DOMESTIC VS INTERNATIONAL HUMAN RESOURCE MANAGEMENT

INTRODUCTION

Despite the fact that the core principles of SHRM also apply to Global HRM, Global HR presents some unique contingencies.

1.Managing People in Global Settings

This requires Human Resources to address a broader range of functional areas. These areas include:

Clarifying Taxation Issues Coordinating Foreign Currencies Exchange Rates Compensation Plans Working Directly With The Families of Employees Who May Be Accepting Overseas Assignments.

2.Involvement In Employees Personal Life

Global Hr Requires More Involvement In The Employees Personal Life The Employee Is Usually Assisted With:

Acquiring Housing In The Host Country Selling Or Leasing Domestic Accomodation Locating Recreational & Cultural Opportunities For Employees & Family Arranging & Paying for School for the Employees Children Locating & Securing Domestic Help For The Employee

Unique HR Contingencies.
3. The Organization Must often Setup Different HRM Systems for Different Geographic Locations

4. The Organization is often Forced to Deal with More Complex External Constituencies, including Foreign Governments & Political & Religious Groups

Exposure To Risks

Global Assignments often involve A Heightened Exposure to Risks. These Risks Include:

Health & Safety of Employees & Family Legal Issues in Host Country Possible Tourism Human & Financial Consequences of Mistakes, which may Greatly Exceed The Costs of Those made Domestically.

Threat of Terrorism

The Threat of Terrorism has added to many of the anxieties employees face when considering & undertaking a Global Assignment. A Recent Survey found that expatriates need & want more support from Head Quarters than they are receiving regarding health & safety concerns;

Major differences between domestic HRM and IHRM

Business activities e.g. taxation, international relocation, expatriate remuneration, performance appraisals, crosscultural training and repatriation Increased complexities e.g. currency fluctuations, foreign HR policies and practices, different labor laws Increased involvement in employees personal life e.g. personal taxation, voter registration, housing, childrens education, health, recreation and spouse employment Complex employee mix cultural, political, religious, ethical, educational and legal background Increased risks e.g. emergency exits for serious illness, personal security, kidnapping and terrorism

Myths about globalization

Myth #1: Global = International Myth #2: Global strategy means doing same thing everywhere Myth #3: Globalizing = stateless corporation, no national/community ties Myth #4: Globalization requires abandoning country images and values Myth #5: Globalizing means tackling on acquisitions or alliances in other countries, without much integration/change Myth #6: A strategy must involves sales/operations in another country

Strategies of international, multinational, global & transnational organizations

International company transports its business

outside home country; each of its operations is a replication of the company's domestic experience; structured geographically; and involves subsidiary general managers Companies offering multiple products often find it challenging to remain organized e.g. need to have a common information systems for accounting, financial and management controls, and marketing. Most evolve to become multinational companies

Strategies of international, multinational, global & transnational organizations

Multinational company grows and defines its

business on a worldwide basis, but continues to allocate its resources among national or regional areas to maximize the total.

Strategies of international, multinational, global & transnational organizations

Global organizations treat the entire

world as though it were one large country; may be the entire company or one or more of its product lines; may operate with a mixture of two or more organizational structure simultaneously.

Strategies of international, multinational, global & transnational organizations

Transnational organization - Use specialized facilities to permit local responsiveness; more complex coordination mechanism to provide global integration

Global efficiency and local responsiveness of different types of firms

High Global efficiency Low

Global International

Transnational Multinational
High

Local responsiveness

Orientation to international operations

(1) Australian organization with international operations

All senior and many middle management positions held by Australians Highly centralized in Australia, large head office Instruction and advice from Australian head office to subsidiaries HR policies and practices are predominantly Australian with some modification to satisfy foreign requirements Australian corporate culture

Orientation to international operations

(2) Australian multinational organization

Localization of some management positions but all top corporate positions held by Australians Some decentralization to regional or area headquarters Regional headquarters is the main source of communications; instructions from Aust head office to regional headquarters HR policies and practices are mixed Mix of Australian and host country culture

Orientation to international operations

(3) Australian global organization All management positions are open to everyone regardless of nationality Decentralized decision making Two-way or multiple-way communication between headquarters HR policies and practices are benchmarked on best international practices International corporate culture

Example from Japanese MNCs

1. Borderless structure and bottom-up decision-making processes that encourage communication and information flow among all components of the company and extend the network to its key suppliers, distributors, and other business partners. 2. Custodial leadership that emphasizes values and vision and is skillfully unassertive, while energizing and challenging middle managers with demanding targets. 3. Human resource management, including socialization, training, and promotion via a hierarchy of ranks, job rotation, and appraisal systems that promote hard work, commitment, and competition among peers.
Campbell, N. (1991). How Japanese multinationals work so well. Prism, 4, 61-69.

4. Incremental planning and control that help a company expand little by little, focusing on new products and the relentless pursuit of operating improvements, rather than "grand designs" for competitive advantage.
5. An extended family model that encourages and rewards commitment.

IHRM - a shift in thinking

Laurent (1986)

Explicit recognition by parent org of the existence of assumptions and values of home & host cultures Explicit recognition by parent org ethnocentrism is neither good/bad, has strengths and weaknesses Explicit recognition of subsidiaries preferences which may be different

IHRM - a shift in thinking

Laurent (1986)

Willingness to acknowledge cultural difference discuss and learn Genuine belief in creative and effective ways of managing people through crosscultural training/learning

Important lessons for global firms

The need The need The need culture The need The need

to manage change to respect local cultures to understand a corporations to be flexible to learn

Main challenges in IHRM

High failure rates of expatriation and repatriation Deployment getting the right mix of skills in the organization regardless of geographical location Knowledge and innovation dissemination managing critical knowledge and speed of information flow Talent identification and development identify capable people who are able to function effectively Barriers to women in IHRM International ethics Language (e.g. spoken, written, body)

Main challenges in IHRM

Different labor laws Different political climate Different stage(s) of technological advancement Different values and attitudes e.g. time, achievement, risk taking Roles of religion e.g. sacred objects, prayer, taboos, holidays, etc Educational level attained Social organizations e.g. social institutions, authority structures, interest groups, status systems

Strategies for managing a global workforce

(1) Implement the aspatial career strategy

Get people from everywhere (geocentric approach) Expats work in multiple countries during the course of their career Gain a lot of knowledge about different cultures & operations Develops in-depth knowledge Use previous knowledge for new assignment Extremely high cost Mainly managers, not technicians

Strategies for managing a global workforce

(2) Implement the awareness-building assignment strategy

Expose a candidate to cultural training exercises Usually for short term (3 months to one year) Family members usually not required to relocate Usually used to train candidates for future assignments Learn from foreign assignment and bring experience back to HQ

Strategies for managing a global workforce

(3) Implement the SWAT team strategy

Highly mobile teams for short term assignments Deployed throughout the organization to different parts of the world No development agenda, plain troubleshooting Transfer technical knowledge to locals as they fix problems E.g. technical troubleshooters

Strategies for managing a global workforce

(4) Implement the virtual solutions strategy

Collection of practices that exploit electronic communication E.g. internet, intranet, videoconferencing, electronic databases, email, electronic expert systems Low cost and very fast in terms of disseminating knowledge Used by Xerox and Ford