Managing Human Resources in the International Firm

Lisa Smirnova

Lisa Consulting

Overview

  • A view of HRM in an international context
  • Cultural issues and HR
  • Labor Policies and Practices
  • Management Development in the international firm
  • Motivation issues
  • Some Leadership issues
  • Conclusion and discussion

The Main Challenges of IHRM

  • A view of HRM in an international context
  • The way in which it can extend its basic mission of “getting the right people into the right places at the right times” and contribute to resolving the conflicting pressures within the corporation of centralization and decentralization
  • Fostering teamwork and learning within the transnational, and in developing a competitive culture

Characteristics of HRM

  • Given the existence of cultural differences in management practices, HRM is the most local of all management functions.
  • Some corporations view HRM - selection, development, appraisal and rewards - as the local implementation of strategic and business plans
  • Fostering teamwork and learning within the transnational, and in developing a competitive culture
  • Cultural differences as source of synergy via the fertile juxtaposition of differences

International Management - International ‘HRM’ Issues

Motivation

  • Current models derived in US and UK
  • Relatively high individuality, masculinity and work ethic

Selection and Recruitment

  • Patronage
  • Social hierarchies

International Management - International ‘HRM’ Issues 2

Pay

  • Local pay structures v ethical considerations of fair pay

IHR Policies and Practices

  • Unions
  • Equal opportunities
  • Training and Development

IHRM ORIENTATIONS

  • Ethnocentric
  • Polycentric
  • Regiocentric
  • Geocentric

IHRM ORIENTATION AND MULTINATIONAL STRATEGY

  • Early stages of internationalization = ethnocentric IHRM
  • Multilocal strategies > polycentric or regiocentric
  • Regiocentric
  • Transnational strategies > a local/global IHRM

Five Distinct Elements of Creating a Shared Culture

  • A clear and simple mission statement
  • The vision of the chief executive officer
  • Management education
  • Project-oriented management programs
  • The process of building a corporate charter
The National Context and HRM

THE US APPROACH TO SELECTION

  • Match skills and job requirements
  • Universalistic criteria

SELECTION IN COLLECTIVIST CULTURES

  • The in-group
  • Preference for family
  • Value personal characteristics
  • High school and university ties

IMPLICATIONS FOR THE MULTINATIONAL

  • Managers must follow local norms to get best workers
  • Often a tradeoff with benefits of home country practices

DIFFERENCES IN TRAINING AND DEVELOPMENT

Result from:

  • Differences in educational systems
  • Values regarding educational credentials
  • Cultural values regarding other personnel practices
  • Skills taught by U.S. organizations -

VOCATIONAL EDUCATION IN GERMANY

  • Standardized national system = a well trained labor force
  • Affects over 65% of 15 to 16 year olds
  • Collaboration of employers, unions, and state
  • Dual system

MANAGEMENT DEVELOPMENT: USA

  • Senior level managers often identify managerial potential
  • Appraisals of managerial readiness
  • Assessment centers
  • Mentoring
  • "Fast track" careers

MANAGEMENT DEVELOPMENT: JAPAN

  • Recruits directly from universities
  • Join the company as a group
  • Selected on personal qualities and fit with the corporate culture
  • Mutual commitment of permanent employment
  • Similar pay and promotion for first ten years - age seniority
  • Informal recognition of those high performance managers

Managing the Development of International Managers

  • Who to focus on
  • Evaluating potential
  • The management review process
  • Identifying and developing potential leaders are particular priorities for the international firm
  • Managerial and leadership skill can be built through challenging job assignments in subsidiaries and international mobility

The Management Review Process

  • Formalization essential
  • Responsibility for review is a line function, not HRM
  • Trade-offs between investing in potential and in performance, between today’s operating needs and tomorrow’s strategic needs, etc. must be made.
  • Management assignment and development

Problem Areas in Executive Development

  • Cloning
  • Sacrificing performance for development - need to separate performance from potential and dealing with both
  • Formal v informal systems. Too much formality drives out consideration of personal competences whilst informality allows for local interest and a lack of comparative information

Shell - Success Factors as Predictors of Potential

  • A sense of imagination
  • A sense of reality
  • The individual’s power of analysis
  • The ‘helicopter quality’ or the ability of the person to see facts and problems in a wider context
  • Leadership skills (in various contexts)

Shell - Criteria to Guide Judgment of Managerial Potential

  • Conceptual effectiveness - vision, synthesis, professional knowledge, business directedness
  • Operational effectiveness - individual effectiveness, decisiveness, control
  • Inter-personal effectiveness - negotiating power, personal influence, verbal behavior

Shell - Criteria to Guide Judgment of Managerial Potential

  • Achievement motivation - ambition, professional interest, emotional control.
  • Leadership qualities - team roles, use of personal qualities
  • But- If you are not mobile, you don’t have high potential

IMPLICATIONS FOR THE MULTINATIONAL

  • Examine feasibility of exporting training
  • IHRM orientation affects training needs of local managers
  • Location skill advantages

PERFORMANCE APPRAISAL

  • Identifying people to reward, promote, demote, develop and improve, retain, or fire

U.S. PERFORMANCE APPRAISAL SYSTEM

  • Performance measures
  • Performance feedback
  • Human resources decisions
  • Must meet legal requirements

PERFORMANCE APPRIASAL IN COLLECTIVIST CULTUES

  • Managers work indirectly to sanction poor performance
  • Often avoid direct performance appraisal feedback

COMPENSATION

  • Wages and salaries, incentives such as bonuses, and benefits such as retirement contributions

COMPENSATION IN THE US

  • Examine feasibility of exporting training
  • Wages and salaries differ based on two major factors
  • External
  • Internal

COMPENSATION IN JAPAN

  • Base salaries for positions
  • Skill and educational requirements
  • Age
  • Marital status and family size may count
  • Bonuses

NEW MERIT (Japanese style)

  • Can affect pay raises to a greater degree the traditional position/seniority system
  • Does not match the Western view - Nenpo
  • Stresses attitudes as much as performance

EVALUATION/COMPENSTATION:

Implications for the Multinational

  • Match HRM orientation
  • Seek location advantages in wages but watch other factors

PATTERNS OF LABOR RELATIONS DEPEND ON:

  • Historical factors
  • Ideology reasons
  • Management views of unions

UNION MEMBERSHIP DENSITY

  • Germany: estimated 40% belonged to trade unions
  • US: 15.8% non-agricultural workforce--down from a high of over 35% in the early 1940s
  • Denmark: over 80% unionized
  • Great Britain: approximate 50% unionized

SOME HISTORICAL UNION DIFFERENCES

  • German
  • Formalized, legalistic

    Bargaining centralized between large unions and large corporations

    Works Councils

  • French--militant/strong ideologies
  • U.S.--"bread and butter" issues--wages, benefits, and working conditions

IMPLICATIONS FOR THE MULTINATIONAL

  • Must deal with local labor practices
  • A factor in location choice

Motivation

  • Multinational managers need to motivate international employees
  • Need to understand
  • Why do people work?

    What do people value in work?

WHY DO PEOPLE WORK?

  • Three major functions of work
  • Providing needed income

    Interesting activity

    Contact with other people

  • Emphasis differs by country

IMPORTANCE OF WORK

What do people hope to achieve from working?

  • Interesting work
  • Good pay
  • Job security
  • Good interpersonal relationships

WORK CENTRALITY

  • Work versus other activities
  • Higher levels of work centrality also match average number of hours worked per week
  • High levels of work centrality may lead to dedicated workers
  • Religious and other cultural issues

THE BASIC WORK MOTIVATION PROCESS

  • Motivation: psychological process that results in goal-directed behavior that satisfy human needs
  • Needs: a feeling of deficit
  • Work satisfies many needs - e.g., food and shelter
  • Motivation includes more than satisfying needs
  • Reactions to behaviors
  • Reinforcement

    Punishment

NATIONAL CONTEXT AND WORK MOTIVATION

Culture and supporting institutions

  • Influence the priority people attach to work
  • Influence reactions to goal-directed behaviors at work

THEORIES OF WORK MOTIVATION IN THE MULTINATIONAL CONTEXT

Two basic types of motivation theories:

  • Need theories
  • Process theories

Applications to multinational context follow

NEEDS AND THE NATIONAL CONTEXT

  • Need priorities differ by country
  • Even with similar ranks, level of importance differs by country

APPLYING NEED THEORIES IN MULTINATIONAL SETTINGS

Identify:

  • Basic functions of work
  • Needs considered most important

Sources of need fulfillment

Know available jobs to satisfy needs

PROCESS THEORIES OF MOTIVATION

  • Three major theories: expectancy theory, equity theory, and goal setting theory
  • More complex than need theories
  • Relate individual beliefs regarding effort, outcomes, and performance

CHOOSING JOB ENRICHMENT TECHNIQUES IN MULTINATIONAL SETTINGS

Distinction between individualistic and collectivist cultures should determine the choice of job-enrichment

  • U.S. individual approach
  • European group approach

PROBLEMS OF TEAM WORK IN INDIVIDUALISTIC CULTURES

  • Social loafing
  • No responsibility for group outcomes
  • Individual work/interests have priority over group's

CONCLUSIONS

  • Motivating the multinational workforce: a constant challenge
  • Motivation theories not culture free
  • Application requires knowledge of national context