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Int. J.

of Hutnan Resource Management 12:8 December 2001 I25J-I268

The changing role of the corporate


HR function in global organizations
of the twenty-first century

Milorad M. Novicevic and Miehael Harvey

Abstract The primary focus of this paper is to examine how the increased demand for
global corporate strategic consistency and flexibility redefines the roles of the corporate
human resource function and its venues of influence. In particular, we analyse possible
causal linkages among strategic international HR management, strategic leadership of
corporate top management team (i.e. TMT), and alternative global assignment options.
As globalization significantly changes not only the operating boundaries but also the
symbolic context of the global organization, we argue that corporate HR function can
play more influential roles in global organizations than it has in the past.
Keywords Global strategic human resource management; strategic perspective in
corporate HR issues; inpatriation; political aspects of SGHRM

Introduction

The globalization of business activities in multinational corporations (MNCs) has


created an increased pressure to link intemational human resource management (i.e.
IHRM) policies and practices with the firm-level outcomes (Chadwick and Cappelli,
1999). The increasing demands for modification of control and co-ordination mechan-
isms in global organizations have distinctly imposed a commensurate need for structural
changes within the headquarters human resource function of the MNCs (Roth and
Ricks, 1994). Therefore, the focal point of the corporate human resource (i.e. HR)
function in global organizations appears to be moving toward the need to design a
supporting infrastructure for managers to manage competently the complex and
competing demands for network co-ordination (i.e. consistency and efficiency) and
differentiated responsiveness (i.e. flexibility and effectiveness) in global markets (Harvey
et aL, 1999a). In addition, as these structural changes also entail heightened decentraliza-
tion of global operations, the corporate HR function faces the complex issues associated
with how to design flexible global assignments and leadership development systems
(Ricks et aL, 1990).
Recent research findings suggest that developing competent global managers is an
issue of the firm-level strategic relevance because global assignments and leadership are
increasingly becoming the primary means of differentiating the global strategic thrust of
the organization (Wieserma and Bantel, 1992). Thus, global assignments to develop
global leaders represent one of the major areas of the corporate HR management
involvement in corporate strategy formulation and implementation processes (Taylor

Milorad M. Novicevic, Assistant Professor, University of Wisconsin - La Crosse. Michael


Harvey, Dean and Hearin Chair of Global Business School of Business Administration,
University of Mississippi, University MS, USA (e-mail: mharvey@bus.okmiss.edu).

The International Joumal of Human Re.murce Matiagement


ISSN 0958-5192 prinl/ISSN 1466-4399 online © 2001 Taylor & Francis Ltd
http://www.tandf.co.uk/journals
DOI: 10.1080/09585190110083785
1252 The International Journal of Human Resource Management

and Beechler, 1993). If global leadership is to become one of the central facets of
developing global strategies, the role of the human resource function, department, and
managers must be redefined in the context of this change. To address the growing
strategic importance of leadership, companies like Gillette have implemented an
international-trainee programme that expose candidates for global assignments to
corporate planning and strategy development prior to their being transferred overseas.
As a result, 85 per cent of Gillette's global assignees come from the twenty-seven
countries in which Gillette operates. Other MNCs, such as Coca-Cola, will not repatriate
managers until there is solid evidence that they have had an impact on overseas
performance and that they have developed a global mindset.
The primary focus of this paper is to examine how the increased demand for global
corporate strategic consistency and fiexibility redefines the roles of the corporate human
resource function and its venues of infiuence. In particular, we analyse possible causal
linkages among strategic international HR management, strategic leadership of corpor-
ate top management team (i.e. TMT), and alternative global assignment options. As
globalization significantly changes not only the operating boundaries but also the
symbolic context of the global organization, we argue that corporate HR function can
play more infiuential roles in global organizations than it has in the past. This increased
influence stems from a new set of the corporate HR's roles, characterized by blended
political and strategic dimensions, which includes: the change agent of corporate
culture; the TMT's symbolic 'communicator' to other levels of the organization; senior
managers' mediator in development/career planning opportunities; and corporate TMT's
and particularly the CEO's reliable internal informal adviser (Napier et al., 1995).
Therefore, it would appear that supplementing the traditional strategic perspective with
the political infiuence perspective on the IHRM function in global organizations
provides unique insights into the emerging portfolio of roles that the corporate HR can
play in global organizations when the demands for strategic fiexibility and leadership
development are salient.
In focusing on global leadership issues, we follow Napier's (1996) recommendation
that the framework of a three-dimensional matrix (i.e. strategy, HR management,
organizational outcomes) should include a fourth element, that being the type or level
of employee affected by the other three factors (Napier, 1996: 239). Napier particularly
hypothesized that organizations that grow internally within the existing structure will
use 'transfers to promote managers to top management positions' based on subjective
selection criteria, whereas the firms that diversify and acquire other firms will tend
to draw upon the 'new' insiders using objective selection criteria. However, as the
corporate growth in the global context is increasingly becoming a mixed-mode growth,
management-staffing processes has become political in nature, thus opening an
opportunity for a new role for corporate HR infiuence and/or power. Therefore, we will
analyse the corporate HR roles within the combined strategic and political infiuence
perspective (Ferris et al., 1995) by examining both the political and strategic forces
driving global staffing and leadership development policies and practices. In particular,
we will focus on the implicit infiuence of corporate HR on the design and imple-
mentation of global management staffing policies and practices to supply an adequate
number of managers to implement the explicit corporate initiatives.
In the first section of the paper, we examine a strategic perspective on corporate HR
roles in global organizations. We address the problems of control and co-ordination
faced by corporate TMT as the firm globalizes its activities. Also, we examine the
role of global management staffing in integration of control and co-ordination in a
decentralized global organization. In the second part of the paper, we explore the
Novicevic and Harvey: Changing role of corporate HR 1253

relationship between TMT and corporate HR from the perspective of political influence
theory. In the final part, we integrate the strategic and political perspective to devise
specific alternative means of corporate HR political influence on global strategic
leadership and management staffing choices. We conclude that this influence may result
in a beneficial homogenization of 'best practices' in the global organization.

Strategic perspective on tbe corporate HR roles in global organizations

The international human resource literature appears to have not focused on the issue of
how the transition from the multi-domestic MNC to a global integrated/co-ordinated
network can affect the change in roles of the corporate HR function (Napier et aL,
1995). However, it is becoming clear that the increasing difficulty in staffing a global
organization with competent leaders has put significant pressure on the corporate human
resource function to elevate its corporate relevance for the TMT's strategic leadership
and better relate its output to the firm performance (Wright and Snell, 1998). These
new, latent in nature and global in scope, roles of the corporate HR function in a MNC
are different from its traditional organizational roles in administering HRM programmes
and processes involving identifying, selecting, training/developing, compensating, and
appraising managers assigned overseas (Tung, 1994; Huselid et aL, 1997). Specifically,
the increased emphasis on the globalization of corporate leadership through 'advice
networks' (Athanassiou and Nigh, 2000) has given rise to the importance of corporate
HR role in the global context and its influence on strategic staffing and leadership
development policies and practices (Harvey, 1996). For example, the corporate HR
function in 3M takes a competency approach to the selection of global assignees that
focuses on the level of unique skills that each candidate has and then attempts to fit
these competencies to the dimensions of the environment and task in the overseas
assignment.
In a functionally organized, as well as in multi-domestic MNCs, it might be possible
to achieve a specific system 'fit' of HR management to the corporate strategy (Schuler,
1989; Wright and Snell, 1998). However, due to the multi-level globalization of
organizational processes, the concept of this fit linkage has become elusive (Wright and
Sherman, 1999). In a co-ordinated global network, rather than emphasizing the
relevance of the behavioural 'fit', it would appear more appropriate that the emphasis be
placed on the competence of HR management (Kamoche, 1997), as espoused by the
resource-based view of the firm (Taylor et aL, 1996). The resource-based view of
strategic international human resource management (i.e. SIHRM) opens the potential of
emphasizing the organizational capability derived from the diversity of linkages in the
various organizational configurations utilized in global organizations (Snell et aL,
1996). For example, Hewlett-Packard takes a global account management perspective
in matching assignee competencies and maintaining consistency on a global strategy
bases regardless of the number of countries where their key accounts are. Global
account management attempts to balance the need for consistency (i.e. with key
accounts) with the adaptation to local market demands. Therefore, the executives
utilized on these global account management teams have a global mindset and at the
same time recognize the need for unique strategies for individual countries.
Although the resource-based SIHRM models can frequently capture the form of these
linkages, they lack the explanatory power relative to the content of the linkages (i.e.
how, why and when they occur). Most empirical research supporting the resource-based
view of SIHRM has tended to focus on associating the industrial relations strategy and
1254 The International Joumal of Human Resource Management

its macro relationship of the high-performing fiexible practices with the firm's
performance indicators (Huselid, 1995; Becker and Gerhart, 1996). Though, clearly, the
decisions related to employee relations and development have firm-level ramifications
(i.e. training intensity, employment selectivity, union recognition, job grading, effective
compensation/benefit system, labour force fiexibility policies, and appropriate level of
collective bargaining), it is difficult to assess the significance of these factors for the
strategic management process in a global organization (MacDuffie, 1995).
In summary, the strategic perspective on the HR function leaves an array of questions
unanswered relative to the corporate HR roles in a global organization, particularly
those along the lines of the headquarters-subsidiary relationships. The questions, that
would appear to have major implications, include:

1 How do the processes of global diversification and the trade-offs in global integration
(i.e. efficiency) and local responsiveness (i.e. effectiveness) affect the headquarter-
subsidiary HR management relations?
2 What are the forms of the fit and fiexibility in the headquarters/subsidiary HR man-
agement relations that complement the strategic options in a global organization?
3 How can the corporate HR function exercise an effective infiuence over the sub-
sidiary practices in the global context?
4 How do various institutional and cultural constraints affect the corporate HR design
of the strategic global staffing policies and practices? (Ferris et al., 1999).

We address the complexities of these specific strategic issues in the following section.
In this analysis, we focus on the TMT headed by CEO as the primary 'customer' of the
corporate HR function. The TMT-focus of the corporate HR function arises from the
non-specific and non-competitive nature of the corporate HR's relationships with other
stakeholders of a global organization.

Strategic role of corporate TMT in controlling and co-ordinating activities in a


global organization

The growing globalization of competition has increased a global leadership dilemma,


which is how to design optimal governance mechanisms to resolve the tension between
the needs for the global integration among operating entities and those for local
responsiveness (i.e. how to achieve 'contextualization' in the global strategies to
compete effectively at the local market level) (Hamilton and Kashlak, 1999). The
Gillette Co. has attacked this problem by ensuring that 80 per cent of its TMT members
have extended international experiences. By doing so, Gillette feels that they will better
understand the need for a global perspective in the HR function. In Gillette's case, this
global mindset development is of particular importance because Gillette operates in
200 different markets, which challenge the TMT's leadership attempts to maintain
consistency in the differentiated approach to each market. To maintain this consistency,
the optimization of formal and informal control modes designed by the headquarters
should resolve the problem of achieving the desired performance levels while support-
ing efficient co-ordinating efforts to induce cooperative behaviours among the globally
networked subsidiaries (Gupta and Govindarajan, 1991). The balancing of control
modes puts an increased demand for an agile strategic leadership supported by fiexible
co-ordination of differentiated activities in the global network (Harvey, 1996). To
provide for the firm strategic fiexibility and global leadership, the TMT in a global
Novicevic and Harvey: Changing role of corporate HR 1255

organization should enhance its global mindset by diversifying the membership of its
intemational assignees (Harvey et ciL, 1999b). As the cultural diversity of global
assignees may contribute to the development of performance-enhancing global capabil-
ities, the appropriate strategic global staffing policies and practices should support a more
multicultural network of assignees (Dulfer, 1998).
The increase in cultural diversity among the global assignees in MNCs could provide
benefits for the control used over subsidiaries (Harvey and Buckley, 1997). In general,
the control benefits of the assignees' cultural diversity depend on the internal and
external conditions that create sources of uncertainty in the allocation of resources by
the headquarters' TMT. The internal sources of uncertainty for the TMT include: the
size of the global organization; the extent of its global diversification; and the extent of
interdependence among its business units. Whereas, the external sources of uncertainty
for TMT are: the perceived attractiveness of specific host country market and the
perceived country risk of host markets (Gencturk and Aulakh, 1995; Roth and Ricks,
1994).
MNCs typically design appropriate administrative mechanisms of formalization and
centralization to mitigate uncertainty engendered by the internal and external sources,
and thus increase the efficiency of the TMT's control (Roth et aL, 1991). Formalization
provides explicit norms (i.e. such as rules and procedures) of desirable behaviour (Roth
and Morrison, 1990), whereas the centralization e.stablishes legitimacy of the decision-
making authority through a hierarchical design of governance. However, these 'hard'
administrative mechanisms are generally not sufficient because, in addition to the
explicit internal/external sources of uncertainty in a global organization, there are many
latent sources of uncertainty in the decision-making environment (Pfeffer, 1989). These
sources of uncertainty require 'soft' personnel control, which in turn requires prior
development of global staffing policies and practices (Tung, 1987). When developing
these policies and practices, MNCs have traditionally resisted decentralization of global
assignments and have relied on the centralized practice of expatriation of home country
personnel (i.e. expatriates) as the primary solution for appropriate control mechanism to
mitigate uncertainties in foreign markets (Napier et al., 1995).
Besides the support of the 'soft' control accentuated by globalization, an effective
TMT's global strategic leadership needs the development of the co-ordination
capability that is necessary for rationalization of reciprocal activities in a global net-
work organization (Nohria and Ghoshal, 1994). The co-ordination capability helps
integrate reciprocal interdependencies between the headquarters and subsidiaries as well
as among the subsidiaries in the global network by securing consistency in the
associated functional activities. The co-ordination in a global organization becomes
more efficient if the TMT members and the subsidiary top managers share a common
strategic philosophy and vision about the resources contributing to the firm's com-
petitive advantage (Harvey et aL, 1999c). In addition, the efficiency of the global co-
ordination increases if the geographic configuration and flow of the firm's resources
match the organization's unique strategic positioning (Kogut, 1985). However, it is
extremely difficult to efficiently map the globally distributed specific capabilities into
the co-ordinated set of strategic activities. Moreover, it is highly challenging for
expatriates to capture the context-specific efficiencies of this resource-activity mapping
critical for global strategy implementation. Therefore, global assignments and leader-
ship development activities, designed by the corporate HR function, should go beyond
expatriation to support the TMT's strategic leadership in a global context and insure an
efficient integration of control and co-ordination in the global organization.
1256 The International Journal of Human Resource Management

The role of global staffing in integration of control and co-ordination in


global organizations

The integrating personnel mechanisms, that may improve control and co-ordination
under the conditions of uncertainty engendered by globalization, include strategic
global staffing, global task forces and oversight committees (Taylor and Beechler,
1993). The positive externality of these mechanisms is an array of informal relation-
ships among the members of these entities that are developed over time. These
integrating mechanisms are intended to develop into the 'soft' structures within global
organizations, which function both as informal control monitoring devices and as co-
ordinating 'inducers' of subsidiary collaboration and competition for strategic projects
(Birkinshaw and Hood, 1999). The process of lateral integration in a global organiza-
tion is facilitated if the global assignees help the corporate and the subsidiary TMTs
share the same strategic logic in their operating philosophies and orientations (Dowling
et al., 1999). Specifically, these integrating mechanisms can enhance the shared mindset
in the global organization by increasing the level of trust in the network as the reference
point of trust is shifted to subsidiaries. Therefore, the global staffing solutions for co-
ordinating roles in lateral integration have increasingly been assigned to 'inpatriated'
local and third country nationals usually carefully selected within the organization's
network and intensively developed at the regional and/or corporate levels (Harvey and
Buckley, 1997). Eventually, the inpatriates who are successful in globalizing corporate
initiatives may become candidates for the TMT openings in the future (Harvey et al.,
1999a). In this way, the level of cultural diversity in the MNC is raised to favourably
influence the perceptions of procedural justice among the constituents of the global
organization (Bartlett and Ghoshal, 1995).
The strategic global staffing issues, which infiuence the design of these complex
integrating mechanisms, are supposed to be resolved through the global leadership
development programmes that are necessary to help managers master the complex
control and co-ordination tasks in global assignments (Harvey et al., 1999c). In many
ways, the staffing choices for individual assignments and global teams depend, most of
all, on the nature of the assignment (i.e. the location and purpose of the assignment), as
well as on the specific task of controlling and co-ordinating multiple interdependent
activities associated with the TMT's strategic choices. Particularly, the task complexity
of lateral integration among the subsidiaries is most affected by the firm's extent of
related global diversity of goals and strategies (Gomez-Mejia, 1992). The global diversity
in the organization's operations is a combined measure of the firm's product diversifica-
tion and global market diversification (Hitt et al., 1997). International diversity of
operations is conceptualized as the firm's expansion across borders into new geographic
markets (Prahalad and Doz, 1987), whereas product diversification is defined as expan-
sion into new product markets (Yip et al., 1997). Empirical findings have supported the
hypothesis that the performance of a globally diversified firm is a quadratic function of
the extent of its product diversification and is moderated by the extent of the number of
country markets in which it is conducting business simultaneously (Vachany, 1999).
However, this relationship is also moderated by risk that needs to be controlled and co-
ordinated throughout the organization (Roth and Ricks, 1994).
Managing these complexities of a globally diversified firm under the conditions of
growing global hypercompetition is a unique challenge for both TMT and human
resource management (Murtha et al., 1998). The top management must search for
appropriate ways to effectively manage across the new emerging country markets in
order to create a sustainable competitive advantage, while the corporate HR must
Novicevic and Harvey: Changing role of corporate HR 1257

support effectively these efforts. Past research findings, suggest that product and market
innovations and strategic flexibility are critical for creating sustainable competitive
advantage as global organizations increasingly shift their organization design toward
the integrated/co-ordinated network form of organization (Hedlund, 1986).
The integrated global networks, which require the development of a transnational
capability through the effective personnel-based horizontal co-ordination, attempt to
maintain a positive linear relationship between international diversification and both
innovation and firm performance (Hitt et aL, 1997). In this view, global diversity,
supported by personnel-based control and co-ordination mechanisms, may produce
superior firm performance because of increased economies of scale and scope, enhanced
learning and innovation, and effective exploitation of core competencies (Tsang, 1999).
These processes enhance the firm's dynamic capability to appropriate returns from
innovation in the global context. However, the problem of a globally diversified firm is
that these value-adding processes are also accompanied by geometrically increasing
costs of lateral co-ordinating because of institutional and cultural constraints imposed
on the personnel-based control and co-ordination mechanisms (Ghoshal and Bartlett,
1995). Therefore, the solution to the problem of efficient control and horizontal co-
ordination may require that the corporate TMT has to increase the firm stock of trans-
cultural and transnational competencies to maintain a differentiated fit in managing the
decentralized global firm (Bartlett and Ghoshal, 1989). In other words, an efficient
lateral co-ordination requires the decentralization of the TMT's informal authority.
The primary problem in managing horizontal collaboration in a global organization
is in co-locating the centralized decision rights with the decentralized specific/tacit
knowledge (Jenssen and Meckling, 1999). Any co-location solution requires a trade-
off between costs and benefits of decentralization. Specifically, decentralization (i.e.
delegation of autonomy to subsidiaries) sacrifices the efficiency of strategic control and
co-ordination (Prahalad and Doz, 1987) whereas, centralization (i.e. retention of the
headquarters directed hierarchy) sacrifices the effectiveness of responsiveness and
innovativeness (Engelhoff, 1988). The strategic leadership of the TMT members and
the effectiveness of the employed personnel integrating mechanisms determine how far
the limits of the decentralization can be set in terms of the governance costs. The trade-
offs associated with the decentralization (i.e. delegation of TMT authority) in a global
organization determine the level of uncertainties engendered by the extent of related-
ness in global diversification.
A number of case studies reported by Ghoshal and Bartlett (1995) have shown that
globally diversified firms' success depends on the corporate HR's capabilities to design
and employ efficient differentiated and multicultural management system across sub-
sidiaries. In particular, the horizontal integration among subsidiaries requires a dis-
tributed global leadership and project groups to develop the informal lines of horizontal
co-ordination, relationships and shared values, while maintaining vertical control. There-
fore, it would appear that an adaptive and transcultural management system requires that
the vertical control mechanisms are mostly staffed by expatriates, whereas the horizontal
co-ordination mechanisms are mostly staffed by inpatriates (Harvey et aL, 1999c).

Political perspective on tbe relationsbip between TMT and corporate HR


management in global organizations

The tendency for TMT to be conservative in decentralization, thereby emphasizing its


formal corporate authority in the form of 'soft' control over subsidiaries, carries specific
consequences for the subsidiaries' top managers (Hamilton and Kashlak, 1999).
1258 The International Journal of Human Resource Management

Specifically, the consequences affect the subsidiary top managers' compensation and
reputation, which are contingent to a degree to the subsidiaries' financial performance
as well as other strategic goals established by corporate TMT for each subsidiary
(Birkinshaw and Hood, 1999). Therefore, strategic staffing of subsidiary's executive
positions strongly infiuences both the success/failure of TMT initiatives and the
reputation and career progression of specific subsidiary executive. This 'strong'
situation of competing values represents a heightened organizational problem for the
corporate HR when selecting the appropriate base (i.e. parent organization or the
subsidiaries) to design an adaptive global staffing system (Harvey, 1996).
The growing relevance of the global operating context for corporate actions mandates
not only the new roles of the corporate HR function but also the corresponding global-
ization of the corporate HR manager's task domain (Harvey, 1996). First, the corporate
HR manager needs more frequent face-to-face and indirect interactions with the HR
managers in subsidiaries to properly assess the contextual relevance of staffing options.
Second, the corporate HR manager has to become not only an efficient bureaucratic
administrator in assessing the proper global staffing solutions but also an entrepreneurial
promoter of corporate staffing policies. Third, the corporate HR manager's initiatives
not only have to project this co-operative global dimension but also have to separate it
from the administrative demands of impartiality when comparing managerial and labour
performance and cost across countries. Finally, the corporate HR manager has to create
specific direct and proactive political venues of infiuence on subsidiaries by bridging
and/or buffering certain TMT-subsidiary confiict relationships.
This corporate HR political contribution to the TMT's global strategic leadership
can be most effectively achieved through a proactive support of global management
development programmes and experiences for the headquarters' and subsidiaries' senior
managers who are candidates for or are already involved in global assignments. The
smoothly programmed fiexible transfer of senior managers across subsidiaries/cultures
necessitates that the corporate HR's staffing policy criteria are tangible and explicit.
Moreover, corporate HR support for global management development becomes particu-
larly valuable if implemented through the subsidiaries' training and development
departments (Tsang, 1999). In the following section, we develop a theoretical explana-
tion for the new venues of political infiuence of the corporate HR function in global
organizations.

Political influence theory to explain the increasing influence of corporate HR


in global organizations

The political infiuence perspective, proposed by Ferris and Judge (1991), may be an
appropriate frame to explain the new venues of corporate HR infiuence in global
organizations. This perspective brings into question the inherent artificiality of the
stand-alone rational strategic international HRM model, which assumes the possibility
of maximizing both of individual and organizational outcomes across borders through
the elusive concept of 'organizational fit' (Judge and Ferris, 1992). Ferris and Judge
(1991) argue that the supplementary 'issues of competing interests, power and politics'
should be taken into account to explain the subjective evaluative reality of fit in the
global organization. They define political infiuence as 'deliberate attempts to manage or
control the meaning shared by others' in the organization (Ferris and Judge, 1991: 449).
The shared meaning is a socially constructed aspect of the organizational reality in
which the standard strategic factors such as competence, performance and fit are not
assumed because of their subjective evaluative nature (Frost, 1989). In this perspective.
Novicevic and Harvey: Changing role of corporate HR 1259

the political influence in a global organization can be viewed as a value-neutral, specific


form of social influence achieved by the use of symbolic means (Jennings, 1994).
In a co-ordinated global network, political influence is manifested as a rivalry, which
takes place among the competing interests of the influential actors in the headquarters
(i.e. HQ) and subsidiaries (Ferris et aL, 1992). The most critical areas of the interests
relative to this latent competition include: strategic management staffing; managerial
career mobility, and managerial compensation (Galang and Ferris, 1997). First, the HQ
coalitions differentiated on the basis, for example, functions, nationality and demo-
graphics often compete over the rules and decision criteria for global management
staffing. The winning HQ coalition then needs the alliance of the corporate HR to have
the management staffing system designed so that the coalition's interests are incor-
porated in the critical selection criteria. Second, competing interests at the firm level,
manifested in the management of the shared meaning, exercise influence over informa-
tion and decision criteria related to performance evaluation systems in the subsidiaries.
The outcome of these processes forms the performance evaluation context within which
corporate and subsidiary HR functions interact to manage the meaning attached to the
appraised performance of each individual subsidiary. Third, internal labour market for
international assignments and advancement opportunities toward the 'high potentials'
circle are applicable for political influence (Ferris et aL, 1995). In this domain, the
interests of the HQ coalitions can become influential and inclined to preserve the status
quo through symbolic control of the corporate HR decision criteria which frequently
favours social reproduction through perpetuation of expatriation practice (Dipboye,
1995).
The most sensitive aspect of managerial career mobility and advancement, where the
political influence perspective becomes relevant at the firm level, is centred on the TMT
succession planning process (Ferris et aL, 1992). The possible outcomes of the TMT
succession are normally left silent but are informational concerning the dominant HQ
and subsidiary coalitions' intents that wield the most influence over time (Galang and
Ferris, 1997). The dominant interests in the headquarters attempt to ensure perpetuation
of their control through succession/promotion of individuals supportive of those
interests by raising the important political issue of 'cultural fit' in global management
staffing decisions. Finally, political influence is particularly prominent in compensation
system decisions both at the corporate and business levels (Pfeffer, 1989). Compensation
systems involve allocation of scarce resources and thus are the subject of competing
interests over the allocation decision criteria, particularly when long-term compensation
elements like stock option and pension plans, that are dependent upon various national
regulations, are addressed.
In summary, the political influence perspective of the corporate HR role in a global
organization is supplementary to the rational strategic perspective (Ferris and Judge,
1991). Specifically, the rational strategic perspective focuses on the importance of the
structure to control activities and secure the preservation of trust and co-operative
interests against opportunism in global organizations. In contrast, the political influence
perspective focuses on the importance of the process and the influence of competing
interests on the collaboration and conflict in global organizations (Ferris et aL, 1999).

Alternative means of corporate HR political and symbolic influence in


global organizations

Supplementing the strategic perspective with the political influence perspective implies
a meta-theoretical view of corporate HR influence at the boundary between the
1260 The International Journal of Human Resource Management

functionalist and interpretative paradigms. From this view, which assumes the
significance of social context (Ferris et al., 1999), we need to offer answers to the
following critical research and pragmatic questions: firstly, how does the political
influence of corporate human resource moderate the relationship between the TMT
strategic choices and the management staffing alternatives in globally diversified
organizations? Secondly, what are the possible beneficial outcomes from this corporate
human resource infiuence?
To articulate possible answers to these research and practical questions, we first need
to provide a realistic preview of the traditional operating role of corporate HR in a
MNC. First, the traditional area of technical and administrative responsibility for the
human resource management function appears to be too narrow to infiuence the firm-
level strategic decisions (Baron and Kreps, 1999). Second, the popular argument of HR
effectiveness lacks both formal and practical legitimacy to enhance the corporate HR's
marginal image of being commonly perceived as a mere derivative of the corporate
strategy implementation (Galang et ai, 1999). Third, HR managers are usually isolated
from major global strategic decisions unless some industrial relations-specific issue,
such as union contract negotiation/administration, is involved (Schuler, 1989). Fourth,
even in the cases of comprehensive corporate change, such as cross-border mergers and
acquisitions, the IHRM-related strategic decisions are made post hoc (Jennings, 1994).
Finally, IHRM issues, even when strategic, are not considered by TMT to belong to
strategy formulation but strategy implementation phase; and even then, only within a
narrow scope of country-specific employment implications, such as those related to
corporate difficulties with bargaining situations (e.g. major lay-offs) (Russ et al., 1998).
Therefore, it may be anticipated that the utilization of SIHRM structure in organ-
izations globalizing their effort will not adequately address the unique requirements of
a network organization. Rather, it is envisioned that a global human resource leadership
system will be required to meet the challenge of global competition in the twenty-first
century (Harvey et al., forthcoming). The primary difference between these two HR
systems is the ability of global HR leadership to address effectively the need to co-
ordinate global processes with the fiexibility to allow the adaptation of the processes for
local subsidiaries. The development of global HR leadership system will allow for the
TMT and local subsidiary managers to effectively co-ordinate the distribution of
political infiuence to develop/implement HR policies that are globally efficient (i.e.
co-ordinated) and sometimes effective (i.e. adapted) to the unique needs of subsidiaries
in various country markets (Harvey et al., 1999a; Harvey et al., 1999b; Harvey and
Novicevic, 1999).
To be an effective and relevant actor in an leadership-driven globally diversified
organization, the corporate HR has to redefine its traditional role of the bureaucratic
administrator or the quasi-strategic partner of TMT and become an effective political
'infiuencer'. Specifically, corporate HR has to identify and establish new effective and
relevant venues of its infiuence that are related to the firm global strategy. Establishing
the new means of corporate HR infiuence requires taking part in certain discrete firm-
level choices of political relevance to the strategic global leadership role of TMT in the
following areas: venues of infiuence in strategic global orientation; venues of infiuence
in strategic global staffing; venues of infiuence in strategic worldwide configuration
of competencies; and venues of infiuence in strategic labour bargaining in the global
context (see Figure 1).
These corporate-level choices can have a powerful political relevance to the corporate
TMT and subsidiaries' TMTs because they infiuence the boundaries of responsibility
and liability along the vertical levels and horizontal interfaces of the organization. In
Novicevic and Harvey: Chatiging role of corporate HR 1261

Corporate HR
Influence
. Venues of Influence
in Strategic Global
Orientation
2. Venues of Influence
in Strategic Global
Staffing
3. Venues of Influence
in Strategic
Configuration of
Competencies
4. Venues of Influence
in Strategic Labour
Bargaining

Global Orientation of Strategic Human Global Management


Corporate Strategic Resource -^—•-
Staffing Alternatives
Leadership (TMT) Management System

Figure 1 Model of corporate HR infiuence in global organizations

particular, when coupled with the financial controls, these critical choices influence the
activities at the business level, which affect the competitive advantage creation. The
first venue indicates that corporate HR must find a way to make a substantial
contribution to the TMT strategic orientation in global strategic issues. Whereas, this
contribution will be modest in the multi-domestic MNC, it is likely to be significant in
the global organizational context. The second venue of the corporate HR influence falls
in the domain of strategic global management staffing. Whereas, staffing is content-
related (staffing with functional or generalist managers) in multi-domestic MNCs, it is
process-related in global organizations (staffing with managers possessing cross-
functional knowledge). The third venue of the corporate HR influence, strategic con-
figuration of competencies, refers to the flexibility and responsiveness of the integrating
mechanisms to enable and co-ordinate the development of specific capabilities within
and among subsidiaries. This process of lateral co-ordination could be politically rele-
vant to the corporate HR when identifying and selecting inpatriate candidates for
corporate TMT succession planning. The fourth venue, strategic relevance of the level
of labour bargaining, depends on the specific national labour-related regulations and
may require a differentiated approach to country-specific policies on the global basis.
Of all these areas of potential corporate HR influence over subsidiary practices, the
most politically sensitive area is that of creating the internal labour market for global
managers, particularly its segment related to the career ladders toward TMT positions
in the parent organization. In this domain, the subsidiary (i.e. business unit) executives
and senior managers, with career orientation toward upper firm echelons, may be
rationally prone to emphasize subsidiary cost minimization strategy at the cost of
innovation in order to meet the tight financial control requirements set up by the TMT.
To prevent such short-term focus, the corporate HR must design the appropriate
appraisal and compensation criteria with bonuses for supporting lateral integration
efforts. If successful, this practice of induced horizontal co-ordination could make the
subsidiary executives' position central to the parent organization and the TMT would
potentially heavily invest in their development initiating for them specific opportunities
1262 The International Journal of Human Resource Management

for future promotion and possible successful inclusion in the corporate TMT member-
ship. As a result, the corporate HR has an opportunity to increase its political influence
and become a 'voice' venue in the subsidiary managers' career progression process.
Therefore, the corporate HR may become politically very influential across the man-
agement layers of the global organization.

Proposition I: The more salient the corporate HR's political influence in strategic
global orientation, staffing, configuration of competencies, and bargain-
ing, the greater the effect of the TMT's strategic leadership on global-
ization of the MNCs HRM system.

As a boundary condition, however, we need to explain why the globalization of the firm
strategy is a necessary condition for corporate HR to attain the position of political
influence. Specifically, we need to answer two critical questions: why is the corporate
HR role of low strategic relevance in a multi-domestic MNC, but it may be of high
strategic relevance in global organizations? (Harvey and Buckley, 1997); and why does
the corporate HR in a multi-domestic MNC have a form of downsized bureaucracy
whose destiny depends on its administrative ability to survive? (Stewart, 1995). First,
the corporate HR in a multi-domestic MNC does not have a defined corporate role in
tangible, bottom-line terms. Second, the traditional corporate HR operating policy-laden
influence on subsidiaries has little appeal as the centralized source of power because the
global decentralization and diversification processes in the consumer-centred global
economy push the operating power centre toward subsidiaries' HR departments.
Finally, corporate HR is often viewed by subsidiaries of a multi-domestic MNC as an
unnecessary 'burden cost' because it may often merely duplicate the operating function
of the subsidiary HR departments. However, in the global model, the corporate HR role
becomes of greater importance because of its often-indispensable political support to
the process-focused informal control and co-ordination in achieving lateral integration
among subsidiaries. In particular, when the corporate TMT of a global organization
searches for informal forms of influencing co-operative interdependencies among
subsidiaries, corporate HR can significantly contribute to the development and main-
tenance of these innovative types of co-ordination and control.
The very important political tool of the corporate HR's informal influence in a global
organization is the back-up infrastructure utilized by the integrating mechanisms, which
enables the worldwide dispersion of corporate culture (i.e. the transnational infra-
structure for efficient functioning of task forces, interlocking boards and oversight
committees). Specifically, the communication channels and media are critical for the
effective corporate culture dispersion throughout the global network. For example, the
corporate HR-implemented intranet may sometimes be the most infiuential medium.
The intranet-placed HR messages may take the form of informal web-memo summaries
of guiding principles, which implicitly communicate the TMT view of corporate values
in the mission-related terms. These generalized symbolic policies may have a powerful
signalling influence on subsidiaries indicating which practices are and which are not
viewed as acceptable by the corporate TMT. This means that corporate HR, capable of
skilfully communicating and brokering the strategic ambiguity in these informal general
policies, may acquire a powerful referent base of political power in the global network.
The power of such signalling messages is derived from their projected meaning
designed to emphasize the achievement of consensus among subsidiaries rather than to
serve as centralized TMT's instructions (see Boyd and Begley, 2000, for a compre-
hensive field research on the high-tech MNCs' practices of incorporating worldwide
input into the corporate HR policy making processes).
Novicevic and Harvey: Changing role of corporate HR 1263

As a mediator of the TMT signals, the corporate HR management may build specific
political capital by managing the means of influence and thus provide a 'weak tie'
among the subsidiary career-oriented executives and HR managers. The corporate HR
manager may also choose to initiate reverse prototyping of these signals by informing
the corporate TMT on the emerging hurdles in the achievement of potential consensus
across subsidiaries. This informal advising can be grounded upon the previous informal
interactions with the corporate co-ordinators who have participated in the meetings of
interlocking directorates and personnel committees. It would also be tactically wise for
the corporate HR to advise the TMT when to include in its co-ordination meetings the
career-oriented and promising subsidiary line managers who are eager to qualify for the
TMT-approved quotas in the executive development programmes and corporate career
tracking databases. This strong influential base of the corporate HR referent power in a
global organization could be maintained if the corporate HR manager succeeds in
building an informal constituency (i.e. .social capital) among subsidiary senior managers.
The symbolic positioning of the corporate HR as their 'voice venue', influential to
capture the attention of the upper firm echelons, can pool this constituency. The reverse
direction of this venue of the corporate HR political power could be built by enhancing
the corporate HR image in the eyes of the subsidiary managers to perceive it as the
competent disseminator of accepted corporate professional standards. However, the
success of this political tactics of corporate HR highly depends upon the initial build-up
of the critical mass of constituents among international assignees who originate from
foreign subsidiaries.

Proposition 2: A positive interaction of strategic and political dimensions in the corpor-


ate HR's efforts to globalize the MNC's HRM system will increase the
diversity in global assignment and leadership development alternatives.

Tbe role of inpatriate managers in implementation of corporate HR influence

The increasing corporate HR power base of political influence rests primarily in the
globally dispersed informal managerial networks (Athanassiou and Nigh, 2000). This
influence must be sustained and integrated by frequent communication and symbolic
interactions during formal regional and corporate training and development pro-
grammes for the high potential senior managers form the headquarters and subsidiaries.
Besides having the formal function, these programmes can also have an informal
function of facilitating the prototypical socialization of promising managers into the
corporate upper echelons. Within this informal function of the development pro-
grammes, on the one hand, the senior managers from around the world leam to exchange
their local/regional experiences and initiatives interpreting and labelling them in terms
compatible with the TMT initiatives. The informal function of the programme is, on the
second hand, to communicate the corporate TMT attitude and approach to the emerging
issues deserving managerial initiative. A politically beneficial role of the corporate HR
manager is to engage in this informal function as a moderator and motivate the
subsidiary managers to propose how they would implement and/or innovate specific
corporate initiatives in other subsidiaries.
The regional and corporate programmes are particularly important for the social
capital development and networking of young promising intemational managers. This
is an opportunity for the corporate HR manager to influence young managers'
expectancies about the company's goals and introduce them to the influential corporate
managers during the development programmes. By becoming an embedded information
broker or 'bridge of influence' in these managerial informal networks, the corporate HR
1264 The International Journal of Human Resource Management

manager can assess the expectancies of the upward-progressing managers coming from
multiple nodes in the global network. In effect, these expectancies will later become
reinforced and socially controlled by the implicit norms embedded in the network
through cultural forms of influence exerted by the corporate TMT through the corporate
HR mediation. Such an ex ante political infiuence of the corporate HR on the young
'fast track' global managers from around the world may also beneficially contribute to
the success of their future international assignments.
In this way, the dense venue network of corporate HR infiuence may secure that the
main carriers of the cultural norms in the TMT initiatives become the global assignees
coming from foreign subsidiaries. Their emerging primary role is less that of traditional
subsidiary monitoring and reporting to the headquarters, but more that of transferring
knowledge, skills and expertise across the global network. These globally mobile
'transpatriates' are continuously 'expatriated' from their homelands and also 'inpatri-
ated' through the parent organization-sponsored socialization process (Harvey et al.,
1999c). For example, a globally mobile manager who has successfully implemented a
TMT initiative in one subsidiary may be transferred as a corporate entrepreneur of that
initiative in another subsidiary. The careers of the 'transpatriates' are shaped by their
continuing acquisition of new competencies as well as by their reputation built on their
successful completion of strategic projects when championing the corporate TMT's
global initiatives.
Using the metaphor of top professional golf players, these global 'lead' managers
can be viewed as high-impact players competing in the multinational tournaments for
global reputation. The corporate TMT-influenced and corporate HR-implemented
'tournaments' serve the function of building interpersonal and interorganizational trust
in the global network based on the reputation of these champions. The inpatriate
champions thus become knowledgeable agents of organizational isomorphism of the
'best practices' in the global network. Such global management staffing and develop-
ment practices may create socially complex, rare, inimitable, and non-substitutable
organizational and human resources capable of creating competitive advantage. In
the last instance, but far from the least importance, they embody the implicit TMT-
communicated vision of the global cultural control and co-ordination (Harvey and
Buckley, 1997).

Conclusion

In summary, the corporate HR influence in the global organization of the twenty-first


century is envisioned to take a form of specific political venues with strategic
ramifications. These venues of the symbolic political power of corporate HR provide
various opportunities for the corporate HR to socially construct its global strategic
relevance as a subsidiary resource. In the use of the venues of its influence, the
corporate HR strives to achieve its ultimate goal - to complement the corporate TMT
efforts to elicit homogenization of best practices in the global organization while
preserving the specific capabilities and responsiveness of individual subsidiaries.
The responsiveness of the subsidiaries to corporate HR influence is motivated by
their competition to become the regional centres of excellence in the global organiza-
tion. This competition necessitates the corporate HR-brokered cues on the TMT views
of best practices. The corporate HR influence is further reinforced by the corporate
TMT-rcferent comparison of subsidiary compliance to hard and soft norms promoted by
the focused corporate strategy and culture. These venues of the corporate HR influence
may thus contribute the successful institutionalization of corporate culture of shared
Novicevic and Harvey: Changing role of corporate HR 1265

values across subsidiaries. The corporate HR symbolic actions help the subtle repro-
duction of corporate culture by supporting the isomorphism of best practices transferred
by the global teams led by international assignees. In effect, the global staffing policies
and practices increasingly rest on inpatriates, who are championing TMT initiatives
through lateral co-ordination as potential candidates for the corporate TMT succession
planning.
Practices of many MNCs go beyond global management staffing toward global
employee involvement. For example, Dow Chemical started developing its specific
global HRM system, branded as 'People Success', in 1992. Dow installed 35,000 global
workstations that gave all employees across the globe open access to the same
databases. This system, which supports Dow's business strategy implemented through
a global network structure, provides to all employees opportunities governed by the
same principles and values. As now Dow's world-wide-spread employees have greater
freedom to plan and control their careers, the primary responsibility for personal
development is shifted to employees by the global HRM system.
At Dow, people have opportunities to enhance and develop various acquiring,
applying, leveraging, and visioning competencies over time. The identified eight global
competencies (i.e. in addition to specific competencies for the function) include
initiative, innovation, interpersonal effectiveness, leadership, learning, market focus,
teamwork, and value creation. As a result, Dow's global HRM system has moved to a
competency platform. The most important feature of Dow's global HRM competency
platform is its open access nature to previously confidential information/knowledge.
This increased global relationalism in knowledge sharing forces managers to focus on
leadership within the multiple contingencies of the global HRM system.
In summary, to enhance the strategic flexibility of the corporate TMT global
orientation, the committing yet flexible influence of corporate HR in a global network
organization depends upon the development of a global HR leadership system. This HR
system allows for integration and localization of new aspects of HR management
process. It would be difficult, if not impossible, for the traditional SIHRM structure to
permit the opportunity and effectiveness requirements for distributed global leadership
in a global network organization. Therefore, the development of a new role portfolio for
the corporate HR function is critical for the distributed global leadership to flourish in
global organizations of the twenty-first century.

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