International HRM: 2015 Block 1 -2: Contexts of International HRM: - cultural analysis - integration v. responsiveness - resourcing approaches - convergence v. divergence - comparative legal contexts 1
Re-cap … 2
Levels of integration of Strategy & HRM Best-fit / Alignment approach Best-practice approach 3
Alignment of HRM with strategy and with … 4
Alignment of HRM with Societal Institutions • HRM requires alignment with the “institutions” of society (the traditions of society): ① Socio-economic system: social-market ---- neo-liberal ② Social stratification: fixed & significant ----- fluid & minimal ③ Welfare system: safety-net ---- minimal ④ Regulation of employment: legalistic ---- liberal ⑤ Employment relations: participation ---- imposition ⑥ Employment relations: unionised ---- individualist ⑦ Production system: Fordism ----- Toyatism ⑧ Shareholding: many small ---- few bigger investors ⑨ Labour supply: abundant ---- scarce ⑩ Labour quality (education): high skill / knowledge ---- low skill k Labour use: flexible ---- rigid And alignment with National culture 5
National cultural differences and IHRM Globalisation: Typically 30% of total economic activity (GDP) in developed economies comprises international trade and 15 -20% of the work-force were born abroad. Certain aspects of life are 100% gloablised “Culture … one of the most important aspects of the external context for HRM … Understanding culture fundamentally affects how we run our business, what characteristics to look for in selecting people, how to develop global talent, how to conduct meetings and how to manage employees and work with teams Competency in working with varying country and organisational cultures is one of the most important issues impacting the success of international business activity in general and IHRM in particular” 6
Defining culture “Definition. . as many definitions as there are books / articles on culture … the characteristic way of behaving and believing that a group of people have developed over time and share in common” Schuller et al. (2012) 7
National cultural differences and SHRM • HRM is the most culturally sensitive business function (contrast accounting, operations management, even marketing which can all, largely, be standardised internationally) • Accepting national cultural differences suggests that the universalistic, “best practice” (RBV) approach to SHRM may be unsuitable to firms with international operations The “best fit” approach to SHRM may be more suitable for firms with international operations if, in additional to corporate strategy, national culture is taken into account in influencing HRM policy and practice • 8
Cross cultural capabilities 9
Task Chose a national culture other than your own, with which you are familiar: 1) Identify 3 behaviours or practices that contrast with your own culture 2) Identify the attitudes or core values that possibly underpin these behaviours or practices 10
Dimensions of culture Hofstede, G. (2001) Culture’s Consequences. . . Individualism High Power Distance High Uncertainty avoidance . Collectivism Low Power Distance Low Uncertainty avoidance Masculinity Femininity Short-term orientation Long-term orientation Indulgence Restraint 11
Simple cultural diagnostic questionnaire 1) 2) 3) In an examination do you think: a) everyone should work silently alone? b) help each other in small ways? c) talk to each other and help less able students? If your boss asks you to wash his car at the weekend, do you: a) visit his home on Sunday and wash it for him? b) if you are doing nothing else on Sunday you visit and wash it? c) say “no”; he is your boss only at work? Your boss asks you to travel to Novosibirsk for 3 months from next week. Do you: a) say “yes” and feel really excited at the prospect? b) say “yes” if he can guarantee you will have a local minder? c) say “no”, he should choose someone else? 12
Simple cultural diagnostic questionnaire 4) 5) Should women be airline pilots? a) yes b) yes, but with more training than men would receive c) no, this is a man’s job Would you prefer a job that: a) pays most money now b) pays reasonable money now but offers some deferred benefits c) that pays less now but offers longer-term benefits like health care and a pension Use the cultural comparison calculator on Hofstede’s web-site to compare your home culture with that of your host culture: http: //www. geert-hofstede. com/hofstede_dimensions. php 13
Alternative dimensions of cultural analysis Trompenaars, F. (1993) Riding the Waves of Culture • Identified “value orientations” defining national cultural difference: • universalism v. particularism • collectivism v. individualism • affective v. neutral • specific v. diffuse relationships (e. g. the role of extended family) • achieving v. ascribing status (e. g. the role of connections) • time as sequence v. time as synchronous • inner directed v. outer directed House, R. J. et al. (2004) Culture, Leadership and Organizations: The GLOBE Study of 62 Societies • Identified 9 dimensions (building on Hofsteded) refining and adding: • performance orientation • assertiveness orientation • humane orientation 14
Evaluating cultural typologies (option 1) Useful though they may be to International HRM policy makers and professionals (and Marketers), many researchers have criticised the functionalist / positivist approach of cultural typologies such as those of Hofstede, GLOBE and Trompenaars. 1. Identify 3 -4 problems with the research methodology from which such typologies are derived 2. Identify 5 -6 problems with the Hofstede typology itself (e. g. in the contemporary world age group differences might be a more useful analytical tool than national culture) 15
Evaluating cultural typologies (option 2) Work in groups: 1. Read the Introduction to the chapter, “Beyond Hofstede: challenging the Ten Commandments of cross-cultural research” 2. In a group, read the allocated Assumption (3, 4 or 5) 3. Summarise the main problems that the authors’ raise regarding your allocated assumption 4. In view of these problems, how should International HRM professionals and researchers use Hofstede’s work? Identify 3 -4 problems with the research methodology from which such typologies are derived Identify 5 -6 problems with the Hofstede typology itself (e. g. in the contemporary world age group differences might be a more useful analytical tool than national culture) 16
Alternative perspective on culture Emphasis is placed on the interpretations of individuals and the significance of the local context • “Within each society there are tremendous variations between individuals, social groups or genders in the ways they make sense of situations” (Romani, 2014) This perspective: • attempts to counter the dominance of European and US models and prescriptions for HRM policy and practice which are “culture bound” and suggest the need for cultural convergence • recognises that cultures are dynamic and change • accepts that difference does not mean worse and can mean better 17
Alternative perspective on culture 18
Radical / critical perspective on culture Attempts to define cultural difference are not neutral but conceal power: • “The critical approach urges us to pay attention to how ‘cultural differences’ to hide another aspect [of difference] or to masquerade an issue … Discourses on culture are constructed and mobilised in individual power struggles” (Romani, 2014) This perspective on culture has emerged from “postcolonial” studies [the ways in which certain nations attempt to informally dominate other nations] Power inequalities determine what cultural differences people see and emphasise Contrasting nationalities are typically “othered”, are seen as different, typically inferior, or if superior, superior only in minor ways 19
Culture, Internationalisation and HRM National cultural differences, or beliefs about national cultural differences, along with contrasting institutions affecting employment (such as the legal environment of employment; labour market structures; union recognition and influence) impact on: • the extent to which HRM policies and practices can be integrated within one MNC or standardised on supposedly rational, efficient and scientifically proven, “best practices” (convergence) • the extent to which HRM policies and practices need to be diversified between nations in which the MNC operates and remain different between nations (divergence) 20
Stages of Internationalisation – IHRM Involvement Review each of the 5 Stages of internationalisation of business outlined on the following slide: The US based coffee chain Starbucks has progressed through each of the 5 Stages of internationalisation: ① How do you feel that Starbucks operated at each of the 5 Stages? ② Identify two likely key policy priorities for Starbucks’ HQ HRM team at each stage of internationalisation Think about this problem: firstly from the perspective of a large investor in Starbucks secondly from the perspective of a group of employees directly affected by the Stage of Starbucks’ internationalisation 21
Stages of Internationalisation of business 22
Stages of Internationalisation & Staffing Stage 1 / 2: Domestic Stage 3: Multi-domestic Stage 4: Global / Multinational Stage 5: Transnational Primary orientation Product or service Market Price Long-term strategy Business model Foreign clients buy product / service Increase market abroad / technology transfer Source, produce & market internationally Achieve global synergies Staffing approach … Ethnocentric Polycentric Geocentric Sources of knowledge Staff Parent-country staff Parent-country expatriated staff Host-country staff Third-country / Global staffing (PCNs) (HCNs) (TCNs) ? ? ? Key HR issues with ? each source of staff 23
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Stages of Internationalisation - Staffing Assuming that you are advising global furniture producer and retailer IKEA, a firm that trades strongly on its Scandinavian image and culture: Even numbered groups’ perspective: operational managers Odd numbered groups’ perspective: corporate HQ managers 1) Identify the advantages and disadvantages of using expatriate knowledge employees (PCNs) in establishing a retail operation in a new territory 2) Identify the advantages and disadvantages of using hostcountry knowledge employees (HCNs) in establishing a retail operation in a new territory 3) Identify the advantages of using third-country / global knowledge employees (TCNs) in establishing a retail operation in a new territory 4) How might your staffing decisions be different if you were establishing a production operation in a new territory? 5) What areas of HRM policy are IKEA likely to delegate to national level operations and which are they likely to control from HQ and why? 27
Staffing mobility From your own perspective, assume that you are employed as a project manager by a geo-thermal power-generation company based in your home country and you have just been promoted to the next managerial grade, where you will lead new projects. However, this promotion requires you to move to one of the firm’s offices abroad. You have a choice of working in the firm’s office in: Wuhan, Visakhapatnam, Geelong, Dunedin, Kota-Kinabalu, Haifa, Irkutsk, Port Angeles or Ushuaia ① What are the variables influencing where you would want to work? ② What would be your concerns about this promotion? ③ What additional support would you require from your organisation’s HR service? 28
Convergence or Divergence in Operations and in HRM policies? To adopt or to adapt? 29
Convergence or divergence? Organisations selling products or services to final consumers are likely to need to balance standardisation with local responsiveness: the famous “Mc. Donaldisation” thesis is to some extent contradicted by the regional differentiation of Mc. Donalds’ menus. Questions – HRM convergence or divergence? ①Identify four advantages for the MNE of convergence on “best practice” HRM policies across the whole, global, enterprise. ② Why might the MNE have to accept a degree of divergence (diversity or decentralisation) in its HRM policies or practices (“think global, act local”), adapting home country or best-practice HRM policies to local circumstances? ③ What are the advantages and disadvantages from the perspective of the corporate HRM function of diverging, diverse and decentralised HRM policies? ④What specific HRM practices are more likely to converge and what practices are more likely to be divergent and why ? 30
Culture and HRM: integrate or respond? 31
Convergence on a common organisational culture 32
Legal contexts of IHRM • Overview The legal regulation of the employment relationship is pervasive in developed economies and detailed consideration of the key areas of employment law applicable within the European Union will feature throughout your HRM studies What follows is a brief introductory overview of the extent of the legal regulation of employment. • In a world of free trade, why is there a need for the international legal regulation of employment? 33
Employment law case study • Lingua-Franca have broken the law of employment in at least four ways: identify the areas of the law they are in breach of. • Lingua-Franca is a medium-sized interpretation and translation agency based in the historical English city of Chester. The company was established in 2001 by two language graduates, Richard Neumann and Robert Land-Vetter, who had graduated the previous year from the city’s university. Richard studied for a degree in German and French translation and interpretation, whereas Robert’s degree is in Russian and Arabic. The business now has 35 staff based in its Chester offices who do mostly translation work, and 34 staff who work largely independently on short-term interpreting contracts throughout Europe, Russia and the Middle East: these latter staff rarely visit the Chester office. Richard and Robert are very entrepreneurial and the Lingua-Franca 34
Employment law case study • has recently won a two year contract to be the primary Russian-English interpreters and translators for the Russian Consulate in London. Richard and Robert decide that they will need three new staff qualified in Russian-English interpretation to fulfil this contract. The vacancy is advertised on Lingua-Franca’s web-site and Professor Mycos, Head of Russian Studies, at the University of Chester is approached to suggest students who are about to graduate and who might be effective in doing the job. Seven women and two men apply for the vacancy and Richard and Robert employ the two men because they feel that although the women were just as well qualified, if ever there is any work to be done in Moscow, they wouldn’t want to send women there. The company believes that employees should be flexible and does not, therefore, issue contracts of employment; Robert notes, “we are so small, everyone knows what they are supposed to be doing, so there is really no need for that sort of formality”. 35
Employment law case study • After successfully working for Lingua-Franca for 7 months, one of the new interpreters, Adam Kaplinski, becomes ill while interpreting a business licensing meeting in Moscow and has to fly home prematurely. Adam’s early return annoys Richard who feels that Kaplinski wasn’t really ill at all and was merely hung-over from drinking too much vodka the night before. When Kaplinski returns to work at the Chester office, three days after his return, Richard immediately dismisses him saying that his “fake illness” in Moscow could have jeopardized the whole of the Russian Consulate contract. Kaplinski is very upset as he really needs his job and so he asks whether he could stay on perhaps moving to the company’s new Warsaw office. Richard replies, aggressively, “no, you are fired Adam” and he then adds, “in any case Rob and I decided yesterday to close the Warsaw office so our 16 staff there will be in the same position as you by the end of the week. That is: without a job. . . Goodbye Adam!” 36
Employment law case study • Kaplinski is now very cross and angry himself and he walks out, seeming to accept his dismissal. Meanwhile, Robert has approached another graduate in Russian to take up Kaplinski’s work straight away and this new person, Sascha Smith, has started work. Two weeks after being dismissed, Adam is still owed wages and expenses by Lingua-Franca (Robert and Richard say that they will not pay because of Kaplinski’s behaviour while in Moscow). 37
Legal contexts of IHRM • Diversity of legal traditions and systems and diversity in the regulation of employment: highly permissive ------------------------- highly regulated • Contrast between “common law” approach and “civil code” approach • Diversity in access to and effectiveness of compliance and redress procedures • Some convergence in employment law: • EU • ILO • Right-of-centre governments have moved to de-regulate employment but … Increasing legal regulation of HRM in the 27 EU countries. . . • 4 largest EU countries? • 4 smallest EU countries? 38
Legal contexts of IHRM • % of HRM areas regulated? • Areas of HRM typically regulated by law and areas where international organisations such as the ILO attempt to achieve equivalent, high, standards: • • • restrictions on temporary working restrictions on child labour … general restrictions on working-time Contract of employment – areas requiring specification discrimination. . . _____, ______, _____ dismissal redundancy health and safety pay – how and when and equality collective communication – consultation. . . 39
Legal contexts of IHRM. . . • transfer of undertakings (sale of businesses) • grievance rights and procedures • trade union recognition • trade union rights such as to strike without dismissal • 2013 in the EU: about 130 distinct types of legal claims that an aggrieved employee / ex -employee / job applicant can bring against an employer • The IHRM professional often faces the challenge of either “When in Rome, do as the Romans do” (ethical relativism – context determines “right” and “wrong”) or of insisting on the highest standards of employment practice as required by, for example, EU, employment law (ethical absolutism): What are your views on this? 40
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