Cross Cultural Management Culture Session 2

Yoginder Kataria

Brain Teaser 1
Imagine you are a Manager for a domestic company that is planning to extend its operations internationally. You are responsible for handling the CCM implications. What questions should you be asking the senior management team?

Why CCM?

Multinationals are becoming increasingly dominant. Technological changes make it easier to spread the business across the globe. Globalization.

IHRM

IHRM is Human resource management issues, functions and policies and practices that result from the strategic activities of multinational enterprises and that impact on the international concerns and goals of those enterprises.
Schuler, Dowling and De Cieri, 1993

What does IHRM add into the Traditional Framework of HRM?

Types of employees
Within and cross-cultural workforce diversity Coordination Communication

Human resource activities

Procurement Allocation Utilization of human resources

Nation/country categories where firms expand and operate

Host country Parent country Third country

A Model of IHRM

Adapted from PV Morgan

Some Terms Defined

Host Country National (HCN): Belongs to the Country where the subsidiary is located Home Country National (HCN): Belongs to the Country where the firm has its headquarters
also might be called Parent Country National (PCN)

Third Country Nationals (TCN): Belongs to any other country and is employed by the firm

HRM emphases in 7 European countries

Role of HRM Den Fr Ger Net Sw UK

Comp Ad SHRM Decentralization of HR activities Integration of HR functions Individualization of emp relationship

Clark, T. and Pugh, D. (2000). Similarities and differences in European conceptions of human resource management.

International Studies of Management & Organizations, 29(4), 84-100.

Evidence of Trends

Evidence that increasing responsibility is being devolved (decentralize) to the line in Europe. Recruitment and selection, health and safety, and workforce expansion/reduction would go to the line; whilst ER and training would stay with HR.

The IHR Department

Ensure IHR is involved in global strategy formulation for the firm Ensure managers have the necessary competence to contribute to the global management of the firm Prepare issues/concepts for inclusion in global strategies

Prepare a framework to ensure global management are aware of the growing complexity of the business
Distribute and share the responsibilities for IHR

Operation of the Department

IHR will be linked to business at both strategic and operational level IHR will shift from being a purely operational function to one of strategic input and operational implementation IHR will shift from doing HR, to advising line managers HR issues involved with their teams IHR will focus on internal and external issues Staffing the Department: Fewer specialists, more generalists Greater business focus; managers with line experience Experience of global working, and global teams Development of coaching and counselling skills

HRM functions in a global setting

Recruitment methods Headquarters vs. local practices Selection criteria: Ability, education, experience, . . . (achievement focus) Age, gender, religion, sex, . . . (ascriptive focus) Performance evaluation Centralized or decentralized policies & practices Compensation & benefits Local market conditions vs. common compensation Labour relation strategies Centralised or decentralised

Glossary of Terms
Home country where a firm is headquartered Host country - where a subsidiary may be located Other country may be a source of labour or technology PCNs parent country nationals HCNs host country nationals TCNs third country nationals MNE multinational enterprise

IHRM

Ethnocentric (parent control) Polycentric (Keeping PCNs and HCNs separate) Regiocentric (Asia-Pacific, Eastern European regions) Geocentric (pick talent from wherever possible)

Four Approaches to International HRM

Perlmutter (1969); Dowling and Welch (2004)

The ethnocentric HR orientation- All key positions in the host country are occupied by parent company nationals. Ensures tight control and good communication. Typically deployed during the early stages in establishing a new business presence.

The polycentric orientation- Host country nationals manage all operations in their own country. This helps avoid intercultural management conflict and also promotes the corporations image.

Four Approaches to IHRM/cont The geocentric orientation- A meritocratic approach. The best people are deployed throughout the organisation and may be sourced from any region of the world. This enables corporations to build international executive teams.

The regiocentric orientation- Results in staff being developed and deployed within specific regions of the world eg. Europe, S.E. Asia etc.

Brain Teaser 2
What are the potential disadvantages for each of these approaches?

Schulers integrative framework for strategic HRM in MNEs Schuler et al (1993)

Exogenous factors Industry characteristics Country/regional characteristics SIHRM issues Interunit linkages SIHRM Functions Orientation Resources Location SIHRM Policy Staffing Appraising Compensating Developing

Strategic MNE Components Interunit linkages Internal operations

Internal operations Local sensitivity Strategic fit

MNE concerns & Goals Competitiveness Efficiency Local responsiveness Flexibility Learning & transfer

Endogeneous factors Structure of international operations HQ international orientation Competitive strategy Experience in managing international operations

See Fig 31 BS&V pp 215

IHRM practices

Compensation: Seniority-based, team-based vs Merit-based, individual-based Selection: De-emphasize experience? Appraisal: Low (collectivist) to High (individualistic) Training & development vs Outsourcing (e.g. US) SHRM: low cost and differentiation strategies (Asia) to no linkage (Mexico)
Von Glinow, M.A., Drost, E.A. and Teagarden, M.B. (2002). Converging on IHRM best practices: Lessons learned from a globally distributed consortium on theory and practice. Human Resource Management, 41(1), 123-140.

 Thank you