, recreation & schooling information
– Finalising compensation
o Delivery of salary overseas
o Determination of overseas allowances
o Taxation treatment
What are the 5 variables that moderate the differences between domestic and international HRM?
– The cultural environment
– The industry(ries) within which the Multinational is primarily involved
– Complexity involved in operating in different countries and employing different national categories of employees
– Attitudes of senior management
– Extent of reliance of the multinational on its home-country domestic market
Culture matters! Why?
– Culture shock
– Emic ≠ etic (participation/embedded in the culture being studied vs neutral)
– Convergence hypothesis research tends to focus on macro level
– Divergence hypothesis research tends to focus on micro level
– The international HR manager must be aware of cultural differences
What are the two ends of the MNE industry type continuum?
– Multi-domestic industries
– Global industries
What is an example of a multi-domestic industry?
– Retail
– Distribution
– Insurance
What is an example of a global industry?
– Airlines
– Semiconductors
– Copiers
What is the international strategy of a multi-domestic industry?
– Collapses to a series of domestic strategies
What is the international strategy of a global industry?
– Must integrate activities on a worldwide basis
What are Laurent’s steps for true IHRM?
1. Parent org. recognizes that its HRM reflects some assumptions & values of own home culture.
2. Parent org. recognizes that its own peculiar ways are neither universally better nor worse than others -just different & likely to exhibit strengths & weaknesses, particularly abroad.
3. Parent org. recognizes that its foreign subsidiaries may prefer other ways to manage people -ways that are neither intrinsically better nor worse, but possibly more effective locally.
4. Headquarters is willing to acknowledge cultural differences & take steps to make them discussable & therefore usable.
5. All parties build belief that cross-cultural learning invites more creative & effective ways of managing people.
What in involved for a company to truly internationalise?
– Senior management have to have a global mindset vs just behaviors
Why do MNEs Fail?
– MNEs fail primarily because of a lack of understanding of the differences in managing human resources in foreign environments
What are the approaches to IHRM? (3)
– Globalised approach: The use of the parent company’s HR strategy and practices globally (e.g., McDonalds)
– Localized approach: The development of HR strategy and practices to suit the local environment (eg companies in the financial sector)
– Adaptation approach: The use of either a globalized HR strategy and localized practices, or a localized HR strategy and globalized practices (eg Ford and Toyota)
How do you choose the right IHRM approach?
– Organisational orientation: There are 4 orientations that are possible management strategies
– National culture: The collective programming of the mind that distinguishes the members of one group or category of people from another (Hofstede, 2001)
– Country specific factors (eg economic system, government mandate, the regulatory/legal environment, political stability, labour groups)
What are some cross-cultural considerations?
– Training and development: The educative and learning tool used to foster development of employees’ cognitive, affective and behavioural abilities for successful cross-cultural interactions in diverse countries (Morris & Robie, 2001).
– Performance appraisal: The dissimilar cultural orientations for motivations (eg West versus East: DeVoe & Iyenga, 2004)
– Remuneration: Cultural insensitivity in a remuneration or reward process may de-motivate certain employees, which in turn reduces their behavioural and cognitive qualities.
What are the 7 different culture theory names learned?
1. Kluckhohn & Kroeber – Culture consists in patterned ways of thinking, feeling and reacting.
2. Hansen’s – Standardization of communication, thought, feeling, behavior.
3. Schein’s – Culture has three levels: Artefacts (visible), values, and underlying assumptions
4. The Hofstede framework – Differences in: Power distance, uncertainty avoidance, individualism/collectivism, masculinity/femininity, time orientation, and indulgence vs restraint
5. GLOBE study – 8 dimensions: Institutional collectivism, in-group collectivism, uncertainty avoidance, power distance, Gender egalitarianism, Assertiveness, Performance orientation, Humane orientation
6. Trompenaars & hampden-Turner – 7 dimensions in 3 categories:
a. Relationships between people
i. 1. Universalism vs. particularism
ii. 2. Individualism vs. communitarianism
iii. 3. Emotional vs. neutral
iv. 4. Specific vs. diffuse
v. 5. Ascription vs. achievement
b. Concept of time
i. Sequential vs. synchronic concept of time
c. Concept of nature
i. Internal vs external control
7. Hall & Hall – 4 dimensions
a. High vs low context communications
b. Spatial orientation
c. Monochrome vs polychrome time
d. Information speed
What are the advantages of the Hofstede study?
– Historical prominence
– could be repeated at different points in time
– results serve as a guide for explaining behavior.
What are the Disadvantages of the Hofstede study?
– Western research team
– limited industry focus
– equivalence of culture to nation
– level of analysis
What are the advantages of the GLOBE STUDY?
– Distinction between
– practices and values
– multinational research team
– various culture levels (ind., org, social)
– distinctions in sample in some countries
What are the disadvantages of the GLOBE STUDY?
– Ltd industries (3)
– equivalence of culture to nation
– level of analysis
What are the advantages of the Trompenaars & Hampden-Turner?
– Practical template to monitor behavior
What are the disadvantages of the Trompenaars & Hampden-Turner?
– Operationalization and justification of dimensions remain unclear
What are the advantages of the Hall & Hall?
– R’ship between culture and communication
– Practical template
What are the disadvantages of the Hall & Hall?
– Dimensions may be incomplete, closely related, overlapping
– cultural regions represented in a macro sense
What are the management demands of internationalization?
– Size
– Structure
– Geographical dispersion
– Control mechanisms
– National cultures and languages
– Host-country demands
– Operation modes
– Flow and volume of information
Why globally standardise HRM?
– Consistency
– Transparency
– Alignment
– Achieve common principles and objectives
Why locally responsive HRM?
– Cultural values
– Traditions
– Legislation
– Government policies
– Education systems
What are the factors driving standardization?
– Pursue multinational or transnational corporate strategies
– Supported by corresponding org structures
– Reinforced by a shared worldwide corporate culture
What are the factors driving localization?
– Cultural environment
– Institutional environment
– Mode of operation abroad
– Subsidiary role
What are Gupta & Govindarajan’s four generic subsidiary roles?
– Global innovator – Low inflow, High outflow
– Local innovator – Low inflow, low outflow
– Implementor – High inflow, low outflow
– Integrated player – High inflow, high outflow
Why do organisational structures typically change?
– Strain imposed by growth & geographical spread
– Need for improved coordination & control across business units
– Constraints imposed by host-government regulations on ownership and equity
What are the two major issues of structure of MNEs?
– Extent to which decisions are made at PC headquarters or at subsidiary units (centralisation vs decentralisation)
– Type of control exerted by the parent over the subsidiary unit
Why, internationally, is the matrix difficult?
– Dual reporting can cause conflict & confusion
– Many communication channels can create information logjams
– Overlapping responsibilities
o Turf battles
o Loss of accountability
– Distance, language, time, & culture barriers
o Loss of clarity and ability to control
What does the matrix require in terms of managers?
– Know the business in general
– Have good interpersonal skills
– Can deal with ambiguities of responsibility & authority
– Have training for presenting ideas in groups
Other than the Matrix, what are the other organisation structures?
– The Heterarchy: MNEs have different kinds of centers apart from ‘headquarters’
– The Transnational: resources & responsibilities are interdependent across national boundaries
– The Network: subsidiaries are nodes, loosely coupled political systems
What are the 5 dimensions of networked MNEs?
1. Decision-making authority is delegated to appropriate units & levels
2. Key functions are dispersed geographically across units in different countries
3. Fewer organizational levels
4. Formal procedures are less bureaucratic
5. Work, responsibility, & authority are differentiated across the networked subsidiaries
What are the 3 types of units meta-nationals have?
1. Sensing units: Uncover widely dispersed engineering & market insights
2. Magnet units: Attract & create business plan to convert innovations into products & services
3. Marketing & production units: Market & produce adaptations of these
products & services around the world
What are three ways HR develops with international growth?
1. Sensing units: Uncover widely dispersed engineering & market insights
2. Magnet units: Attract & create business plan to convert innovations into products & services
3. Marketing & production units: Market & produce adaptations of these
products & services around the world
4. Think: An M-N = global tournament played at 3 levels
What are M&As?
– Mergers and Acquisitions
What are IJVs?
– International Joint Ventures
How does a merger work?
– Company A and Company B come together to form a new company
How does an Acquisition work?
– Company A buys Company B and stays as Company A
What are some typical problems faced by M&As?
– Within the first year of a merger, up to 20% of executives may be lost
– The percentage lost gets worse over more than one year after a merger
– Personnel issues are often neglected
– A large number of M&As fail or do not produce the intended results
What are the phases of a cross-border M&A?
– Pre-M&A phase
– Due diligence phase
– Integration planning phase
– Implementation and assessment phase
What are some things that need to be done in the Pre- M&A phase?
– Identification of people-related issues
– Planning for due-diligence
– Assessing people
– Working out the organizational/cultural fit
– Forming the M&A steering team
– Educating the team on the HR implications
What are some things that need to be done in the Due diligence phase of an M&A?
– Estimating people-related
o Transaction costs
o Ongoing costs
o Savings
o Identifying and assessing cultural issues
What are some things that need to be done in the Integration planning phase of an M&A?
– Developing employee culture-sensitive communication strategies
– Designing key talent retention programs
– Planning and leading integration efforts
– Developing a new strategy for the new entity
– Helping the organization cope with change
– Defining an organizational blueprint and staffing plan
What are some things that need to be done in the Pre- M&A phase?
– Managing ongoing change, especially cultural change
– Managing employee communications
– Advising management on dealing with people issues
– Aligning HR policies, especially total rewards
– Monitoring the process of organizational and people-related integration activities
– Ensuring the capture of synergies via incentives
– Initiating learning processes for future M&As
What are three conceptual tools firms should rely on during M&As?
1. Resources: Money, people, brands, relationships
2. Processes: Activities used to convert resources into goods and services
3. Values: the way employees think about what they do & why they do it
What are some challenges involved with IJV?
– HR must manage relations at the interfaces between IJV & parent companies
o Different rules can create critical dualities
– HR must develop appropriate HRM practices & strategies for the IJV itself.
o HR must recruit, develop, motivate, retain human resources at IJV level
What are the main reasons for an IJV?
– To gain knowledge & transfer that knowledge
– The host government insists
– Increased economies of scale
– To gain local knowledge
– To obtain vital raw materials
– To share risks (e.g., financial)
– To improve global competitive advantage
– Provide an efficient & cost effective response required by market globalization
What are the IJV development stages?
– Partnership role
– Change facilitator & strategy implementer
– Innovator
– Collaborator
What are some barrier to international markets by Small to Medium enterprices (SMEs)?
1. Not enough working capital to finance exports
2. Inability to identify foreign business opportunities
3. Limited information to locate/analysemarkets
4. Inability to contact potential overseas customers
5. Inability to obtain reliable foreign representation
6. Lack of managerial time to handle internationalization
7. Untrained or not enough personnel to go international
8. Difficulty in managing competitors’ prices
9. Lack of home government assistance & incentives
10. Excessive transportation & insurance costs
What are the different approaches to staffing?
– Ethnocentric – PCNs are favored
– Polycentric – HCNs manage subsidiaries
– Geocentric – Ability is more important than nationality
– Regiocentric – Similar to geocentric, but limited to a given region
What are the determinants of staffing choices?
– Context specificities
– Company specificities
– Local unit specificities
– IHRM practices
What are some reasons for international assignments?
– Position filling
– Management development
– Organisation development
What are the types of normal international staff assignments?
– Short term – up to 3 months
– Extended – Up to a year
– Long term – 1 to 5 years (Traditional expatriate assignment)
What are some types of non-standard international staff assignments?
– Commuter – Goes home once every week or two
– Rotational – work for a certain amount of time followed by a break in home country
– Contractual – Specific skills employees hired for 6 months – 12 months
– Virtual – Manage international responsibilities from base in home country
What are some factors that influence effectiveness of international assignments?
– Open environments
– Knowledge/info travels freely between expatriate, HC and PC
– Consideration for personal networks
– Abilities, motivations, relationships of locals
What are some issues with international business travelers?
– Home & family issues
– Work arrangements
– Travel logistics
– Health concerns
– Host culture issues
What is an inpatriate?
– An employee of an MNC who is from a foreign country but is transferred from a foreign subsidiary to the corporation’s headquarters.
What are some drivers for recruiting & transferign inpatriate managers?
– Desire to create global core competency & cultural diversity of strategic perspectives
– Desire to provide career opportunities in HCs
– The emergence of developing markets which often are difficult locational for expatriates.
Why choose international or domestic recruits for selections?
– Smaller number of external recruits
– Preference for internal recruitment
What are some factors in expatriate selection?
– Individual
o Technical ability
o Cross-cultural suitability
o Family requirements
– Situational
o Country/cultural requirements
o Language
o MNE requirements
What are some predictors of success?
– The five big personality traits: Extroversion, agreeableness, conscientiousness, emotional stability, and openness or intellect
– Language skills
– Prior international experience
– Realistic previews
– Self-selection
– Candidate assessment e.g. interviews, assessment centre
What are some variables affecting expatriate performance?
– The compensation package
– The task
– HQ support
– Host environment
– Cultural adjustment – self and family
What are some tasks that expatriates do?
– CEO or subsidiary manager
– Structure reproducer
– Trouble-shooter
– Operative
What are the types of expatriate assignments?
– Technical (5-10%) – short term knowledge transfer
– Developmental (5-10%) – in country performance
– Strategic (10-15%) – high profile activities
– Functional (55-80%) – Two way transfer of existing processes & practices
What are some challenges that non-expatriate performance management face?
– Performance criteria & goals for non-standard work
– Criteria for performance is subject to cultural differences
– Isolating international dimensions of job performance is not as straightforward as for traditional expatriate jobs
– Outstanding/under-performance & failures will challenge performance appraisal process
– Performance appraisals are complicated by international context, outside appraisers
– Ways to improve & rewards are unclear
– Impact of non-standard work on HCN co-workers
What are essential components of pre-departure training?
– Cultural awareness training
– Preliminary visits
– Language instruction
– Assistance with practical day-to-day matters
– Security Briefings
What are Black & Mendenhall’s 3 keys for cross-cultural training?
– Training methods
– Levels of training rigor
– Duration of training relative to
o Expected degree of interaction
o How different the host culture will be
What is in Information-giving approach for pre training?
– Low interaction
– Similar culture
– < 1-week training
What is in affective approach for pre training?
– 2-12 mount job,
– Some interaction
– 1-4+ weeks of training
What is in the immersion approach for pre training?
– High interaction
– Novel culture
– 2+ months of training – More rigor
What are some ways to reduce expatriate turnover?
– opportunity to use experience
– Position choices upon return
– Recognition
– Repatriation career support
– Improved performance evaluation
What are some skills and knowledge acquired from international assignments?
– Market specific knowledge
– Personal skills
– Job-related management skills
– Network knowledge
– General management capacity
Strategies for smooth re-entry?
– Pre-departure briefings on what to expect & upon return
– Multiple career planning sessions
– Written repatriate agreements clarifying available assignments upon return
– Mentoring programs that continue after return
– Extended home visits to keep with social, family & organisational changes
– Reorientation programs on changes in organistaion
– Presonalised financial & tax advice
– Providing an adjustment period upon return
– Visible & concrete expression of repatriate’s value to the firm
What is compensation?
– A mechanism to develop & reinforce global corporate culture
– Primary source of corporate control
– Explicitly linking performance outcomes with associated costs
International compensation complexities?
– Pay
o Taxes
o Cost of living
– Housing
– Safety
– Transportation
– Education of children
– Length of stay
What are some of the expectations of international employees when working overseas?
– Financial protection in terms of benefits, social security, and living costs in foreign location
– Opportunities for financial advancement through income & savings
– Career will be advanced
– Housing, children’s education, & recreation will be addressed
What are some key components for expatriates when working overseas?
– Base salary
– Foreign service inducement & hardship premium
– Allowances
– Benefits
What are the three approaches to international compensation?
– Going rate approach
– Balance sheet approach
– Local plus (hybrid)
What is the going rate approach?
– Paid the same as people from the country you are working in.
What is the balance sheet approach?
– You are paid certain parts of your salary in different currencies
What are industrial relations?
– The study of the interrelationships between managers, workers, and external representative agencies
Why does industrial relations exist?
– To safeguard the interest of management and labour to secure the highest level of mutual understanding
– Help the productivity of workers
– Reduce high staff turnover
– Improved industrial democracy
How do industrial relations influence firms?
– The degree of inter-subsidiary production integration
– Different nationalities of the subsidiary
– IHRM approach
– MNE prior experience
– Subsidiary characteristics
– Characteristics of the home product market
– Management attitudes towards unions
How do trade unions limit MNE choice?
– Influence on wage levels
– Constrains the ability of MNEs to vary employment levels at will
– Hinders or prevents global integration of operations of multinationals
Why do trade unions have concerns about MNEs?
– MNEs have/can:
o formidable financial resources
o Alternative sources of supply
o Move production to other countries
o Remote locus of authority
o Production facilities in many industries
o Better knowledge
o Investment strikes
What are some IHRM related to global code of conduct?
– Drawing up and reviewing codes of conduct
– Conducting cost-benefit analysis to oversea employees and others’ compliance
– Championing the need to train employees and partners in the code of conduct
– Checking that performance and rewards include compliance to codes of conduct
What are some ethics involved with IHRM?
– Ethical relativism: no universal rights or wrongs
– Ethical absolutism: One should do what one would do at home
– Ethical universalism: There are principles of right & wrong which transcend cultural boundaries.
What is bribery and corruption?
– Paying agents to do things inconsistent with the purpose of their position or office so as to obtain an unfair advantage.
What are HR implications for bribery and corruption?
– Ensure employees comply with legal requirements
– Code of conduct
– Training – corrupt bribery payments versus gifts
– Negotiation skills to deal with corruption
– Performance appraisals, compensation that reinforces ethical behaviour
– Visits home
What are 5 MNE corporate risk areas?
– Health and Safety
o In-facility emergency & disaster preparedness
o In-facility security
o Out-of-facility fire & travel risks
– Knowledge and information
o Industrial espionage
o Cyber-terrorism