International Human Resource Management (IHRM) PDF

International Human Resource Management (IHRM) Dr. Abdumalek Hazbar International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Level Four International Business Management |Page1 International...

International Human Resource Management (IHRM) Dr. Abdumalek Hazbar International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Level Four International Business Management |Page1 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Chapter 1 Introduction: The enduring context of IHRM Chapter objectives In this introductory chapter, we establish the scope of the textbook. We: 1. define key terms in international human resource management (IHRM). 2. outline the differences between domestic and international human resource management and the variables that moderate these differences 3. discuss trends and challenges in the global work environment and the enduring context in which IHRM functions and activities are conducted – including the way in which forces for change affect the operations of the internationalizing firm and have consequences for the management of people in the multinational context. Figure 1-1: Inter-relationships between approaches in the field |Page2 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Figure 2-1: A model of IHRM HR activities 1. Human resource planning 2. Staffing Recruitment Selection Placement 3. Training and development 4. Compensation (remuneration) and benefits 5. Industrial relations What is an expatriate? - An employee who is working and temporarily residing in a foreign country. - Some firms prefer to use the term ‘international assignees’. - Expatriates are PCNs from the parent country operations, TCNs transferred to either HQ or another subsidiary, and HCNs transferred into the parent country. |Page3 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Figure 1-3: International assignments create expatriates. Definition of International HRM - We define the field of IHRM broadly to cover all issues related to managing the global workforce and its contribution to firm outcomes. Hence, our definition of IHRM covers a wide range of human resource issues facing MNEs in different parts of their organizations. Additionally, we include comparative analyses of HRM in different countries. Differences between domestic and international HRM 1. More HR activities 2. The need for a broader perspective 3. More involvement in employees’ personal lives 4. Changes in emphasis as the workforce mix of expatriates and locals varies 5. Risk exposure 6. Broader external influences. |Page4 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Figure 1-4: Variables that moderate differences between domestic and international HRM The ‘top ten’ multinationals 1. Rio Tinto (UK/Australia) 2. Thomson Corporation (Canada) 3. ABB (Switzerland) 4. Nestlé (Switzerland) 5. British American Tobacco (UK) 6. Electrolux (Sweden) 7. Interbrew (Belgium) 8. Anglo American (UK) 9. AstraZeneca (UK) 10. Philips Electronics (The Netherlands) |Page5 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Figure 1-5: Factors influencing the global work environment. Forces for change 1. Global competition 2. Growth in mergers, acquisitions and alliances 3. Organization restructuring 4. Advances in technology and telecommunication. Impacts on multinational management 1. Need for flexibility 2. Local responsiveness 3. Knowledge sharing 4. Transfer of competence Managerial responses Developing a global mindset More weighting on informal control mechanisms Fostering horizontal communication Using cross-border and virtual teams Using international assignments |Page6 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Chapter summary This chapter has established the scope of this book. We have: Defined international HRM and the term ‘expatriate’. Discussed the differences between domestic and international HRM – looking at six factors: more HR activities, the need for a broader perspective, more involvement in employees’ personal lives, changes in emphasis as the workforce mix of expatriates and locals varies, risk exposure and more external influences. Examined what we have called the enduring context of IHRM. The focus is on the current global work environment, looking at the forces for change that have prompted managerial responses that have implications for the way in which people are being managed in multinationals at the turn of the 21st century. However, we have made a brief comparison with the situation that confronted a 14th-century merchant as a way of drawing out some of the constants in international business. This treatment has enabled us to provide an overview of the field of IHRM and establish how the general environment affects IHRM. The next chapter examines the organizational context where we explore how IHRM activities are determined by, and influence, various internal changes as the firm internationalizes. |Page7 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Chapter 2 THE CULTURAL CONTEXT OF IHRM Objectives Learn these key findings and themes: Definitions of culture Cultural concepts Results of various intercultural mgmt. studies: Hofstede, GLOBE, Trompenaars, & others Reflections on cross-cultural mgmt. research Development of cultures. Definitions of culture 1. Kluckhohn & Kroeber def. of culture. |Page8  International Human Resource Management (IHRM) Dr. Abdumalek Hazbar 2. Hansen’s 4 elements of culture: Standardization of 3. Schein’s concept of culture A culture has 3 levels: 1. Artefacts - visible 2. Values – intermediate level of consciousness 3. Underlying assumptions – invisible, unconscious Schein’s 6 underlying assumptions. 1. Nature of reality & truth 2. Time dimension 3. Effect of spatial proximity & distance 4. Nature of being human 5. Type of human activity 6. Nature of human relationships. |Page9  International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Intro to cross-cultural mgmt. research 1. Goals of cross-cultural mgmt. studies Describe Compare Explain & improve interaction between employees, customers, suppliers or business in different countries & cultures. 2. The Hofstede study Hofstede’s 5 culture dimensions 1. Power distance 2. Uncertainty avoidance 3. Femininity vs. masculinity 4. Individualism vs. collectivism 5. Confucianism or long-term orientation. Culture that are classified as long-term and Short-term in this dimension Long-term cultures characterized by: - Great endurance, persistence in pursuing goals - Position of ranking based on status - Adaptation of traditions to modern conditions - Respect of social & status obligations within limits - High savings rates & high investment activity - Readiness to subordinate oneself to a purpose - The feeling of shame | P a g e 10  International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Short-term cultures characterized by: - Personal candor & stability - Avoiding loss of face - Respect of social & status obligations without consideration of costs - Low savings rates & low investment activity - Expectations of quick profit - Respect for traditions - Greetings, presents & courtesies based on reciprocity Figure 2.1 Hofstede study: Power distance & individualism vs. collectivism. | P a g e 11 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Table 2.1 Impact of the cultural context on HRM practices | P a g e 12 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Future Hofstede-style research issues Realization of cross-level studies Consider groups, organizations, & country levels Inclusion of cross-cultural differences Consider intracultural variance Inclusion of theoretically relevant moderators Consider sex, class affiliation, etc. Interaction between variables 3. The GLOBE study The GLOBE study questions Are there leadership behaviors, attributes & org. practices effective across all cultures? Are there leadership behaviors, attributes & org. practices effective in some cultures only? How much do leadership attributes affect the effectiveness of specific leadership behavior & its acceptance by subordinates? How much do behaviors & attributes in specific cultures influence the well-being of members in the researched societies? What is the relationship between these socio-cultural variables & an international competitive capacity of the various sample societies? GLOBE’s 8 culture dimensions Institutional collectivism In-group collectivism Uncertainty avoidance Power distance Gender egalitarianism Assertiveness Performance orientation Humane orientation. | P a g e 13 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar 4. The Trompenaars & Hampden-Turner study 7 dimensions of Trompenaars & H-T study 5. Hall & Hall’s cultural dimensions Hall & Hall’s 4 dimensions High vs. low context communication Spatial orientation actual distance between people when communicating Monochrome vs. polychrome time sequential processes vs. parallel actions Information speed high or low information flow during communication. | P a g e 14 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar The development of cultures | P a g e 15 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Chapter 3 The Organizational Context Chapter Objectives Examine how international growth places demands on management and HRM Standardization and localization of HRM practices Factors driving standardization Factors driving localization The path to global status Structural responses to international growth Effect of responses on HRM approaches and activities Control and coordination mechanisms, including cultural control. Figure 3.1 Demands on Management by International Growth | P a g e 16 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar The Global Mindset and Local Responsiveness The aim of global standardization ▪ Consistency ▪ Transparency ▪ Ease of administration ▪ Efficiency and effectiveness ▪ Sense of equity The aim of localization ▪ Respect for local culture and traditions ▪ Adaptation to local institutional requirements such as legislations and government policies ▪ Educational system and HR practices ▪ Workplace practices and employee expectations. | P a g e 17 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Factors Driving Standardization 1. Large MNEs with long international history and extensive cross-border operations ▪ Pursue multinational or transnational corporate strategies ▪ Supported by corresponding organizational structures ▪ reinforced by a shared worldwide corporate culture 2. The host-country context ▪ The cultural environment ▪ The institutional environment 3. Mode of operation abroad ▪ Ownership and control 4. Subsidiary role ▪ Greenfield versus IJV ▪ M&A ▪ Implementer, innovator, integrator | P a g e 18 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Table 3.1 Examples of impact of the cultural & institutional context on HRM practices. Table 3.2 Gupta and Govindarajan’s Four Generic Subsidiary Roles | P a g e 19 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar The Path to Global Status As the nature and size of international activities change, organizational structures response, due to: - The strain imposed by growth and geographical spread - The need for improved coordination and control across business units - The constraints imposed by host-government regulations on ownership and equity The evolution path is common but the steps are not normative. | P a g e 20 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar | P a g e 21 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar | P a g e 22 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar | P a g e 23 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Global Product/Area Division. Strain of sheer size may prompt structural change to either of these global approaches Choice typically influenced by: - The extent to which key decisions are to be made at the parent country headquarters or at the subsidiary units (centralization versus decentralization) - Type or form of control exerted by the parent over the subsidiary unit. | P a g e 24 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar | P a g e 25 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar | P a g e 26 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar | P a g e 27 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar | P a g e 28 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar | P a g e 29 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Problems with the Matrix HRM Issues in Matrix Management skills and abilities - Know the business in general - Have good interpersonal skills - Can deal with ambiguities of responsibility and authority inherent in the matrix system - Analytical and presenting skills for sharing ideas, joint authority, and decision-making in groups Management development and HR planning are more critical in matrix MNEs than in traditional organizations. | P a g e 30 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Beyond the Matrix 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 At this stage, there is less hierarchy & no structure is considered inherently superior | P a g e 31 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Five Dimensions of a Less Hierarchical Structure or Networked MNEs Delegation of decision-making authority to appropriate units and levels Geographical dispersal of key functions across units in different countries De-layering of organizational levels De-bureaucratization of formal procedures Differentiation of work, responsibility and authority across the networked subsidiaries. Beyond Networks: Meta-nationals Locally imbedded sensing units Uncover widely dispersed sources of engineering & market insights Magnet units Attract innovative processes and create a business plan to convert innovations into products & services Marketing & production units Market and produce adaptations of these products & services for a range of customers around the world. A global tournament played at three levels is a race to identify and access new technologies and market trends ahead of the competition, a race to turn this dispersed knowledge into innovative products and services, and a race to scale and exploit these innovations in markets around the world. The Place of HR in Response to Structural Changes Centralized HR firms characterized by large, well-resourced HR departments responsible for a wide range of functions, typically within product-based or matrix structures Decentralized HR firms characterized by devolving HR responsibilities to a small group, mostly for senior mgmt at corporate HQ; mostly within product- or regional-based structures Transition HR firms characterized by medium-sized corporate HR with small staff at HQ; decentralized, operate mostly in product-based structure | P a g e 32 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Different Countries, Different Paths European MNEs: ‘mother-daughter’ → global with product/area divisions or matrix structure Swedish MNEs: Tend to adopt mixture of mother-daughter & product divisions Nordic MNEs: may prefer matrix structure U.S. MNEs: limited success with matrix Japanese MNEs: similar to US, but evolve more slowly, possibly not changing structure Chinese & Indian MNEs: Not much info yet | P a g e 33 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Summary Issues of standardization & localization Mode of operations Subsidiary role Structural responses to international growth The effect of responses on HRM approaches and activities Control & coordination mechanisms, including cultural control. | P a g e 34 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Chapter 5 Sourcing HR for Global Markets: STAFFING, RECRUITMENT & SELECTION Objectives We learn foundations of ‘managing people’ in IHRM: Issues related to approaches to staffing foreign ops. Reasons for international assignments Types of international assignments Expatriate & non-expatriate roles in supporting international business activities. Then we learn about IHRM recruitment & selection: Debate about expatriate failure, selection criteria, & gender in IHRM. Introduction: This chapter Examines various approaches to international staffing Outlines pivotal role of international assignments Focuses on recruitment & selection as major factors in success of global assignments. Approaches to staffing: Staffing attitudes of internationalizing firms 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. Table 5.1a Advantages & disadvantages of using PCNs | P a g e 35 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Table 5.1b Advantages & disadvantages of using TCNs. Table 5.1c Advantages & disadvantages of using HCNs | P a g e 36 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Figure 5.1 Determinants of staffing choices Transferring staff for international activities ❖ Reasons for international assignments Position filling. lack of available skills → PCN works abroad. Management development - training, development, common corp. values Organization development - transfer of knowledge, competence, practices - exploit global market opportunities. | P a g e 37 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Types of international assignments Short term up to 3 months Extended up to 1year Long term 1 to 5 years (traditional expatriate assignment) Some non-standard assignments: Commuter go home every one to two weeks Rotational commute for set period followed by break in home country Contractual specific skills employees hired for 6-12 months on specific projects Virtual employee manages international responsibilities from base in home country Table 5.2 Differences between traditional & short-term assignments | P a g e 38 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Roles of an expatriate Figure 5.2 Determinants of staffing choices Factors that influence effectiveness of international assignments Open environment »Support for cross-fertilization of ideas »Implementation of best practice. Knowledge/info travels freely between expatriate, host country, & parent country Consideration for personal networks Some knowledge transfer requires longer assignments (e.g., where there is much tacitness) | P a g e 39 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Expatriate’s ability & motivation to act as an agent of knowledge transfer Abilities, motivations, relationships of locals Role of non-expatriates Issues with international business travelers » Home & family issues » Work arrangements » Travel logistics » Health concerns » Host culture issues Role of inpatriates Drivers for recruiting & transferring inpatriate mgrs. »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 locations for expatriates: - Quality of life adjustment - Cultural adjustment | P a g e 40 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Recruitment & selection of international managers International vs. domestic recruitment & selection »Smaller number of external recruits »Preference for internal recruitment - To reduce selection risk - To secure present & past human capital investments Expatriate failure & success Table 5.3 Expatriate failure rates | P a g e 41 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Selection criteria Figure 5.3 Factors in expatriate selection. Figure 5.4 Overview of important adjustment variables | P a g e 42 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Expatriate selection processes in practice Table 5.4 Tasks & exercises used in an assessment center Table 5.5 Evaluation scheme for a role play in an intercultural assessment center | P a g e 43 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Dual career couples IHRM solutions for dual career couples » Inter-firm networking » Job-hunting assistance » Intra-firm employment »Language training, educational assistance »Employer-sponsored work permits »Career planning assistance. | P a g e 44 International Human Resource Management (IHRM) Dr. Abdumalek Hazbar Table 5.6 Strategies for breaking the expatriate glass ceiling | P a g e 45