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JNB513 International Human Resource Management

Lecture 2

Organisational Influence

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JNB513 International Human Resource Management

• Last week we looked at how people feel at work

2015 Gallup Inc


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Lecture 1 Recap

• Why does this happen?

• Poor management of human resources


• Culture shock
• State of mind of senior management

The question is what influence can HRM have over this?

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Lecture 2

• Impact on the Organisation


• Summarised by need for CONTROL over
• People
• Resources
• Information

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Lecture 2

Objectives:
Effective system across many countries
Whilst exploiting local advantages without sacrificing global consistency
hence MNE’s are striving for balance between:

• Global Standardisation
• Localisation

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Lecture 2

Areas of Focus

• Issues of standardization & localization


• Structural responses to international growth
• Control & coordination mechanisms,
including cultural control
• The effect of responses on
HRM approaches & activities

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Lecture 2

Management Demands of Internationalisation

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Lecture 2

Should we standardise Human Resources Globally in our


business?
The international human resource management models developed in the last
decade pursue a contextual analysis of the standardization (global integration)
of multinational parent companies' human resource management policies and
practices and localization (local differentiation) of host countries' practices

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Why globally standardize HRM?

Of a geographically fragmented
Consistency workforce around common

Transparency
Alignment Principles
Objectives

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Factors Driving Standardisation – MNE that standardise….


• pursue multinational or transnational corporate strategies

• supported by corresponding org structures

that are

• reinforced by a shared
worldwide corporate culture

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FACTORS DRIVING LOCALISATION

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• Cultural environment
more social context  more complete balance of
extrinsic & intrinsic rewards
more individual  more extrinsic rewards
or fast changing
personal & social contexts

• Institutional environment (country-of-origin & HC)


• Mode of operation abroad
• Subsidiary role: e.g., global innovator,
integrated player, implementer
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Institutional effects on MNEs

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Examples of impact of cultural and institutional context on HRM practices

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Gupta & Govindarajan’s four generic subsidiary roles

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Lecture 2

The path to global status

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Organisational structures typically change due to

• Strain imposed by growth & geographical spread


• Need for improved coordination & control across business units
• Constraints imposed by host-government regulations on ownership
and equity

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Lecture 2

Stages of internationalisation

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Lecture 2

Export Department Structure

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Sales subsidiary structure

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Lecture 2
International Division Structure

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Two major MNE issues of structure

• Extent to which key decisions are made


at PC headquarters or at subsidiary units
(centralization vs. decentralization)

• Type of control exerted by the parent over the subsidiary unit

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Global Product Division Structure

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Global Product Division Structure

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Global Matrix Structure

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Internationally, matrix is difficult

• Dual reporting can cause conflict & confusion


• Many communication channels can create
information logjams
• Overlapping responsibilities can produce
- turf battles
- loss of accountability
• Distance, language, time, & culture barriers
make it difficult for managers to resolve conflicts & clarify confusion

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Matrix requires managers who

• Know the business in general


• Have good interpersonal skills
• Can deal with ambiguities of
responsibility & authority
• Have training for presenting ideas in groups

HR planning in matrix MNEs is more critical


than in traditional organizations
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Lecture 2

Beyond the matrix org. structures

• The Heterarchy
MNEs have different kinds of centers apart from ‘headquarters’
• The Transnational
resources & responsibilities are interdependent across national boundaries
• The Network
subsidiaries are nodes, loosely coupled political systems

At this stage, there is less hierarchy & no


structure is considered inherently superior
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The networked organisation

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5 dimensions of networked MNEs

1. Decision-making authority is delegated to appropriate units &


levels
2. Key functions are dispersed geographically across units in different
countries
3. Fewer organizational levels
4. Formal procedures are less bureaucratic
5. Work, responsibility, & authority are differentiated across the
networked subsidiaries

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Beyond networks: meta-nationals

Meta-nationals have 3 types of units:


1. Sensing units
Uncover widely dispersed engineering & market insights
2. Magnet units
Attract & create business plan to convert innovations into products & services
3. Marketing & production units
Market & produce adaptations of these
products & services around the world
Think:
An M-N = global tournament played at 3 levels

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HR’s place in structural forms

Three ways HR develops with international growth:


1. Centralized HR firms
large, well-resourced:
typically product-based or matrix structures
2. Decentralized HR firms
small group, mostly for senior mgmt. at corp. HQ:
mostly product- or regional-based structures
3. Transition HR firms
medium-sized corp. HR with small staff at HQ:
decentralized, product-based structure

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Different countres, different paths

• European MNEs: ‘mother-daughter’ 


global with product/area divisions or matrix structure
• Swedish MNEs: Tend to adopt mixture of
mother-daughter & product divisions
• Nordic MNEs: may prefer matrix structure
• United States MNEs: limited success with matrix
• Japanese MNEs: similar to US, but evolve more slowly, possibly not
changing structure
• Not much info yet on
Chinese & Indian MNEs

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Control Strategies for multinational firms

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