Global HRM

Amity Business School Pune - 2011

Internationalization
International business is the process of focusing on the resources of the globe and objectives of the organizations on global business opportunities Internationalization is as an expansion of economic activity among more countries and is related to all forms of international economic cooperation. Internationalization is multidimensional process of increased incorporation of inward and outward company activities outside the borders of a home country.

Management demands of international growth

Stages of Internationalization
Stage 1: Domestic Operations
Firms offer products or services that are designed to primarily serve consumers in the domestic market

Stage 2: Export Operations

Products and services are opened up to markets in other countries, but production facilities remain localized. HRM: Provides sales force with skills and motivation to succeed in these foreign markets.

Stages of Internationalization
Stage 3: Subsidiaries or Joint Ventures Some operational facilities (e.g., parts assembly) are physically moved to other countries. Corporate headquarters in home country has high control over foreign operations. HRM: Provides expatriates and local employees with knowledge and skills to succeed in the foreign country.

Stages of Internationalization
Stage 4: Multinational Operations Much more prevalent international dispersion of production and service provision facilities.

Decentralization of decision-making more prevalent, but major personnel decisions still made within home country. Expatriates still primarily manage foreign facilities.

Stages of Internationalization
Stage 5: Transnational Operations Little allegiance to the firms country of origin. Large-scale decentralization of decision-making.

Dominant role of expatriates is removed.

Each business unit across the globe has the freedom to make and implement its own HRM policies and practices.

Internationalization strategy
THE DECISION WHETHER TO INTERNATIONALIZE THE DECISION WHICH MARKETS TO ENTER MARKET ENTRY STRATEGIES DESIGNING THE GLOBAL MARKETING PROGRAM
IMPLEMENTING AND COORDINATING THE MARKETING PROGRAM

HR factors
HR issues and activities that affect the successful functioning of international joint ventures include: Assigning mangers to the joint venture Evaluating their performance Handling aspects pertaining to career path Compensation and benefits

Going International
After companies decide to go international, what are the typical questions an HR Manager should be asking? What types of people (employees) do we need to become successful? How do I find them? Or do we train? How do we find out the laws, trade union practices, local labor markets and expectations of the new land?

Continued..
What are the local unwritten cultural norms? What are the strategies that work best there? How do we manage knowledge and operations across the geographical and cultural distance? How do we gel yet remain unique?

Challenges of I HRM
Deployment Identifying and developing global talent Knowledge and information dissemination

Factors to consider:
Cultural Factors Economic systems Legal perspectives Industrial relations Changes in business strategies Reorganization of hierarchies Technology Changing workforce profiles

Continued..
Managing diversity of workforce. Managing pressures for more labor rights in third world countries. Managing outsourcing of employees More part-time and temporary work Managing productivity and quality Downsizing the workforce Coping with flexible working hours

Continued..
More activities More risk More involvement in employees personal life External influences More broad perspective

Is it?
Life would certainly be a lot simpler if other people would just shape up and see things our way !!! Our Way?????

Them and Us!

When cultures clash, no matter what the cause, things inevitably evolve into a 'them' and 'us' environment.

What is Culture?
A pattern of basic assumptions, invented, discovered or developed by a group; as it learns to cope; that have worked well enough to be considered valid and therefore, to be taught to new members as the correct way to perceive, think and feel. Responsible for all evil and credited for all good

Scheins Definition
A set of basic assumptions shared solutions to universal problems of external adaptation and internal integration which are evolved over time and handed down from one generation to the other

Also,
It conveys a sense of identity for organizational members It facilitates a sense of commitment to something other than self It is a device that guides and shapes behaviors It is the element that can make one group think, perceive, behave and even look different from another

Therefore:
Different groups : Different values Different beliefs Different perceptions Different interpretations

Some differences:
Who are we? How do we relate to the world? What are we doing? How do we relate to each other? What do we think about time? What is space for us?

Framework
Social institutions Public policy and legal framework Societal values Personal values of leaders

Edgar Scheins Levels of Culture

Behaviors

Values

Assumptions & Beliefs

Charles Handys Structural Cultures

Power Culture: Central Power Informal Communication Trust Small and entrepreneurial organizations Demanding Dynamic central force

Continued..
Role Culture: High levels of bureaucracy and formality Group of senior management controlling coordination between specialists and functions Departmentalized Clarity Security

Continued..
Task Culture: Matrix organizations where power resides at intersection of responsibilities Team culture Flexible Reduced need for authority

Continued..
Person Culture: Communities of people or professionals Less formal control Informal communication links

Levels of Culture
Sub Culture Professional culture Organizational culture Industry culture National culture Supra national culture

Diversity What kind of a bird are you, if you cant sing? chirped the bird What kind of a bird are you, if you cant swim? quacked the duck!

Diversity ??? Diversity is otherness or those human traits, that are different from our own or from the groups we belong to, yet present in other individuals and groups.

Diversity
generally understood and embraced, is not just casual liberal tolerance of anything and everything that is not yourself. It is not polite accommodation ; Instead, diversity is, in action, the sometimes painful awareness that other people, other races, other voices, other habits of mind, have as much integrity of being, as much claim on the world as you do ... And I urge you, amid all the differences present to the eye and mind, to reach out to create the bond that ... will protect us all. We are meant to be here together. William Chase from The Language of Action

Typical Workplace Diversity

Diversity can be differences in: Age Ethnic origin / race / color Gender Physical abilities / qualities Sexual orientation

Continued..
Educational background Income Marital / parental status Religious beliefs

Yet
Diversity is no longer just a black / white, male / female, old / young issue
Diversity is about our relatedness, our connectedness, our interactions; where the lines cross.

Why are we talking Diversity?

Globalization and liberalization More complex and dynamic work environment Increased use of technology Smaller world one world Working across time boundaries Most organizations pot pourri of people, who are totally different, yet a lot similar

Challenges

Challenges
Communication Taking a one-size-fits-all approach Resistance to change Lack of adequate and focused training

Advantages of Diversity
Helps in promoting a minority friendly reputation among prospective employees Diverse cultural corporations have larger potential to get a diverse customer base

Advantages - Continued
Ability to manage cultural diversity increases adaptability and flexibility of an organization to environmental changes. Diverse group of employees / heterogeneous groups are perceived to be more creative and efficient in problem solving as compared to homogenous groups

Managing Diversity
Planning and implementing organizational systems and practices to manage people; so that the potential advantages of diversity are maximized, while its disadvantages are minimized

How to manage - Strategies

Diversity a tool for organizational progress rather than a managerial problem No cook book approach to managing diversity. Acknowledge people's differences and recognize that these differences as valuable

How to manage - Continued

Move your frame of reference from an ethnocentric view (our way is the best way) to a global perspective (let's take the best of a variety of ways) More than treating others the way you want to be treated; treat others the way they want to be treated

Action Points for Managing

Staffing policies addressing diversity Employee assistance policies based on needs of workforce Diversity based mentoring initiatives Walking the talk

Continued..
Making room for all types of diverse events which matter to employees Promoting diversity in seniority positions Communication of policies related to diversity

Diversity

Differences

Value

Accommodate

Utilize

Skills for managing diversity

An understanding and acceptance of diversity concepts
Recognition that diversity is threaded through every aspect of management

Skills - Continued
Self-awareness: understanding your own culture, identity, biases, prejudices, and stereotypes Willingness to challenge and change institutional practices that present barriers to different groups

Think about this!

Same treatment is not fair treatment Ignoring diversity will ultimately increase costs through: Unhealthy tension between groups Loss of productivity because of increased conflict Inability to attract and retain talented people of all kinds Complaints and legal actions

Leadership
Do required leadership qualities differ as per nations? According to implicit leadership theories (ILT), individuals hold a set of beliefs about the attributes, personality characteristics, skills, and behaviors that contribute to, or impede outstanding leadership

Continued..
These belief systems, called prototypes,

cognitive categories, mental models, schemas, and stereotypes in the broader social cognitive sense, are assumed to affect the extent to which an individual accepts and responds to others as leaders

Deriving from this:

From the larger group of leader behaviors, 22 attributes were universally deemed to be desirable: Trustworthy Foresight Planning ahead Encouraging Positive Excellence-oriented Dependable

Continued..
Honest Intelligent Communicative Informed Coordinator Team builder Just Dynamic

Continued..
Motive arouser Confidence builder Motivational Decisive Effective bargainer Win-win problem solver Administratively skilled

Continued..
While, there are 8 leadership attributes that are universally undesirable. Leaders who are Loners Irritable Egocentric Ruthless Asocial Dictatorial Non co-operative Non explicit

Moving on..
To CLT, which refers to Culturally Endorsed Implicit Leadership Theory Coming up after extensive research after the GLOBE Studies, CLT depicts 6 dimensions valid for cross cultural leaders GLOBE empirically identified universally perceived leadership attributes that are contributors to or inhibitors of outstanding leadership

Dimensions of CLT:
Charismatic A broadly defined leadership dimension that reflects the ability to inspire, to motivate, and to expect high performance outcomes from others on the basis of firmly held core beliefs. This dimension is generally reported to contribute to outstanding leadership.

Continued..
Team-Oriented A leadership dimension that emphasizes effective team building and implementation of a common purpose or goal among team members. Team-oriented leadership is generally reported to contribute to outstanding leadership

Continued..
Participative. A leadership dimension that reflects the degree to which managers involve others in making and implementing decisions. Participative leadership is generally reported to contribute to outstanding leadership, although there are meaningful differences among countries and clusters.

Continued..
Humane-Oriented. A leadership dimension that reflects supportive and considerate leadership but also includes compassion and generosity. Humane-oriented leadership is reported to be almost neutral in some societies and to moderately contribute to outstanding leadership in others.

Continued..
Autonomous. This newly defined leadership dimension, refers to independent and individualistic leadership. Autonomous leadership is reported to range from impeding outstanding leadership to slightly facilitating outstanding leadership.

Continued..
Self-Protective.
From a Western perspective, this newly defined leadership dimension focuses on ensuring the safety and security of the individual. It is selfcentered and face saving in its approach. Self-protective leadership is generally reported to impede outstanding leadership.

And above all:

A global mindset Cultural adaptability and flexibility Ability to tolerate high levels of ambiguity

Who is an expatriate?
An employee who is working and temporarily residing in a foreign country Some firms prefer to use the term international assignees Expatriates are PCNs from the parent country operations, TCNs transferred to either HQ or another subsidiary, and HCNs transferred into the parent country

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Figure 1-3: International assignments create expatriates

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The Expatriate Assignment Life Cycle

Crisis and Adjustment or Departure or The Selection Process Pre-assignment Training Crisis and failure Post-arrival Orientation and Training Repatriation and Adjustment Reassignment Abroad

Determining the Need for Expatriate

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Reasons for Expatriate Failure

US Firms

Japanese Firms
Inability to cope with larger international responsibilities Difficulties with the environment

Inability of spouse

Managers inability to adjust

Other family reasons Managers personal or emotional maturity Inability to cope with larger international responsibilities

Personal or emotional problems

Lack of technical competence

Inability to spouse to adjust

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Culture Shock Cycle

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Factors in Expatriate Selection

Technical Ability Cross-Cultural Suitability Family Requirements

Individual Situation

Selection Decision

Specific Situation

CountryCultural Requirements

Language

MNC Requirements

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Expatriate Success Factors and Selection Methods

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Objectives of Expat Compensation

Attract employees who are qualified and interested in international assignments Facilitate the movement of expatriates from one subsidiary to another, from the home country to subsidiaries, and from subsidiaries back to the home country; Provide a consistent and reasonable relationship between the pay levels of employees at the headquarters, domestic affiliates, and foreign subsidiaries; and Be cost-effective by reducing unnecessary expenses.

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Problems in Expat Compensation

Discrepancies in pay between parent, host and third-country nationals. The need to vary expatriate compensation, depending on the stage of life cycle of the expatriates family (e.g. young children, children in college, etc). Remuneration issues related to re-entry into the parent-country organisation. Remuneration issues to deal adequately with new waves of change in the international business environment.

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Factors Influencing International Compensation

MNC Internal Environment Goal orientation Capacity to pay Competitive strategy Organisational culture International workforce composition Labour relations Subsidiary role
Internal and external relativities

Staffing orientation

MNC external environment Parent nationality Labour market characteristics Local culture Home and host country governments roles Industry type Competitors strategies

International compensation strategy

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Steps in Expat Performance Management

Linkage to organisational strategy Setting individual performance goals Identifying variables impacting performance Appraising the performance

Providing regular feedback on progress towards goals

Providing opportunities for improvement

Linking results with rewards

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Components of Expat Compensation

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A Balance Sheet Approach to Expatriate Compensation

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The Repatriation Process

Preparation

Physical Relocation Repatriation Process

Transition

Re-adjustment

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