Managing human resources in a multinational context

Sumetzberger, Walter
Journal of European Industrial Training; 2005; 29, 8/9; ProQuest
pg. 663

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VIEWPOINT Managing
human resources
Managing human resources in
a multinational context
Walter Sumetzberger 663
osb-international, Vienna, Austria Received January �
Revised October �
Accepted February 2005
Abstract
Purpose - To develop more sensitivity for different patterns of hwnan resource management in
multinational companies.
Design/methodology/approach - Systemic approach; the concepts and models are based on the
evaluation of consulting projects in the field of human resource management.
Findings - A concept of four typical varieties of human resource management, a model and
important aspects for designing the cooperation processes between human resource departments and
company management in multinational companies.
Originality/value - This paper provides a complex mindset about human resource management in
a multinational context, which is a prerequisite for designing constructive cooperation processes
between human resource departments and company management and for increasing the effectiveness
of human resource activities.
Keywords Human resource management, Multinational companies, Management effectiveness
Paper type Conceptual paper

Indroduction
From a systemic point of view, human resource management is situated at the interface
between the personal systems of the employees and the social system of a company.
The specific difficulty in handling human resources lies in the paradoxical fact that a
company - even though it pays for it - has no direct access to the psychical
performance of employees.
The core function of human resource management is therefore:
• to manage the paradox that work is the only factor of production which is, after
the sale, not at the full disposal of the buyer (e.g. companies are unable to pin
their employees down to certain motivational/performance levels); and
• to manage the uncertainty which is entailed with the availability of work.

Human resource management has to ensure staff ability and the willingness to
perform, The central challenge is the dependence on human resources and the
autonomy of those involved:
Journal of European Industrial
• The company's dependence on its staff increases because of the increased Training
productivity requirements and the increasing importance of "knowledge" as a Vol. 29 No. 8, �
pp. 663-674
success factor. But the company cannot be sure of having the performance C Emerald Group Publishing Limited
0309-0590
potential it purchased by merely binding staff contractually. DO! I0.11�10627120

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 JEIT • The constant adjustment of staff and company interests and the balancing of
expectations on both sides connected with it becomes a creative task that is
29,8 relevant for competitive purposes with two central adjusting levers.
• The safeguard for willingness to perform emerges by designing an environment
that supports the involvement of the staff in the interests of the company. This
also includes promoting staff ability to perform with the corresponding
664 instruments of staff selection and development.
• From the general manager's perspective, this concerns creating an environment
that increases staff willingness and ability to perform on the basis of workable
self-initiative.

In our considerations about human resource management in a multinational context

we are - according to our systemic approach - guided by two central hypotheses:
Hl. How human resource management is pursued in a company depends on the
condition or state of the company.
H2. Human resource management is one of the non-delegable core tasks of
company management. A human resource department can only support
company management by this core task. So the functions of human resource
management are to be performed "in teamwork"/in combination with the
executive personnel of a company.
This conceptual paper is based on the evaluation of our consulting projects in the
field of human resource management. It will describe some important dimensions
which influence the condition or state of a company and discuss four typical
varieties of human resource management, which can be observed in companies.
This concept of four varieties of human resource management is a basis for
analysis, which kind of human resource management is practiced in a specific
company and gave some advices for appropriate human resource management
activities and for designing the "teamwork" between company management and
human resource departments.
The following part of the article adresses the issue of cooperation between company
management and human resource departments. It presents a model, how human
resource departments can develop a useful offer for the company management and
which aspects in this cooperation must be taken into consideration in a multinational
context.

Dimensions which influence the condition or state of a company

The demand for human resource services in a multinational company- and
therefore the starting point for the cooperation between company management and
the human resource department - will be substantially influenced by the following
dimensions:

Market situation and infrastructure

Depending on the market situation and the infrastructure in the different countries in
which the multinational enterprise is working, human resource management has, e.g.:

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 • to build up staff and support personnel recruitment in growth markets; Managing
• to manage the availability of employees with a certain qualification level, e.g. human resources
management know how by recruiting managers from the local job market, by
developing local high potentials in management training programs or by
dispatching expatriates; and
• to develop and manage systems and models for different wage levels and
industrial laws, etc. 665
Organisational logic and organisational culture of the company and the industrial sector
The organisational logic and the resulting culture of a company can be described as the
historically grown patterns which are important for the success and the survival of the
company. The current company culture is, for example, influenced by the history of the
company's foundation and the subsequent development:
• Is it a company founded by one famous person and the ownership still in the
hands of descendants of the family?
• Is it a widespread public company?
• Has it great merits in pioneering specific new products?
• Is it a company with longstanding experience as a multinational corporation?
• Is it a very "young" company making the first steps into other countries?

Depending on industrial sectors, there are different success factors for a company.
Financial institutions have other challenges than retailers or IT services. Speed of
reaction, ability for innovation, delivering just-in-time, but also quality of products,
reliability and customer trust in the company are success factors which are more
important in one industrial sector than in another. That is why you meet different
critical processes in each industrial sector; in one case a hierarchical structure of
decision finding makes more sense, and in another case teams are necessary to deal
with complex tasks near the point of sales.

Diffierent cultural, backgrounds

Especially in multinational enterprises different values, (role-) norms and behaviours
stemming from different cultural backgrounds determine the usual way to deal with
human resource issues.
There are a lot of studies describing this different values and (role-) norms. The
most well-known and quoted studies and descriptions are from Kluckhohn and
Strodtbeck (1961), Hofstede (1980, 1991), Hall and Hall (1989), Adler (1997) and
Trompenaars and Hampden-Turner (1998). In a rough summary, often used
dimensions to describe the cultural orientation of a society are:
• relationship with nature/world: dominant, harmony, subjugation;
• relationship with people: universalism versus particularism, individualism
versus collectivism, neutral versus affective, achievement versus ascription,
uncertainty avoidance, power distance, masculinity versus femininity;
• relationship with time: future, present or past orientation; monochronic versus
polychronic; and
• relationship with space: private, public or mixed; specific versus diffuse.

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 )EIT Depending on the organisational logic and the organisational culture of the company,
as well as on the different values, (role-) norms and behaviours stemming from
29,8 different cultural backgrounds, companies have different patterns of managing the
uncertainty which is entailed with the availability of work.

Four varieties of human resource management

_6_6_6 Analysing our consulting projects we found - based on the "type of decision making"
and the "place of decision making" in companies - four varieties of human resource
management (Figure 1).

Personnel-bounded human resource management

In this variety of human resource management, companies absorb uncertainty in using
family patterns to handle the incalculability of individuals. Affiliation to the social
system is created by origin (relationship, acquaintance, same socialisation by
vocational training, etc.).
The basic contract is that by affiliation to the wider field of a family, the individual
gets a secure and most likely permanent place which offers care and support. The
company, in return, gets individuals with unlimited availability; it's not legitimate to
demarcate from the company ( = family) and the organisational expectations.
Individuals have to justify if they do not fulfil the performance expectations.
Mutual predictability emerges on the basis of personnel availability versus
personnel affiliation and security: give up demarcating from expectations of
performance versus covering life risks.
If this predictability is disappointed, a spiral of mistrust is created.
Companies with this pattern of coping uncertainty between organisation and
individuals have a strong personnel bounded, implicit human resource management.
Typical characteristics are:
• Access to the company takes place by relationship and acquaintance, by
recommendations and connections. There are no public job offers or vacancies.
• There is no professional recruiting process. A intuitive "audit" sorts out job
applicants, whether they fit to the company/family, whether they have the same
"stable smell".
implicit explicit
Plllceof
decision makin

Shift of responsibility to a certain PERSONNEL BOUNDED ORDER-AND RULE-DRIVEN

position Certainty is created by Certainty is created by rules
membership and loyalty

PERFORMANCE-AND NEGOTIATION•
Self-responsibility of persons or RESULT-BASED ORIENTED
Figure 1. company sectors Certainty is created by Certainty is created by communicative
Four varieties of human the experience ofsuccessful processes
resource management contributions

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 • Tasks are built around persons. Managing
• Loyalty to the "family" is more important than professional qualifications. human resources
• Possibility for personnel development and qualification training is a reward for
loyalty. Generally there is no development planning.
• No explicit human resource management instruments.
667
Usually, there is no explicit Human Resource function. The highest management level --------
takes care of human resource management in passing. Often, there are only supporting
positions for personnel administration.

Performance- and result-based human resource management

Everyone is his own entrepreneur in the enterprise and committed to the
entrepreneurial task. Effort and output have to meet the mark. If somebody does not
bring the expected performance, he will be kicked out. Trust in the willingness to
perform (individuals will bring the full effort) is the way to absorb uncertainty.
Affiliation is caused by bringing the expected performance. Constant learning, quick
acquisition of excellent know-how is also necessary.
Commitment emerges for the vision of the company. The company gets the
availability of the individuals for a "promise of grandeur": "You really can be
proud working for this company". To be part of this great business also increases
the market value of an employee. For the company, this means a permanent effort
to renew this "promise of grandeur" and make sure that it is kept.
Mutual predictability emerges on the basis of experience of successful performance
versus the promise to be part of something great (which also increases the market value of
an employee), trust in effort and entrepreneurship versus trust in the vision of the
company.
As long this mutual trust exists, each side goes all out. If trust fails, it leads to
separation.
Typical examples for this pattern of coping uncertainty are start-ups and companies
in the pioneering phase. If the company applies the pioneering spirit in the long run,
this pattern of human resource management will survive. In companies which work
with this pattern:
• Flexible organisational and leading structures give room for a high level of
self-organisation.
• Events for common experiences about building together something great are
supported.
• Professional staff recruiting is a critical factor: clear task profiles and excellent
assessments of potentials to find persons with the right qualification and
willingness to perform.
• The necessity of quick integration in the working process leads to instruments
like mentorship programs for new employees.
• A quick reaction to manpower requirements is usual. That means flexible models
of employment, working time and payment, and instruments like management
by objectives.
• Long-term personnel development is not addressed.

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 ]EIT Human resource management is a task of the company management. Specialised
29,8 Human Resource functions provide services and instruments to increase the accuracy
of recruitment, to speed up integration of new employees and to guarantee the
flexibility of employment models.

Order- and rule-driuen human resource management

668 From the point of view of the company, the hope to create certainty is to submit
-------- individuals to rules. Desirable are routinely working processes, by which the company
can be sure about certain and repeated results. The background is a mechanistic picture of
human beings: only a part of the dimensions of an individual is taken into consideration.
The oompany also submits itself to (internal and external) rules, and then conveys
certainty about the durability of employment, career, etc. to the employees. The
regulations also include the idea that in the remaining elbowroom, everyone can do
what s/he wants. This individual elbowroom is part of the contract. And the company
gets only a specific element of effort and performance.
Mutual predictability emerges on the basis of submission to the rules of both sides -
company and individuals.
The relationship between company and individuals is extremely instrumentalised.
Therefore, identification with the organisation/the company is difficult.
Typical examples are companies in the public sector, but also established, big
global oorporations. In companies with this pattern of human resource management,
there exist(s):
• bureaucratic structures for design and supervision of regulations;
• a high level of written documentation (keeping the personnel file is one of the
most important human resource management tasks);
• differentiated human resource management standards and instruments, which
serve to formalise judgement, legitimation and supervision;
• regulated careers and standardised personnel development; and
• models of payment with automatic jumps from stage to stage.
The typical form of organisation is departments with human resource management
experts. human resource management is delegated to these experts and to the works
council. The management has only to control deviations and to discipline.

Negotiation-oriented human resource management

The paradox that the company has no direct access to the psychical performance of
employees, even though it has paid for it is a main issue in the managing process.
Management does not delegate to deal with this uncertainty, but rather makes it a
recurrent act of negotiation.
Mutual predictability is created in the respective situation in negotiation processes,
knowing the interdependence between company and individuals. The certainty lies in
the quality of the communication processes.
In companies with a pattern of negotiation-oriented human resource management:
(1) staff recruiting, assessments of potentials, staffing decisions, etc. are common
processes;

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 (2) there is a shared responsibility for personnel development between company Managing
management and individuals;
human resources
(3) instruments are available which support negotiation and feedback processes
(e.g. appraisal interviews, 360° feedback, etc.); and
(4) experts are able to take on functions such as moderation, conflict mediation,
coaching and consulting to support communication processes.
669
To handle the human resource management processes is explicitly a task of the
company management. Internal or external experts support the company management
as service providers.
This concept of four varieties of human resource management describes typical
patterns how companies are managing the uncertainty of availability of work. In
reality you have often mixtures between varieties or companies are "on the way",
moving from one variety to another.

Designing the teamwork between company management and human

resource department
For designing the "teamwork" between company management and human resource
departments one of the important things is to make a useful offer for cooperation to the
company management. To develop such an offer, the following model of a business
system of a human resource department can be useful (Figure 2):

Customer model of an international human resource department

For the customer model you have to answer questions such as:
(1) What is our market?
• In which region, which countries, which part of the global corporation are we
working? (e.g. is this specific joint venture included or not?)
(2) Who are our target groups?
• Which level of company managers are our target groups?

• Maricets
Customer • Target Groups
Model

FOCUS: WHAT?
HOW? more advantage for customer • Core Services
more efficiency • Marginal Services
• Business
Processes

Figure 2.
• Organisational Supply Business system of a
Structure
Model human resource
department

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 ]EIT (3) Which variety of human resource management dominates in the (local)
29,8 companies?
• What is the main pattern in our multinational corporation?
• Which patterns are changing?
(4) What are therefore the needs and requirements of our customers?
670 • What are the central challenges for the human resource management?

The four varieties of human resource management can help to identify the basic
requirements of the company regarding human resource management. In a
multinational enterprise the varieties of human resource management can be
different between parts of the corporation. For example, you have to deal with the fact
that a young regional company in Eastern Europe, which is in a pioneering phase,
opens up a new market practice human resource management in a performance- and
result-based way, but in the central headquarters an order- and rule-driven human
resource management is usual. Or after a merger with a former family owned company
some parts of the corporation are dominated by patterns of personnel bounded human
resource management. This means that the necessity for, e.g. training and development
and the motivation to set some activities for it can be seen totally different.

Supply model of an international human resource department

For the supply model you have to answer questions such as:
• Which principles are important for designing our services?
• Are there company strategies which determine our services?
• What are our core services?
• What are our marginal services?
• Within this services what is the competence and the responsibility of the human
resource department and what are competences and responsibilities of the
company management?
• How do we design the division of labour between company management and the
human resource department?

The following list of the ten dimensions of human resource management can be used as
a checklist to define what are core services and marginal services and help facilitate
decisions regarding which task belonging to the specific dimension should be made by
company management or by human resource department:
(1) assessment of personnel needs, personnel planning and personnel controlling;
(2) personnel marketing, recruiting, selection;
(3) integration and initial qualifications;
(4) personnel development;
(5) potential development for leaders/managers and future leaders/managers;
(6) designing of compensation and employment models;
(7) personnel management in a narrow sense;

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 (8) personnel exit strategies; Managing
(9) personnel administration; and human resources
(10) cooperation with works council and unions, concrensmg of legal and
negotiation framework regarding basic conditions.

For certain issues (e.g. also for a special target group) you may have different service
levels. Following the model of value disciplines of Treacy and Wiersema (1997) - 671
customer intimacy, product leadership and operational excellence - you can decide
where you want to place your services in the service triangle (Figure 3).
In multinational corporations, you always have to find a balance between services
based on local articulated requirements and services based on corporate-wide
strategies. If you have noticed different varieties of human resource management in
your multinational corporation, this can also lead to different core services and
marginal services and different servive levels. And the division of labour between
company management and the human resource department can be different for some
parts of the company.

Performance model of an international human resource department

For the performance model you have to answer questions such as:
(1) How do we have to design our organisational processes and structures to fulfil
our services in an effective and efficient way?
• How can we find out the needs of our customers?
• How do we develop our services?
• How, together with the company management, do we put our services into
action? Who is responsible, who makes resources available, etc.?
• How do we evaluate the results?
In multinational corporations you have to decide which services should be provided
locally, centrally or bought externally. It can also make sense, that the allocation of
tasks and responsibilities to human resource units is different, depending on the
dominating variety of human resource management in particular parts of the
multinational company.
These coniderations about the basic allignment of human resource management
have to be negotiated between human resource department and company
management.

individual,
customised

6
Quick, easy, Highly innovative, Figure 3.
simple, cheap specific brand, Service triangle
standardised product leadership

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 JEIT Some important aspects of cooperation processes in a multinational
29,8 company
Cooperation processes of human resource management between human resource
department and company management are in itself something what has to be handled
with care. In e global corporation these processes occur in a multinational context and
will be substantially influenced by the following bundle of factors:
672
The structural dynamics between organisational units
To deal with structural dynamics between organisational units (headquarter and
subsidiary companies, etc.), human resource departments must balance tensions
between:
• Centralised versus decentralised, e.g. the headquarter tries to implement
standards, and subsidiary companies try to preserve as much autonomy and
individuality as possible. Centralised human resource departments often depend
on subsidiary companies finding their offers interesting.
• Superiority versus subordination, e.g. in cases of mergers and acquisitions, the
company which makes the take-over is - more or less legitimated - suspected to
colonise the foreign company. This causes mistrust and resistance. human
resource departments have to promote exchange and implement new
communication platforms and processes.
• Different interests between locations and sites, e.g. competition about production
orders or about functions as centre of competence. human resource departments
have to take care whether they want to be involved in these conflicts.
The necessity to transcend distances
Transcending distance means a lot of travelling or working together virtually.
Particularly these new forms of communication are very risky to produce
misunderstandings and offences in cooperation processes, because the used media
work at very reduced dimensions of human communication. Human resource
departments have to pay attention to the fact that to be successful, complex issues
needs adequate complex communication channels.

Differences in la,nguage
Using a foreign language increases the possibility of misunderstandings too. Language
differences cause nuances to vanish. Sometimes the same word has different meanings
(e.g. "concept" in English and "Konzept" in German). Questions and issues will be
avoided, because people do not understand the relevance of the issue or do not know
how to express themselves. Subsequently, this has an affect on attribution of
competence or non-competence, the feeling of being dominated by a native speaker, or
the level of commitment. Human resource departments have to be very careful and
invest a lot of time to produce a common understanding.

Cultural differences regarding values, norms and behaviour

There are also cultural differences regarding values and norms, which causes
misunderstandings:, e.g. every country has another idea regarding what constitutes a
good manager or a high potential. In addition, human resource departments are often

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 faced with cultural dilemmas in cooperation processes (following Krewer (2000)) such Managing
as: human resources
• Focus on group versus focus on individual: e.g. shall I provide the performance of
a team or the performance of the best individual.
• Importance of formal rules and functions versus strategies depending on local
context and personal interests: e.g. I need detailed plans and clear commitments, 673
but I do not want to cut down creativity and attention to local circumstances, -------•
which could lead to innovations.
• Hierarchy and authority versus autonomy and participation: e.g. how can I act in
my function as human resource department in a responsible way, when I have no
formal power and the expectations regarding hierarchy and participation are
different?
• Pragmatic versus conceptual: e.g. how can I solve problems quickly and not
neglect the development of a clear conceptual approach?
• Monochronic time orientation versus polychronic time orientation: e.g. how
much structure do my procedures need to be well organised, and how can I be
flexible for unexpected incidents and for parallel work flows?
• High context culture and implicit communication versus low context culture and
explicit communication: e.g. how clear shall issues be addressed and clarified and
how can I avoid that this is interpreted as impolite?
• Conflict orientation versus harmony orientation: e.g. in my function within the
human resource department, how can I react to the insufficient work of my
partners?
• Task orientation versus relationship orientation: e.g. how much have I to invest
for building and cultivating relationships, when urgent problems wait for a
solution?

Human resource departments in a multinational surrounding have to deal with these

challenges so that no one side of these dilemmas is dominant, or else cooperation
processes will fail. It is necessary to find flexible balances between these positions.

Concluding remarks
In our contacts to multinational companies we can see, how many human resource
activities, e.g. in the field of training and development, come to nothing. So is human
resource management itself challenging enough. In an multinational context,
additional complexity arises. Dealing with this complexity cannot be reduced to a
stringent model or simple advice. Necessary, is a complex mindset to develop more
sensitivity for what happens in companies. This little concept of four varieties of
human resource management tries to bring differences up. To discuss and negotiate
this difference is a prerequisite for designing constructive cooperation processes
between human resource departments and company management in the different parts
of a multinational company. And this again is a prerequisite to increase the
effectiveness of human resource activities.

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 JEIT References
29,8 Adler, N.J (1997), International Dimensions of Organizational Behavior, South West College
Publishing, Cincinnati, OH.
Hall, E.T. and Hall, MR. (1989), Understanding Cultural Differences, Intercultural Press,
Yarmouth, ME.
Hofstede, G. (1980), Culture's Consequences: International Differences in Work-rel.ated Values,
674 Sage, Beverly Hills, CA.
Hofstede, G. (1993), Cultures and Organizations: Software for the Mind, McGraw-Hill, London.
Kluckhohn, F. and Strodtbeck, F.L. (1961), Variations in Value Orientation, Row, Peterson and
Company, New York, NY.
Krewer, G.W. (2000), Managing International Projects. How to Promote Cooperation of
Multicultural Project Groups - A Workbook Introducing Experiences, Cases, Self Tests,
Advice, links, Author's ed., Innovation & Technologie-transfer, Saarbriicken.
Treacy, M. and Wiersema, F. (1997), The Discipline of Market Leaders, Perseus Books Group,
New York, NY.
Trompenaar, F. and Hampden-Turner, Ch. (1998), Riding the Waves of Culture. Understanding
Diversity in Global Business, McGraw-Hill, New York, NY.

Further reading
Garbsch, M., Vater, G., Swnetzberger, W. and Wimmer, R. (2001), osb-international Research
Project "Human Resource Management'', unpublished material, osb-international, Vienna.

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 ]EIT operation of pubs, and so studies the training, attitudes and performance of licensees as
29,8 well as the industry as a whole. E-mail: J.D.Pratten@mrnu.ac.uk

Claire Seaman
Claire Seaman is a senior lecturer and Knowledge Transfer Partnership manager, as
well as a director of the Scottish Centre for Enterprise and Ethnic Business Research,
676 an ESF funded project to develop research with S:MEs owned and managed by

-------- different ethnic minority groups.

Walter Sumetzberger
Walter Sumetzberger is a Management consultant and partner of osb-international for
the topics. He works in the areas of change management, organizational
transformation, business systems development, process management, strategic
know-how development, personnel development and international project
management. He is a Lecturer at the University of Vienna for organisational
transformation, group dynamics, and international human resource management and a
Member of the Austrian Society for Group Dynamics and Organization Consulting.
E-mail: walter.sumetzberger@osb-i.com

Amanuel G. Tekleab
Amanuel G. Tekleab is an assistant professor of Organizational Studies at the School
of Business, Clarkson University. His main research interests are psychological
contracts, training and transfer, team dynamics, compensations, and organizational
justice. His work has appeared in Academy of Management Journal and Journal of
Organizational Behaoior. He has also co-authored a book chapter on psychological
contracts. E-mail: atekleab@clarkson.edu

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