MA GLOBAL BUSINESS CORE COURSE IN HUMAN RESOURCE MANAGEMENT IN THE GLOBAL ENVIRONMENT Academic year 2007 - 2008

International Human Resource Strategy And Organizational Strategy

Objectives After studying this unit, you should be able to:

1. 2. 3. 4.

Observe the human resources management from a strategic point of view Consider the importance of the context in which the human resource strategy is developed Thinking about the peculiarities of human resource strategy in the international context Know the variables that affect to the degree of similarity of affiliate's human resource management system to parent´s human resource management system

Copyright © 2003 by The McGraw

References
Taylor, S., Beechler, S. and Napier, N. (1996), Toward an Integrative Model of Strategi International Human Resource Management, Academy of Management Review, 21, 4, 959-985. Noe, R., Hollenbeck, J., Gerhart, B., and Wright, P.(2002), Human Resource Management, McGraw Hill

1

HR Strategy- is the pattern of planned human Strategy resource deployments and activities intended to enable an organization to achieve its goals.

Strategic System Fit 1

HR Strategy Fit 2 Organizational Structure Fit 3 Environment

Fit 1: Strategic Fit

Corporate Strategy Business Strategy HR Strategy
Type B

Type A

HR Practices (coherence)
Performance Appraisal Job Evaluation Career Planning Training Job Analysis Staffing Reward System

2

Fit 1: Strategic Fit: Type A: HR Strategy-Corporate Strategy

Growth Corporate Strategies

International

Concentration

Organizational Growth
Diversification
• Related • Unrelated

Vertical Integration Horizontal Integration
• Backward • Forward

Fit 1: Strategic Fit: Type B: HR Strategy-Competitive Strategy

HR Role HR Role
Focus of firm Employee role Training Staffing Compensation Performance management

Differentiation Differentiation
- creative, risk-taking - broader tasks creative risk-takers - broad career paths - recruit more from outside - external pay equity - results-oriented

Cost Leadership Cost Leadership
- efficiency - specific & repetitive - specific/short-term skills - promote internally - internal pay equity - behavior-oriented

Fit 1: Strategic Fit

Corporate Strategy Business Strategy HR Strategy MKStrat. …

3

Fit 2: Organizational Fit

Organizational Structure
Decentralization Formalization Specialization Hierarchy Culture … Downsizing Outsourcing Reingeniering

HR Strategy

Fit 3: Environmental Fit

Environment

HR Strategy

Exogenous factors • industry characteristics • country/regional characteristics

Strategic Human Resource Management Strategic International Human Resource Management

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Strategic International Human Resource Management The fundamental issue users of SIHRM must address is the tension between the need for interunit linkages (integration of affiliate´s HRM System) and the challenges faced by each affiliate in order to operate effectively in its local environment (differentiation of affiliate´s HRM System).

So, we are going to focus in…

Fit 1: Strategic Fit: Type A: HR Strategy International Corporate Strategy

Model of Strategic International Human Resource Management
(Adapted from Taylor et al., 1996)

Corporate SIHRM

Affiliate´s HRM

Parent´s International Strategy

Affiliate´s Strategic Role

Method of Affiliate´s Establishment

Parent A - ffiliate´s Cultural Distance

SIHRM Orientation

Degree of Similarity of Affiliate´s HRM System to Parent´s HRM System

Top Management´s Beliefs

Model of Strategic International Human Resource Management
(Adapted from Taylor et al., 1996)

SIHRM has three main orientations: The Adaptive System – that seeks to imitate local HRM practices The Exportive System – that seeks to replicate the HRM system of the home country in host country, affiliates, partners, and subsidiaries The Integrative System – that seeks to emphasize global integration while permitting some local variation

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Model of Strategic International Human Resource Management
(Adapted from Taylor et al., 1996)

Parent´s International Strategy

Proposition 1: MNCs following a multidomestic strategy will adopt an adaptive SIHRM orientation rather than an exportive or integrative SIHRM orientation. Proposition 2: MNCs following a global strategy will adopt an integrative SIHRM orientation rather than an adaptive or exportive SIHRM orientation.

Model of Strategic International Human Resource Management
(Adapted from Taylor et al., 1996)

Top Management´s Beliefs

Top management may or may not believe that parent's HRM competence is useful beyond its national borders

Proposition 3: If top management perceives that the MNC's HRM competence is context specific, the MNC will adopt an adaptive SIHRM orientation rather than an exportive or integrative SIHRM orientation.

Proposition 4: If top management perceives that the MNC's HRM competence is context generalizable, and if the firm is following a global strategy, the MNC will adopt either an exportive or integrative SIHRM orientation rather than an adaptive SIHRM orientation.

Model of Strategic International Human Resource Management
(Adapted from Taylor et al., 1996)

Parent´s International Strategy

Proposition 5: The highest degree of similarity between the parent company's HRM system and the affiliate's HRM system will be found in MNCs following an exportive SIHRM orientation. A moderate degree of similarity will be found in MNCs following an integrative SIHRM orientation. The lowest degree of similarity will be found in MNCs following an adaptive SIHRM orientation.

SIHRM Orientation

Degree of Similarity of Affiliate´s HRM System to Parent´s HRM System

Top Management´s Beliefs

6

Model of Strategic International Human Resource Management
(Adapted from Taylor et al., 1996)

Affiliate´s Strategic Role

The greater the dependence of the affiliate on the parent company, the more the affiliate's HRM system is controlled bv HQs • global innovator: with high outflow of knowledge to the parent company and low inflow to the affiliate.Kraft • integrated player: with high outflow and high inflow.Motorola • implementor: with low outflow and high inflow.Sony • local innovator: with low outflow and low inflow.ABB

Proposition 6: There will be the highest degree of similarity between the parent company's HRM system and the affiliate's HRM system in affiliates that are integrated players. Proposition 7: There will be the lowest degree of similarity between the parent company's HRM system and the affiliate's HRM system in affiliates that are local innovators.

Model of Strategic International Human Resource Management
(Adapted from Taylor et al., 1996)

Method of Affiliate´s Establishment

Proposition 8: The degree of similarity between a parent company's HRM system and an affiliate's HRM system will be greater in affiliates established as greenfield operations than in those acquired or established as shared partnerships.

Model of Strategic International Human Resource Management
(Adapted from Taylor et al., 1996)

Proposition 9: The greater the cultural distance between the host country of the affiliate and the home country of the MNC, the less similarity between the parent company's HRM system and the affiliate's HRM system.

Parent A - ffiliate´s Cultural Distance

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Model of Strategic International Human Resource Management
(Adapted from Taylor et al., 1996)

Corporate SIHRM

Affiliate´s HRM

Parent´s International Strategy
Proposition 1 and 2

Affiliate´s Strategic Role

Method of Affiliate´s Establishment
Proposition 8

Parent A - ffiliate´s Cultural Distance

Proposition 9 Proposition 6 and 7

SIHRM Orientation

Proposition 5

Degree of Similarity of Affiliate´s HRM System to Parent´s HRM System

Proposition 3 and 4

Top Management´s Beliefs

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