INTERNATIONAL HUMAN RESOURCE MANAGEMENT

SyllabusSection I

Managing Human Resources in a foreign subsidiary : Cultural & behavioral differences in different countries, cross cultural studies of Hofstede, Kluckhohm & Stoodbeck; Ethical relativity versus ethical absolutism. IHR planning & staffing: Practice & problems

Section IICompensation Systems: Multinational compensation systems,

factors affecting compensation systems. Training & development: General practices, approaches & short-comings. Appraising performance of subsidiary staff: Appraisal systems, acceptance & resistance.

Section IIIExpatriates: Determination of needs, selection process,

attributes contributing to success & failure, special issue of female expatriates, expatriate re-entry. Accommodating & training of the family members: Education & vocational guidance, amenities & facilities.

The International Context of Business

Globalization Economic development Language & religion Ethics in international scenario The international business environment...

Managing Human Resources in a foreign subsidiary

Domestic to Global – The transition

Ethnocentric approach Polycentric approach Regiocentric approach Geocentric approach

The Culture Shock !!!

Cross cultural studies of Hofstede, Kluckhohn & Strodtbeck;

Hofstede's definition of culture

Culture is the collective programming of the mind which distinguishes the members of one human group from another...... the interactive aggregate of common characteristics that influence a human group's response to its environment.

Geert Hofstede’s cultural dimensions This model was derived from a study of

employees from various countries working for major MNCs and was based on the assumption that different cultures can be distinguished based on differences in what they value.

Hofstede argues that it is possible to gain

considerable insight into organized behavior across cultures based on these value dimensions.

Cultural Dimensions

Power Distance: Beliefs about the appropriate distribution of power in society.

Low power distance: effective leaders do not need substantial amounts of power compared to subordinates.

High power distance: People in positions of authority should have considerable power compared to subordinates.

Uncertainty Avoidance: Degree of uncertainty that can be tolerated and its impact on rule making.

Low uncertainty avoidance: Tolerance for ambiguity; little need for rules to constrain uncertainty.

High uncertainty avoidance: Intolerance for ambiguity; need for many rules toconstrain uncertainty.

Individualism-Collectivism: Relative importance of individual vs. group interests.

Collectivism: Group interests generally take precedence over individual interests.

Individualism: Individual interests generally take precedence over groupinterests.

Masculinity-Feminity: Assertiveness vs. passivity; material possessions vs. quality of life.

Masculinity: Values material possessions, money, and the pursuit of personal goals.

Femininity: Values strong social relevance, quality of life, and the welfare of others

Long-term vs. Short-term Orientation: Outlook on work, life, and relationships.

Short-term orientation:Values traditions and social obligations.

Long-term orientation: Future orientation. Values dedication, hard work etc

Kluckhohn and Strodtbeck’s cultural dimensions

Culture is based on value orientations Values in any given society are distributed in a way

that creates a dominant value system. They identified five value orientations

Cultural Dimensions

Relationship with Nature: Beliefs about the need or responsibility to control nature.

Mastery: Belief that people have need or responsibility to control nature.

Harmony: People should work with nature to maintain harmony or balance.

Subjugation: Belief that individuals must submit to nature.

Relationship with People: Beliefs about social structure.

Individualistic: Belief that social structure should be arranged based on individuals.

Collateral: social structure should be based on groups of individuals with relatively equal status.

Lineal: Belief that social structure should be based on groups with clear and rigid hierarchical relationships.

Human Activities: Beliefs about appropriate goals.

Being: Belief that people should concentrate on living for the moment.

Becoming: individuals should strive to develop themselves into an integrated whole.

Doing: belief on striving for goals and accomplishments.

Relationship with Time: Extent to which past, present, and future influence decisions.

Past: In making decisions, people are principally influenced by past events or traditions.

Present: In making decisions, people are principally influenced by present circumstances.

Future: In making decisions, people are principally influenced by future prospects.

Human Nature: Good, neutral or evil

Good: People are inherently good.

Neutral: People are inherently neutral.

Evil: People are inherently evil

Ethics...... …... Absolute or RelativeIf all the other kids were jumping off a cliff, would you do it too ???

Is it ok to... kill someone ??? kill someone to save another???

What Exactly is ETHICS ?!?!

Ethical Absolutism When in Rome......

one should do what one would do at home, regardless of what

Romans do.

Some behaviors are always wrong no matter what.

Ethical Relativism

When in Rome, one should do as the Romans do

There is no single moral standard which is equally applicable to all people at all times.

Absolutists vs. Relativists

Absolutists think there is a single moral standard that is absolute and does not change

Relativists think that there is no such standard.

From IHRM viewpoint Should Global organizations apply

“their values” everywhere they do business? (Absolutism)

Or they should consider different cultural values and local

practices? (Relativism)

IHR planning & staffing

Factors affecting IHRM policies & practices

•Political & Legal factors

•Economic & Socio-cultural factors

•International biz strategy, organization structure, culture

•Stage of internationalization & International experience

•Type of industry, resource availability, Competitors

•Top management attitude towards internationalization

IHRM Models: the different view points

Evans & Lorange model based on two sets of logic:

•The Product Market logic - based on the Product Life Cycle stages

•Socio-Cultural logic – based on the socio-cultural differences & the related work

styles.

.......... continuedThe Hossain & Davis model

IPM = F (G,M,A)

Where,

IPM - International Personnel Management

M - Multiculturalism

G - Geographic Identification

A - Attitudinal Structure

Managing Human Resources is a function involving Multiple countries, cultures & top management's

attitude towards international operations

.......... continued

Shen's Model - Two major factors to be considered while devising IHRM policies.........

•Firm – specific factors (international strategy, organizational structure & culture, stage in internationalization...)

•Host – contextual factors (political, legal, economic & socio-cultural factors)

.......... and the intervening factors

The Integrated Model

Top management's vision

IHRM Strategy & Policies

Organizational Dynamics (micro)•Strategy, Structure, Culture

Organizational Dynamics (macro)•Industry, PLC, Opportunities, Competition, Relationship with the host country

Environmental Factors•Social, political, technological, economical

Domestic HRM policies & activities and regulatory environment in a host country

Modified IHRM strategy & policies

Specific IHRM activities

Recruitment, Selection & Staffing – the international context

PCNs; the Parent Country Nationals

TCNs; the Third Country Nationals

HCNs; the Host Country Nationals

PCNs as International Managers

Advantages

• Organization control & coordination

• International exposure to talented managers

• More experience with the company

• Common corporate culture

• Better compliance of subsidiaries with company objectives, policies etc

Disadvantages• Limited promotional

opportunities for HCNs

• Longer time for adapting to host country

• Imposing HQ style on HCNs

• Difference in compensation between PCNs & HCNs

• PCNs preference to be in home country or reluctance

to return to home country.

• Govt regulations on hiring PCNs

HCNs as International Managers

Advantages• Lesser barriers

• Reduction in hiring cost

• Stay in the position for longer durations rendering continuity in management process

• Career growth options increase morale of HCNs

Disadvantages• Less control by HQ

• PCNs lose the opportunity to gain

international exposure

• Subsidiaries tend to be individual Business

Units

TCNs as International Managers

Advantages• Salary & benefits

requirements may be lower

• Compared to PCNs, may be better informed about host country environment

Disadvantages• Relationship between

countries affect transfers

• Govt regulations on hiring TCNs

• TCNs preference to be in home country or

reluctance to return to home country.

Why International Staffing? - The motives

Company Motives

• Fill positions

• Management development

• Organizational development (heterogeneous groups)

Individual's Motives• Experience

• Compensation

• Loyalty & Obligation towards company

• Promotion & Growth after return

• Professional challenges

• Restricted opportunities in parent country

• Improved lifestyle

Approaches to MNC Staffing decisions

• Ethnocentric

• Polycentric

• Geocentric

• Regiocentric – a graduating phase from ethnocentric to geocentric