International Human Resource Management

Transcription

1 Chapter 20 International Human Resource Management Learning Objectives Describe the major differences between domestic and international HRM. Describe the major challenges faced in international HRM relating to performance appraisal, training and management development, compensation and industrial relations. Understand some of the key cross cultural issues dealing with ethics, EEO, communication, management style and trust. Appreciate the major characteristics of HRM in China and Japan. Chapter Outline International human resource management is a growing issue for most HR managers as more and more organisations are establishing international or global operations. This chapter examines the impact of culture on various HRM policies and practices, and provides some useful examples of cultural differences that will impact upon management style and HRM policies and practices. Introduction International operations are strategically important for Australian companies such as AMP, Amcor, BHP, Brambles, CSR, Fosters, Lend Lease and Westfield. These companies are now affected more by global than Australian domestic influences and must develop global business objectives and strategies to succeed. They must consider the influences of differing national cultures on their strategic business objectives, corporate culture and the way in which they operate. Strategic business objectives are now the product of an analysis of numerous competing and different environments. Organisational performance depends on a good fit between the organisation s key business objectives and strategies and domestic and foreign environmental demands. While the internationalisation of business has increased opportunities for organisations and their employees, it has also created a myriad of HRM challenges related to a multicultural workforce that is geographically dispersed. The approach to HRM must be sufficiently flexible to allow for sufficient differences in the types of HR policies and practices that are most effective in different business and cultural settings. HR managers and organisations that fail to comprehend this new international orientation and its complexities are unlikely to ever realise the full potential of their overseas ventures. International HRM policy The a key question to ask when developing an international HRM policy is, what type of organisation is desired. It determines to what degree home country values and management practices will be imposed on the overseas operations. It also permits an organisation to identify those core values which are critical to its success and which make it unique Global view To be effective, HRM policies must reflect an international view rather than a narrow, Australian head-office perspective. Managers must have global vision. The task of transforming domestic managers into international managers is a strategic HRM problem facing many multinationals. Unfortunately, inadequacies in this area are a virtual guarantee of failure. HR Technology implications Companies are leveraging technology to manage the complexities of global HRM and to deliver high quality service. Companies use either a common system universal to all locations or a set of non standard systems unique to each location to handle their HR programs and information needs. The problem with the latter is that data are often late, incomplete and/or inaccurate.

2 Key cross-cultural issues Communications Cross-cultural communications can be a minefield for the international manager. Gestures, facial expressions, behaviour and words can have different meanings and connotations. Cultures also differ in the importance they place on what is actually said or written (low context) versus how it is said or written (high context). Silence is another difference. Chinese and Japanese negotiators use, and are used to silence in their business meetings and negotiations. Australians in contrast, find periods of silence (especially if prolonged) unsettling, or even threatening. In meetings, Chinese, Koreans and Japanese are often reluctant to express their views for fear of making a mistake, saying something foolish or expressing an opinion which conflicts with their colleagues (or worse, their superior). Finally, it should be remembered that appearance is important in cross-cultural communications. Dress in Hong Kong, Japan and Korea is conservative and conventional. Australians venturing forth in shorts and long white socks (irrespective of temperature) are seen as disrespectful country bumpkins who do not deserve to be taken seriously. ETHICS Ethics has to do with morality and standards of behaviour. What is considered ethical (and legal) in one culture, may be viewed as unethical (and illegal) in another. Deciding what is right and wrong, moreover is not easy when different ethical standards are in conflict. It is recommended that companies take the following steps to ensure that their responses to different cultural environments are both appropriate and ethical. develop a clearly articulated set of core values as the basis for global policies and decision making. train employees to ask questions that will help them make business decisions that are both culturally sensitive and flexible within the context of those core values. balance the need for policy with the need for flexibility or imagination (for example, a cash payment may not be acceptable, but a business trip to the Sydney head office could be). Trust A hot issue in organisations and international business is trust. This is because employment and business relationships depend on trust. Co-worker, subordinate, superior, client, customer and supplier relationships are all influenced by the degree of trust that exists. In the multinational organisation trust is necessary for quick and co-ordinated global action, the development of employee commitment and social harmony. In joint ventures, trust and commitment are the essential elements for a long term business relationship. Commercial negotiations, negotiations with trade unions, superior and subordinate negotiations all require trust for success. Management style Culture affects management style. Effective managers do not use one style of leadership but adjust their style to each situation. A manipulative or autocratic style, for example, is compatible with cultures which emphasise hierarchy and status. In contrast, in cultures where differences in power and status are de-emphasised a participatory more egalitarian approach will be sought. Thus in high power distance cultures, (such as China and Korea) subordinates will expect their managers to make the decisions and tell them what to do. Equal employment opportunity (EEO) Equal opportunity laws are the product of society s social values. In some cultures, the status of men and women, the young and old and various ethnic and religious groups may not be the same. The international HR manager must be alert to such differences. Foreign EEO laws may be quite different from those applying in

3 Australia (for example, Japan has no specific law against sexual harassment). In addition, although anti discriminatory laws exist, companies and governments may ignore or try and avoid them. Performance appraisal For companies that operate internationally performance measurement is a complex issue. Fundamental questions such as, What do we mean by performance? What performance criteria will be used? Will the same criteria be used for head office employees, expatriates and local employees? Will performance be assessed on an individual or a group basis? Are programs such as management by objectives (MBO) culturally appropriate? How will feedback be given? Directly or indirectly? Simply exporting the head office program may end in disaster if it is not culturally sensitive. Similarly different criteria may be required for the evaluation of expatriate performance It is also important that performance criteria be valid. In an overseas location performance criteria may be polluted by exchange rate fluctuations, government controls, bribery and corruption and other hidden barriers. Training and development Organisations that operate internationally face a number of unique challenges in training and developing their employees. Matters relating to the diversity of the work force, language and cultural differences impinge on all aspects of the training and development activity. Consequently, when an organisation enters the international training and development area, the HR manager needs to be sensitive to local customs and expectations. He or she must deal with questions regarding local, national and corporate culture, the ethnocentricity of particular approaches and interventions, ethics and the value placed on training and development. Compensation National culture is an important consideration in strategic compensation. Cultures that value hierarchy and status differentials will employ compensation strategies that promote and reinforce differences in status. In contrast, more egalitarian reward systems are used in cultures where status differentials are minimised. Individualistic cultures adopt compensation strategies that reward individual performance and the acquisition of individual skills and know how. In collectivist or group oriented cultures organisations will base their rewards more on group performance and individual seniority (in recognition of the employees time as a group member). Industrial relations Industrial relations philosophies and practices vary around the globe. About 26 per cent of the Australian work force are unionised. Employees in the USA can vote whether to have a union, whereas Australian workers in some industries have no such choice. Cultural, economic and political differences clearly express themselves in industrial relations. An Australian head office should ensure coordination so that: practices adhere to and reinforce strategic HRM philosophies and policies and are in harmony with the desired corporate culture. concessions granted in one location do not create damaging precedents for the rest of the organisation. ethical and legal obligations are met. HRM in China and Japan Key issues that should be considered in relation to HRM policy and practice in China and Japan are discussed on pages Summary International HRM is complex, difficult and critical to global business success. The organisation that has not thought through its domestic HRM policies and practices will find that its transition to international activities

4 will be both painful and expensive. Without a solid base on which to build, the development of an international HRM policy risks being ad hoc, wasteful and alienating to domestic, expatriate and foreign employees. A successful policy requires clearly developed HRM objectives which are intimately tied to the organisation s global strategic business objectives. In international business the underlying impact of culture is evident in the way people interact with and manage others. Not surprisingly, the approaches to HRM in cultures such as China and Japan are very different from those employed in Australia. Terms to identify corruption ethics low-context cultures craft-unions expatriate management style cross-cultural communications high-context cultures seniority systems domestic HRM international HRM trust enterprise unions lifelong employment local employee REVIEW QUESTIONS 1. What role does culture play in HRM? Culture plays a significant role in communication, ethics, trust, management style, Equal Employment Opportunity, performance appraisal, training and development, compensation and industrial relations. 2. What is HRM s most important role when a company decides to go international? The a key question to ask when developing an international HRM policy is, what type of organisation is desired. It determines to what degree home country values and management practices will be imposed on the overseas operations. It also permits an organisation to identify those core values which are critical to its success and which make it unique. 3. What are the major features of Japanese HRM? The tradition features of HRM in Japan are lifelong employment, a seniority-based wage and promotional system, and enterprise unions. However, the onslaught of international competition, the transition to a service economy, an aging work force and the emergence of a mobile, technically literate young work force less committed to the one company, one career ideal is forcing change. 4. What is trust? What is its importance to HRM? A hot issue in organisations and international business is trust. This is because employment and business relationships depend on trust. Co-worker, subordinate, superior, client, customer and supplier relationships are all influenced by the degree of trust that exists. In the multinational organisation trust is necessary for quick and co-ordinated global action, the development of employee commitment and social harmony. In joint ventures, trust and commitment are the essential elements for a long term business relationship. Commercial negotiations, negotiations with trade unions, superior and subordinate negotiations all require trust for success. 5. What are the key characteristics of HRM in China?

5 The key features of HRM in China are poorly qualified labour market, and State-owned enterprises which guarantee lifelong employment. 6. To what extent should an organisation export its home HRM policies and practices to its overseas operations? To be truly global organisation, human resource management policies and practices should be benchmarked on international best practice. Australian practices may be best in some situations, but one cannot generalise. 7. What is ethics? What are some ethical problems which may be encountered when doing business internationally? Ethics has to do with morality and standards of behaviour. What is considered ethical (and legal) in one culture, may be viewed as unethical (and illegal) in another. Deciding what is right and wrong, moreover is not easy when different ethical standards are in conflict. It is recommended that companies take the following steps to ensure that their responses to different cultural environments are both appropriate and ethical. develop a clearly articulated set of core values as the basis for global policies and decision making. train employees to ask questions that will help them make business decisions that are both culturally sensitive and flexible within the context of those core values. balance the need for policy with the need for flexibility or imagination (for example, a cash payment may not be acceptable, but a business trip to the Sydney head office could be). 8. What are the main differences between domestic and international HRM? Major differences that exist between domestic and international HRM include: * additional activities such as taxation, international relocation, expatriate remuneration, cross cultural training, repatriation etc. * increased complexities - currency fluctuations, foreign HR policies and practices, differing labour laws etc. * increased involvement in the employee's personal life - personal taxation, voter registration, housing, children's education, health, recreation, spouse employment etc. * more complex employee mix - more people from different cultures and ethnic backgrounds as a significant part of the workforce. * more complex external influences - different cultures, political systems, ethics, laws etc. * increased risk - emergency exits for illness, personal security, kidnapping, terrorism etc. HR managers and organisations which fail to comprehend this new international orientation and its complexities are unlikely to ever realise the full potential of their overseas ventures. In particular, the challenge of instilling a global orientation among employees will be critical. 9. What are some of the barriers which may hinder cross cultural communications? Cross cultural communications can be a minefield for the international manager. Gestures, facial expressions, behaviour and words can have different meanings and connotations. Cultures also differ in the importance they place on what is actually said or written (low context) versus how it is said or written (high context). Silence is another difference. Chinese and Japanese negotiators use, and are used to silence in their business meetings and negotiations. Australians in contrast, find periods of silence (especially if prolonged) unsettling, or even threatening.

6 In meetings, Chinese, Koreans and Japanese are often reluctant to express their views for fear of making a mistake, saying something foolish or expressing an opinion which conflicts with their colleagues (or worse, their superior). Finally, it should be remembered that appearance is important in cross cultural communications. Dress in Hong Kong, Japan and Korea is conservative and conventional. Australians venturing forth in shorts and long white socks (irrespective of temperature) are seen as disrespectful country bumpkins who do not deserve to be taken seriously. 10. How would you describe the Australian and Chinese management styles? Culture affects management style. Effective managers do not use one style of leadership but adjust their style to each situation. A manipulative or autocratic style, for example, is compatible with cultures that emphasize hierarchy and status. In contrast, in cultures where differences in power and status are de-emphasized a participatory more egalitarian approach will be sought. Thus in high power distance cultures, (such as China and Korea) subordinates will expect their managers to make the decisions and tell them what to do. Australia Low power distance Participative decision making Flat structures Individual achievement China High power distance Autocratic Tall structures Group achievement DIAGNOSTIC MODEL 1. Identify and discuss the key influences from the diagnostic model (figure 1.11) that have significance for international HRM. External influences have the major impact on organisational objectives, strategy, and HRM strategy. International factors impact on the way in which international HRM is managed. There is also the issue of internal policy about the nature of the organisation that management wants to develop. To be effective, HRM policies must reflect an international viewpoint rather than a narrow Australian head-office perspective. Managers must have global vision. The task of transforming domestic managers into international managers is a strategic HR problem facing many multinationals. Unfortunately, inadequacies in this area are a virtual guarantee of failure. A study of multinational disasters concluded that the primary causes of failure in multinational ventures stem from a lack of understanding of the essential differences in managing human resources, at all levels, in foreign environments. The choice facing the multinational firm is clear. It can either increase its global character in order to compete worldwide or give up and disappear. The development and promotion of global rather than merely domestic HRM policies is therefore critical. The 1990's is the decade of the global enterprise. Increasingly Australian organisations which traditionally focused on domestic markets are looking internationally. The organisation with a head office in Australia and its major operations overseas is no longer unique. Such firms can no longer claim to be distinctively Australian. In fact, the question, 'What is an Australian product?', is no longer easy to answer. The conventional bonds between local multinational organisations and Australia are fast disappearing. Corporate decisions are increasingly driven by the dictates of global competition not national allegiance. The logic of the global manager is clear: to undertake activities anywhere around the world that will maximise the performance of the company, enlarge its market share and boost the price of its stock. 2. Explain the impact of going international on the acquisition, development, reward and motivation, maintenance and departure of an organisation s human resources.

7 This chapter takes the reader through the impact of international operations on each of the key HRM activities. Recruitment, selection, failure (departure), orientation, career planning and repatriation, compensation and benefits, and industrial relations are all given considerable attention. The message for the student is to be aware of how the functioning of these HRM activities will change or vary in the international environment. 3. Discuss the possible impact of going international on commitment, competence, cost effectiveness, congruence, adaptability, performance, job satisfaction and employee motivation. If the HRM functions are sufficiently modified (as in b above) so as to meet the needs of the new international environment, the HRM outcomes have a better chance of being achieved. It is crucial for students to understand the rationale for and objectives of the different HRM functions. If they understand this, students can then see a way toward performing those functions in the appropriate manner to meet the needs of the situation, rather than just following a set format for each of the HRM functions. For instance, it may well be perfectly logical and appropriate to make gender one of the first criteria for selection for an international position. This would be inappropriate, even illegal, in Australia, but it would be an absolutely critical consideration when sending someone to many countries in the world. Soapbox There are seldom clear answers to these questions. The idea is to stimulate debate as much as to determine an answer. ETHICAL DILEMMA Between a rock and a hard place 1. What would you do in this situation? Why? Because this is an ethical dilemma, there is no one correct answer. Students should debate the choices available, and the ramifications of each. There are genuine safety concerns involved. 2. What ethical questions, if any, are raised in this case? Should the company save money? Should the company pander to the mob? What role should the US authorities play in this? How far should the company be concerned about safety issues? CASE STUDY Going International Discussion Questions 1. You are the new HR manager, how would you help Tom Young achieve his vision? 2. How would you resolve the conflict between Li and Wallace? 3. How would you handle the problems of salary differentials, morale and labour mobility? 4. Discuss the differences between corporate culture and national culture. What is their impact on each other?

8 In addressing each of these questions students should discuss the differences in culture and management style and how these will impact upon the approaches taken by the managers in each location. Issues that should be considered are communication, ethics, management style, compensation, training and development, performance appraisal, and industrial relations. There is no reason why the managers cannot use different management styles. Young will probably find that these two organisations will be more profitable if they adopt a management approach that suits the culture and expectations of the employees. Young should also hold a face-to-face meeting with both managers (Lee and Wallace) to discuss their different management approaches and establish a better working relationship. This is particularly important for Asian businesses as they place a great deal significance on trust and building relationships. It could also help to clarify aspects of the organisation s future and allay any concerns that might be held by Lee about changes that will be introduced.