BUSN3025

INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Copyright 2003-2006, Chris Chan

BACKGROUND
   

Consultation: Mon 11-12pm and Tues 1-3pm 111CRISP 1069 61250386 chris.chan@anu.edu.au

Copyright 2003-2006, Chris Chan

Major differences between domestic HRM and IHRM



Business activities e.g. taxation, international relocation, expatriate remuneration, performance appraisals, crosscrosscultural training and repatriation Increased complexities e.g. currency fluctuations, foreign HR policies and practices, different labor laws Increased involvement in employee s personal life e.g. personal taxation, voter registration, housing, children s 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
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Myths about globalization

    

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

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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.

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Strategies of international, multinational, global & transnational organizations



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

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Global efficiency and local responsiveness of different types of firms

High Global efficiency Low

Global International

Transnational Multinational
High

Local responsiveness

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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
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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

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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 Twomultiplebetween headquarters  HR policies and practices are benchmarked on best international practices  International corporate culture
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Example from Japanese MNCs

Campbell, N. (1991). How Japanese multinationals work so well. Prism, 4, 61-69. Prism, 61-

1. Borderless structure and bottom-up decision-making processes bottomdecisionthat 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 management, promotion via a hierarchy of ranks, job rotation, and appraisal systems that promote hard work, commitment, and competition among peers. 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.
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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
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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 crosscrosscultural training/learning

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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 corporation s to be flexible to learn

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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)
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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
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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 inUse previous knowledge for new assignment Extremely high cost Mainly managers, not technicians
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Strategies for managing a global workforce

(2) Implement the awareness-building assignment awarenessstrategy
   

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

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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
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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
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Key learning themes



 

  

Understand the main differences between domestic HRM and international HRM Able to demystify globalization Understand strategies adopted by international, multinational, global and transnational organizations Important lessons to be learnt by global firms Understand the difficulties/challenges in IHRM Strategies for managing a global workforce
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