Chapter Twelve

IHRM Trends: Complexity,

Challenges and Choices in
the Future
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 Chapter Learning Objectives

After reading this chapter, you should be able to:

• discuss international business ethics and HRM

• describe modes of operation other than wholly owned
subsidiaries and the required IHRM activities
• outline ownership issues relating to IHRM requirements of
organizations other than the large multinational, such as:
- family-owned firms
- nongovernment organizations (NGOs)
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 Chapter Learning Objectives

• identify safety and security issues and the assessment and

planning activities required

• understand that research is still required to unravel the

intricacies and interrelationships among the IHRM
function and activities, firm internationalization, and
strategic directions and goals

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 Terms

ethical relativist risk levels: Bribery ≠ gifts ≠

ethical absolutist primary facilitating payments
ethical universalist micro ‘critical incident’
macro

• family-owned
firms defining culture
• NGOs emic-etic distinction
static group design
• SMEs
translation & stimulus equivalence
• strategic IHRM

FCPA
OECD
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 OpeningVignette

Failed Terror Strike Targeted Canadians

• develop policies and practices ensuring the safety and

security of international employees

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 “General Affairs” Aspect of
IHRM

• the expectation that the human resource function will be

the first line of defense in dealing with unpredictable and
emergent issues

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 Returning to Topics of Strategic HRM
in MNEs (Figure 12.1)

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 External Factors: International
Business Ethics and HRM

Discuss:
1. Should MNEs apply their own values everywhere they
do business, irrespective of the cultural context and
standard of local practices? (i.e. bribery, child labour,
unsafe workplace).

2. Whose standards should prevail? Those of the MNE’s

parent country or the host country?

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 Ethical Relativist

• there are no universal rights and wrongs

• depends on a particular culture’s values and beliefs

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 Ethical Absolutist

• apply home country values and practices regardless of

what the host country does or believes in

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 Ethical Universalist

• fundamental principles of right and wrong transcend

cultural boundaries

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 Ethical Universalist

• United Nations Declaration of Human Rights

• Guidelines for Multinational Enterprises, Organization of

Economic Cooperation and Development (OECD)

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 Translating Ethical
Principles

• instituting a strategic plan for legal compliance

• international accords

• regulations

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 Translating Ethical
Principles

• education and training programs

- ethics
- development of negotiation skills to handle problem
situations
- difference between corrupt bribery payments, gifts,
and allowable facilitation payments

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 Bribery

• a practice that involves payment or gifts to gain an unfair

advantage

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 New Global Developments on the
Criminalization of Bribery

• bribery undermines equity, efficiency and integrity in the

public service

• undercuts public confidence in markets and aid programs

• adds to the cost of products

• affects the safety and economic well-being of the general

public
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 Criminalization of Bribery
(UN)

• Declaration Against Corruption and Bribery in

International Commercial Transactions

• Convention on Combating Bribery of Foreign Public

Officials in International Business Transactions (OECD
Convention)

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 Criminalization of Bribery
(Canada)

• Corruption of Foreign Public Officials Act

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 Transparency International
Corruption Perceptions Index 2006
(Table 12.1)

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 Challenges for the MNEs HR
Function

Ethical issues
• are complex due to different social, economic, political,
cultural, and legal environments

• can not be left up to individual employees

- the pressures of operating in a foreign environment
- internal inconsistencies affecting total global
performance.

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 Challenges for the MNEs HR
Function

Integrity of International Assignee

Selection
• ability to manage with integrity should be an assess job-
relevant criterion

Performance appraisals
• not be placed under unreasonable pressure
• feedback and reinforcement

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 Challenges for the MNEs HR
Function

Integrity of International Assignee

Pre-departure training or orientation

• ethics
• global codes of conduct
• moral imperatives transcend national and cultural
boundaries

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 Internal Factors: Mode of
Operation and IHRM

• key role is the transfer of technology and systems,

inculcation of company culture, and acting as a screening
process

• short-term staff assignments to deliver training in foreign

locations

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 Family-Owned Firms

• human resource planning and succession planning to top

management positions in family-owned firms is a critical
factor in the organizations demise or take-over.

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 Family-Owned Firms

• handing over control can be fraught with immediate and

extended family
- dynamic negotiations
- conflicts of interests
- sibling rivalries
- family favoritism

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  Nongovernment 
Organizations (NGOs)

• utilize variations of structural forms and control

mechanisms
• embrace ideals such as being values‐driven, charitable
and philanthropic as opposed  to the values of efficiency
and effectiveness  of profit orientated MNEs.
• often located in poor or hostile environments exposing
staff to physical security and safety risks
• complex ethical challenges

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 External Factors: Challenges
in an Uncertain World

Safety, Security and Counterterrorism

Examples
• 9/11, terrorism
• kidnapping of executives
• natural disaster impacting a key facility
• airline or private aircraft disaster
• pandemics, SARs, avian flu

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 Safety, Security and
Counterterrorism

Risk management categories associated with natural

disaster protocols

• emergency and disaster preparedness plans for MNE plant

and facilities
• workplace violence policies
• industrial theft and sabotage protocols
• enhance in-house security

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 Management of Occupational
Health and Safety

IHRM
• legal compliance and training issues related to safety in
the workplace.
• expanded national and international regulations related to
workplace safety
• professional standards of practice
• reporting mechanisms
• risk management practices

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 Corporate Risk Assessment
Categories (IHRM Notebook 12.1)

1. In-facility emergency and disaster preparedness

2. In-facility security
3. Industrial espionage, theft, and sabotage
4. Cyberterroism
5. Out-of-facility fire and travel risks

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 In-Facility Emergency and
Disaster Preparedness

• compliance with local safety laws and standards

• creating a command center and triage area

• protocols for transport-evacuation & systematic location

of employees

• liaison with public sector emergency workers and media

relations.
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 In-Facility Security

• perimeter security
• search protocols
• internal search protocols
• bomb threat procedures
• risk control for violence
• protection and lighting in parking areas
• the use of cameras in the workplace.

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 Industrial Espionage, Theft
and Sabotage

• activities to secure internal communications

• open records protection

• employee privacy regulations

• clearly defined physical inspections and search processes

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 Cyber-terrorism

Hardware, software and human systems (and back up

and multiple independent operations systems) to deal
with

• hacking
• information theft
• internal sabotage
• the sabotage of software systems

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 Out-of-Facility Fire and
Travel Risks

• portable five minute air packs

• travel policies (i.e. employees staying in hotel rooms

below the 7th floor, vary airline flights)

• hotel evacuation training

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 Risk Assessment- Terrorist
Threats

IHRM assess the potential risk from terrorist threats at

three levels of analysis

1. primary, individual person and firm

2. micro, regions and industries, levels in value chains
3. macro, global environment

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 Risk Analysis

Dimensions

• external environmental (geographic region of operation)

• internal company (industry, firm media profile, national

affiliation associated with the company)

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 Risk Analysis

• low risk companies in low risk environments do not need

to invest as heavily in security systems and protocols

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 Risk Analysis

• high risk companies in low risk environments should

follow security strategies that focus on hardening
individual sites

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 Risk Analysis

• low risk companies in high risk environments can follow

security strategies that disperse activities across the region
and build redundant infrastructure

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 Risk Analysis

• high risk companies in high risk environments must invest

elaborate risk management strategies

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 Discussion Questions

1. Identify a number of HRM problems that typically arise

with expatriate assignments. In what ways might the core
ethical values and guidelines identified in this chapter
apply to them?
2. Why is management succession frequently an issue for
family-owned firms?
3. Beyond checklists and systemic analysis, what actions
can MNEs take to reduce risks related to terrorism? What
roles can HRM take in these processes?

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 Case: Too Little, Too Late? Siemens
Belatedly Wakes Up to Reputation Risk

1. Imagine you are in your first serious management job.

How would you react when being pressured by your
company to win an international multi-million dollar
order knowing that you can only get the deal through
bribing local authorities (your superiors would provide
you with the necessary financial and non-financial
resources to support your efforts)? Why would you have
that reaction? Be honest with yourself!
2. Browse Siemens’ homepage. Where and how does
Siemens illustrate and state its stance against bribery and
corruption?
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 Case: Too Little, Too Late? Siemens
Belatedly Wakes Up to Reputation Risk

3. In groups discuss recommendations for Siemens to

change its organizational culture in the area of anti-
corruption. What has Siemens done so far?
4. Where does Siemens stand today in its fight against
bribery and corruption? What has changed since
December 2006 in terms of Siemens’ personnel politics
at a senior management level? What have been the
consequences of these HR actions for Siemens’ fight
against bribery and corruption?

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