Developing a Culturally Synergistic Approach to International Human Resource Management Maddy Janssens This paper offers international human resource (IHR) professionals guidelines how to decide which IHRM approach to choose. In choosing among an adaptive, exportive, or integrated IHR approach, IHR managers may want to consider three decision criteria, e.g. forces for global integration and local adaptation, the cultural component of HRM, and the power dynamics within the MNC. To develop an organization that values cultural differences, IHR professionals may choose a culturally synergistic approach to IHRM. This approach has the potential of designing new combinations of HRM practices and simultaneously attends to the three decision criteria. Alarge U.S. based company acquired several years ago a small, successful Belgian company. While headquarters (HQ) initially managed the merger in a very decentralized approach, they recently moved towards a more centralized approach. It was the strong belief of the company s president that the global world has no geographical boundaries, which led to the implementation of several uniform policies, not only in the core domain of R&D but also, in the area of human resource management (HRM). An example here Dr. M. Janssens, Katholicka Universiteit Leuven, Dept of Applied Economic Sciences, Naamesestraat 69, 3000 Leuven, Belgium maddy.janssens@econ.kulewven.ac.be. was the corporate message that turnover in the Belgian plant was too low. It was HQ s belief that a dynamic and resultoriented company has a turnover of approximately 15%. Because turnover in the Belgian affiliate was even lower than 5%, the Belgian HR department was informed about the following decision. They had to work out a performance appraisal system with forced choice to weed out the bad performers. All employees had to be evaluated during the following year and the evaluation scores needed to reflect a Gauss curve. Those employees who had the lowest scores were presented with a choice: improve or be fired. The Belgian HR team hired a consultancy organization to implement the appraisal pro- Deciding An IHRM Approach 429
cess. The results of this international HR decision were anxiety among most of the Belgian employees, an intensification of rumors and an increase in uncertainty about the position of the Belgian unit within the whole company. This story indicates one of the major questions of international HRM: when to impose HR policies and when to adapt them to the local context? The story further illustrates the negative consequences when HQ doesn t consider the cultural component of a HR practice or when they are not sensitive to the power position of an affiliate. Therefore, the purpose of the paper is to provide HR practitioners with guidelines of how to decide when to adapt and when to impose, as well as how to implement a culturally synergistic approach. We develop these guidelines by first synthesizing the different theoretical models of strategic international HRM. From these models, three different approaches to IHRM can be identified: an exportive, an adaptive and an integrative approach. We discuss these three options, with its different advantages and disadvantages. To decide which IHRM approach to choose, we present three criteria that drive the decision: local versus global forces, the cultural component of HRM practices, and power dynamics. We discuss why and how these three criteria may help the decision making process and then apply them as guidelines to the Belgian case. In the second part of the paper, we introduce a culturally synergistic approach to IHRM. Based upon the models of cultural synergy (Adler, 1997; Hoecklin, 1995) and problem solving (Schein, 1999), we first discuss how this approach has the potential of designing new combinations of HRM practices instead of only transferring best practices from HQ to affiliates and vice versa. We further develop this IHRM approach by identifying its different steps and formulating guidelines of implementation. A culturally synergistic approach offers the potential of considering simultaneously the need for global integration, the cultural embeddedness of HRM practices and the importance of the affiliates power and autonomy. Its purpose is to support IHR managers in developing an organization that values differences. HOW TO DECIDE ON IHRM? OPTIONS AND CRITERIA Which Options Do IHR Managers Have? In developing guidelines on how to decide on IHR policies, we start from the models of strategic international human resource management (SIHRM). This work (Adler & Ghadar, 1990; Evans & Lorange, 1989; Milliman, Von Glinow & Nathan, 1991; Schuler, Dowling, & De Cieri, 1993; Taylor, Beechler, & Napier, 1996) has mainly taken a macro, strategic perspective focusing on the determinants of SIHRM systems in a multinational company (MNC). The early models focused primarily on strategy as the main factor, arguing that the central issue is not to identify the best HRM policy per se, but rather to find the best fit between the MNC s overall strategy and its HRM policy (Adler & Ghadar, 1990; Milli- 430 Journal of World Business / 36(4) / 429 450
man et al., 1991). More recent models have specified other internal as well as external factors to explain MNCs choices of IHRM systems. In addition to strategy, the different determinants of IHRM seem to be the industry in which a MNC is operating (Schuler et al., 1993), the MNC s international life cycle and experience (Adler & Ghadar, 1990; Milliman et al., 1991; Schuler et al., 1993; Taylor et al., 1996), the organizational structure (Schuler et al., 1993), the HQ s international orientation (Hedlund, 1986; Schuler et al., 1993; Taylor et al., 1996), the host country s cultural and legal environments (Adler & Ghadar, 1990; Milliman et al., 1991; Schuler et al., 1993; Taylor et al., 1996), and the resources or strategic role of affiliates and certain employee groups (Taylor et al., 1996). In one of the most recent SIHRM models, Taylor and colleagues (Taylor et al., 1996) have identified three different SIHRM orientations in MNCs: adaptive, exportive and integrative. These orientations determine the company s overall HR approach to managing the tension between integration or the pressure for internal consistency and differentiation or the pressure for external consistency. An adaptive SIHRM orientation is one in which each affiliate develops its own HRM system, reflecting the local environment. Differentiation is being emphasized with almost no transfer of HRM philosophy, policies or practices either from the parent firm to its affiliates or between affiliates (Taylor et al., 1996). The major advantage of such an approach is that HRM systems may be completely in tune with their local context. However, when each affiliate determines its own HR policies, disadvantages may occur. There may exist a lack of coherence within the MNC if, for instance, different performance criteria are considered in the employees appraisal in different affiliates. Because each HR department is focused on its own context, there may be also a duplication of efforts with no attention to economies of scale or synergies in terms of learning from each other. Each affiliate will have spent time and resources to design a HR policy without having consulted other HR managers for best practices. The second, an exportive SIHRM orientation is one in which the parent firm s HRM system is being transferred to its different affiliates. This approach emphasizes integration across all affiliates, developing a highly internal consistent MNC (Taylor et al., 1996). However, the downside of such an exportive IHRM approach is its inflexibility, ignoring the possible local differences, and therefore having missed opportunities with respect to learning. This all may lead to an ethnocentric orientation from HQ and as a consequence, affiliates will show feelings of rejection towards the imposed practice. The third, an integrative SIHRM orientation attempts to take the best HRM approaches and uses them throughout the organization in the creation of a worldwide system. The focus here is on substantial global integration with an allowance for some local differentiation. An integrative approach combines both characteristics of the parent company s HRM system with those of its international affiliates. Transfer of HRM policies and practices occurs and Deciding An IHRM Approach 431
can go in any direction, from one affiliate to HQ or between affiliates and vice versa (Taylor et al., 1996). While the advantage of this approach seem to be the spreading of good practices, the major disadvantage is that a so-called best practice may still be ill suited for a particular context. The three orientations of an adaptive, exportive or integrative approach represent three basic choices for IHR managers, reflecting an overall approach towards IHRM. However, in practice, IHR managers may have the option to choose for a mix of the three approaches. Because the IHR function consists of several tasks and is oriented towards different types of employees, choices may differ for the different tasks or employee groups. For instance, Luthans and colleagues (Luthan et al., 2001) advice IHR managers to set up a contingency matrix for IHRM. The horizontal row of the matrix represents the different sample of HR tasks such as recruitment and selection, training, compensation, labor relations, and job design. Along the vertical columns, the different countries of the MNC are being placed. The pragmatic value of such a matrix is that it can be used to organize the existing body of knowledge and experience and to constantly remind IHR professionals that different HR tasks may require different choices for different countries. IHR professionals may also decide differently with respect to certain employee groups. When HR practices are designed for higher and senior level managers, they will probably encounter a need for consistency worldwide, either by exporting the HQ s approach or by an integrated approach. For instance, the question of how to develop global managers seems to lead to an integrated HR approach for this employee group. Many companies emphasize that their senior managers must not only possess technical skills but also need to have a broad understanding of history, culture, sociology, and human relations. Consequently, the selection criterion often set for this employee group is global awareness or global mindset, referring to an openness to other cultures, multiple language skills, tolerance and flexibility (Harris & Morran, 2001). Another example refers to training & development, which may differ for higher and lower level managers. UCB, a Belgian company in the film, chemical and pharmaceutical industry, developed its own global leadership program for its higher level managers. Its purpose is to broadly develop these managers by offering expertise in different functional areas as well as intercultural communication and negotiation skills. Corporate HR further decided that the 3-week program takes place in Asia, North America and Europe, the three regions in which the company is active. Moreover, they selected trainers coming from these different areas as well as local experts from each region to discuss its cultural, political and socioeconomic context. While this program for higher level managers reflects an integrative approach, training, and development for lower level managers reflects an adaptive approach with local HR managers being responsible for this HR task. Which Criteria Drives the IHRM Decision? After having identified the different options of IHRM in terms of an adap- 432 Journal of World Business / 36(4) / 429 450
tive, exportive and integrative approach, the next question is how to decide which option to choose. In examining the different SIHRM models, two factors seemed to be crucial. In all models, there is the postulated need for an SIHRM system to address the tension between the dual imperatives of global integration and local responsiveness (Bartlett & Ghoshal, 1989). We therefore include global and local forces as a first criterion of how to decide. The second crucial factor in almost all SI- HRM models is the cultural context of HQ and its different affiliates, which brings us to a second criterion, for example, the cultural component of HRM. While these two criteria serve as guidelines to decide on the most effective IHRM practice given the contextual factors, we add a third criterion that takes into account the power dynamics within the MNC. This criterion is crucial because the type of relationship between HQ s and affiliates will influence to a great extent the acceptance of the decision by the affiliate HR managers. We will now discuss these three criteria more indepth and then illustrate the relevance of these criteria by applying them to the story of the Belgian affiliate. Global versus Local Forces A first criterion in deciding on an adaptive, exportive, or integrative approach refers to the different global and local forces operating in the MNC. While global forces refer to the need for integration or interunit linkages, local forces refer to the need for responsiveness or differentiation of each affiliate to operate effectively in its local environment. Examples of these forces are most of the critical determinants of the SIHRM models. We limit our discussion here to the following factors: MNC s strategy, top management s belief, the international life cycle of MNC and affiliates, the strategic role of certain employee groups, and the legal environment. The purpose of this discussion is to indicate how these factors may affect the decision of which options to chose. For a more complete discussion of possible global versus local forces, we refer to the different SI- HRM models (see Taylor et al., 1996 for a review). IHR managers may want to start examining the degree to which the MNC s strategy itself is favoring global integration or local differentiation. Following Porter s (1986) two generic MNC strategies of multidomestic and global, Taylor and colleagues (Taylor et al., 1996) propose that MNCs who follow a multidomestic strategy are more likely to adopt an adaptive orientation. On the other hand, MNCs who follow a global strategy are more likely to adopt an exportive or an integrative approach. The reason is that a multidomestic strategy places primarily demands of local adaptation and as a consequence the MNC consists of relatively independent affiliates. This strategy will be supported by an adaptive IHRM system reflecting the different local environments. On the other hand, a global strategy requires a high level of coordination and control of activities (Bartlett & Ghoshal, 1989; Rosenzweig & Singh, 1991). This strategy may favor an exportive HRM system across all affiliates, which will help integrating. How- Deciding An IHRM Approach 433
ever, MNCs following a global strategy may also choose to adopt an integrative approach. Despite the drive towards internal consistency, local forces are also present which may lead to the decision to be simultaneously globally integrated and locally responsive. When differences in the local environment create the need for differentiation, IHR professionals may want to decide on allowance for local differentiation. One of the most influential factor of these local forces is the legal environment of the affiliates which will force a MNC to adapt certain HR practices to the local labor laws (see below). Besides allowance for local differentiation, IHR managers may decide on the choice of transferring best practices across affiliates and HQ. Factors that are likely to affect this decision are top management s belief and the international experience of the MNC. Top management is a key factor in determining the overall international strategy and its implementation approach (e.g., Roth, 1995). Their belief in the generalizability or specificity of policies and practices is a driving force of MNC s choices (Hedlund, 1986; Heenan & Perlmutter, 1979). For example, Interbrew, a Belgian brewery follows the multidomestic strategy of the World s Local Brewer and consequently adopts mainly an adaptive HR approach. However, a former CEO of this company coming from a French company in a global industry strongly believed in centralized decision making and decided on an exportive approach in all areas. With respect to HRM, HQ was responsible for recruitment and selection in the affiliates, and a global corporate culture program was installed. Afterwards, an IHR manager described the consequences of this centralized approach as a dramatic increase in overhead costs, a slow decision making process, heavy workload at HQ and promotion based upon visibility in HQ. Two years later, the company decided again on the decentralization of sales, administration and HRM. In contrast, Doug Daft, the current CEO of Coca Cola, strongly believes in a localized approach. In recent interviews in European newspapers, he strongly expresses the importance of thinking locally and acting locally, being sensitive towards the local environments. Although the company is operating more in a global market, the CEO s belief seems to move the company away from an exportive approach to an adaptive one. As a first powerful signal, the European affiliates are not led anymore by U.S. expatriates but by home country nationals. Other CEOs may believe in an integrated approach or the transfer of best practices across the whole company. For instance, the integrative nature of the global leadership program of UCB was strongly supported by the CEO of the pharmaceutical division. He believes that size and innovation come from exploring cultural diversity (Janssens, Keunen, & Brett, 1998) which instigated corporate HQ to emphasize intercultural communication and negotiation skills, to select international trainers, and to rotate the training program across different regions. Another important factor to consider is the life cycle of the MNC and its affiliates, and consequently their experience (Adler & Ghadar, 1990; Milli 434 Journal of World Business / 36(4) / 429 450
man et al., 1991; Schuler et al., 1993; Taylor et al., 1996). Newly internationalizing companies may choose to adapt an exportive approach. Their belief in their product and management practices or the high level of uncertainty may lead them to use their own practices at the outset (Rosenzweig & Singh, 1991). As MNCs gain more experience, they will receive feedback about the appropriateness of their approaches and may change their policies. For example, MNCs that encounter performance problems in international affiliates will usually move towards a more adaptive IHRM approach over time (Taylor et al., 1996). Or MNCs that encounter good practices developed in affiliates may move towards an integrated approach. Not only the life cycle and experience of the MNC as a whole but also that of specific affiliates is an important factor to consider. Newly acquired affiliates or green fields still need to be integrated into the MNC, which may favor the choice of an exportive approach. For example, British American Tobacco sent a Belgian HR manager for a temporary assignment to its new affiliate in Hungary. His task was to set up and monitor the selection procedure for new hires. According to him, it was a first step in assuring the transfer of the company culture and socializing the Hungarian employees. As illustrated in this example, an exportive approach is often accompanied by sending out expatriates. However, an exportive approach may also consist of transferring people from affiliates to HQ. For example, Bekaert, a Belgian steel company with affiliates in China, trains Chinese employees in HQ. During their time in Belgium, Chinese employees are appointed to Belgian colleagues performing a similar function. The training consists of following their Belgian colleagues as they perform their job it is called a shadowing job. According to the corporate IHR manager, the advantage of this approach is a greater willingness of the Chinese employees to adopt the HQ s approach and procedures, and the development of a personal network which makes it easier for Chinese employees to contact HQ when they are in China confronted with problems or questions. Another factor to consider is the strategic role of certain employees groups. Taylor and colleagues (Taylor et al., 1996) propose that an exportive approach will be adopted for the group of employees who are most critical to the MNC s performance. Because their contribution is critical, they will experience a higher level of control. For example, although Interbrew adopts mainly an adaptive IHRM approach, they opt for an exportive approach with regard to training for employees in technical brewer functions. Because competences related to the brewing process are considered to be the core competence of this 14 th century old brewery, they need to be transferred across all affiliates. In contrast, training programs for other functions such as marketing and sales are locally decided. While limited experience of the MNC and its affiliates as well as the strategic role of certain employee groups all indicate the need for control and integration, a very important force towards local differentiation is the legal Deciding An IHRM Approach 435
environment of the affiliates. IHRM systems will evidently need to take into account specific country laws with regard to labor relations, hiring and firing, compensation or other HR tasks. For example, social inspection in France is increasingly controlling companies to ensure that the effective working hours of higher level managers don t exceed the legal working hours per week. Or in Belgium, the government decided in 1994 on a stop in pay increases to control labor costs which forbid companies to offer salary increases. These two examples illustrate how local laws are not only restricted to lower level employees, as sometimes assumed, but may set important conditions to the management of higher level employees. So, a first challenge for IHRM professionals is assess the different forces that instigate the need for global integration and local responsiveness. Forces that seem to indicate a need for company-wide coordination are a global strategy, top management who believes in generalizability, less experience of the MNC, newly acquired affiliates or greenfields, and the critical role of certain employee groups. While these forces indicate a need for control and integration, there is still the question whether the coordination is imposed by HQ, an exportive approach, or whether coordination is achieved by transferring local best practices across the company, an integrative approach. Two forces that seem to differentiate between these two IHR approaches are top management s belief and MNC s experience in learning from different practices. In contrast, forces that indicate a need for local adaptation are a multidomestic strategy, top management who believes in context-specific practices, feedback from affiliates, and the legal environment. The Cultural Component of HRM The cultural context of HQ and the different affiliates is another crucial factor, mentioned in almost all SIHRM models (Adler & Ghadar, 1990; Milliman et al., 1991; Schuler et al., 1993; Taylor et al., 1996). While this factor can be considered to be one of the local forces, we discuss the cultural component of IHRM separately. We do so because culture is considered to be the main reason that the same HRM policies are not producing the same effects in different affiliates (Schneider & Barsoux, 1997). Differences in cultural values reflect different assumptions about the nature of the relationship between employers and employees and therefore lead to different interpretations and employees experiences of what good HRM practices are. Consequently, cultural differences are main drivers in deciding which HRM practices can be globally used and which HRM practices need to be locally adjusted. For example, practices with respect to selection, socialization, training, performance appraisal, reward systems and career development may all be experienced differently in individualistic than in collectivistic cultures (Hofstede, 1980). The policy of not hiring family members, for instance, may be completely accepted by people coming from an individualistic culture. Because it is the capability of the individual person that will drive the selec- 436 Journal of World Business / 36(4) / 429 450
tion decision, any other possible factors leading to biased decision making are being eliminated. In contrast, people from a collectivistic culture may experience this HR policy as strange because in-group members are likely to be more trusted and will show more loyalty. Therefore, IHR managers need to ask themselves questions about the appropriateness of HR practices: Who to hire? What kind of socialization practices is acceptable? What determines career success? How important is individual versus team effort and result? Such questions are very likely to be answered differently in different cultures. So, a second challenge for IHR managers is to understand the different cultural assumptions embedded in HRM policies and evaluating their likely impact. Being able to assess the cultural context is crucial in deciding which HR policies can be globally exported and which need to be locally adapted. It is a vital step in avoiding the possible alienation or low morale which comes from imposing HR policies that are ill-suited to the local culture (Schneider & Barsoux, 1997). The Political Component Because of Power Dynamics While the global and local forces and the cultural component are criteria that help to decide whether an adaptive, exportive, or integrative approach is effective, this third criterion of political component focuses on the acceptability of the decision by the affiliates. It may happen that the decision is strategically correct from a HQ s perspective but that the different affiliates have another opinion about its need or relevance. A challenge for IHR professionals is therefore to be sensitive to the power dynamics and understand feelings of reluctance. This awareness of the political dynamics brings us to the importance of the process of decision making. Following Kim and Mauborgne (1993), affiliate managers will be more inclined to accept a HQ s decision if HQ shows familiarity with the local conditions, if a two-way communication process is set up, if affiliate managers have the ability to refute a decision or receive an explanation for the final decision, and if decision making is consistent across affiliates. When decisions are being made with understanding of the effects and impacts for that affiliate, affiliate managers will judge HQ to be competent and sincere. Consequently, those decisions will be more respected. Affiliate managers will also value the ability to voice their opinion and work back and forth with corporate HR in decision formulation. If a two-way communication process is not possible, at least they need to be able to point out possible misperceptions or wrong assumptions made by HQ concerning local conditions or operations. Explaining final decisions is further important because an intellectual understanding of the rationale makes affiliate managers more inclined to implement those decisions. Finally, affiliate managers appreciate a consistent application of decisionmaking rules across affiliates. Otherwise, they think that the whole process is just a scam, a political arena where strategic decisions reflect not competi- Deciding An IHRM Approach 437
Table 1 International Human Resource Management Approaches Adaptive Approach Exportive Approach Integrative Approach Conditions A multidomestic strategy A global strategy A global strategy Top management s belief in context-specific practices Negative feedback about the appropriateness of exportive practices Legal environment Differences in cultural values Top management s belief in generalizability First stage of internationalization For newly acquired affiliates or greenfields For strategic critical groups of employees Advantages Localization, adaptability Standardization, internal consistency Disadvantages Fragmentation, duplication of efforts Inflexibility, feelings of rejection Top management s belief in sharing experiences Encountered good practices in affiliates Spreading of good practices Ill-suited for a particular context tive and economic dynamics but the dynamics of political interplay (Kim & Mauborgne, 1993). These guidelines may help corporate HR managers to make decisions about international HR practices as fair as possible. However, even with attention to the decision making process, it is very likely that corporate HR will experience resistance and reluctance towards their decisions. The reason lies in the mere fact that each party wants to reserve the power and autonomy to do things as they see fit. It is also for this reason that an exportive HR approach is very likely to lead to feelings of rejection, as indicated before. So, the discussion of the need for local adaptation is likely to hide a political subtext. In addition, it is often cultural differences that affiliate managers point to as the main reason for local adaptation. Comments such as but that will never work here in Belgium are then used as an excuse, a pretext for retaining local control. The advice from Schneider and Barsoux (1997) is to approach such comments as subjects for dialogue rather than accept them as a given. So, a third challenge is to correctly assess the underlying political concerns that may influence the discussion of where integration is possible and where local responsiveness is needed. To conclude, IHR managers may want to consider three types of criteria when deciding on an IHR practice. First, they may want to examine the different local and global forces leading to a judgment whether these forces ask for local variation, for HR policies to converge, or for global diffusion of best practices. Second, IHR managers need to understand the cultural embeddedness of HR practices to evaluate their likely impact. Table 1 gives an overview of these different conditions leading to an adaptive, exportive or integrative IHRM approach, as well as the advantages and disadvantages of each approach. Finally, IHR managers need to be sensitive to the political concerns 438 Journal of World Business / 36(4) / 429 450
of the affiliates to make the decision acceptable. Assessing the IHR Decision in the Belgian Case To illustrate the relevance of the developed guidelines, we apply the three different types of criteria to the IHR decision in our original story. As the story indicated, a U.S. MNC adopted an exportive approach, imposing an appraisal system reflecting a Gauss curve on the Belgian affiliate to ensure a dynamic and result-oriented company. Examining the first criteria of assessing global and local forces, it seemed mainly the CEO s belief in a boundaryless world that drove this decision. In general, the company moved into the direction of an uniform approach applying the same policies for all affiliates. In the area of HRM, HQ believed that a turnover of 15% was the signal of a dynamic and result-oriented company and affiliates with a lower turnover were forced to use an appraisal system weeding out bad performers. Although the IHR practices supported top management s belief in the transfer of uniform practices, the cultural and political component of this decision can explain why this IHR decision was leading to negative reactions. The belief in the relationship between a 15% turnover and a dynamic, effective company is not free from cultural values. While this may apply in the U.S. context, employment relationships in Belgium are characterized by a psychological contract of high loyalty, low exit. On average, 96% of employees stay in their same job position, an estimation that confirms the preference of Belgian employees for job stability and security. Also most Belgian employers favor long-term relationships offering in general long term, open-ended contracts (Sels, Janssens, Van den Brande, & Overlaet, 2000). Such a high company-employee bonding makes a turnover of 5% very acceptable. Given this cultural context, it is understandable that a performance appraisal procedure with a threat of lay-offs is a violation of psychological contracting in Belgium and leads to negative reactions among Belgian employees. Besides the cultural component, the resistance towards the IHR decision can be further understood by the power dynamics within the MNC. The Belgian affiliate considered itself as a local innovator and therefore claiming an important strategic role within the whole company. The expected freedom and influence coming along with this strategic position was consistent with the decentralized management approach of the past. However, the recent centralized approach was a threat for the autonomy and control of the Belgian affiliate, which in it was leading to feelings of rejection towards HQ. In addition, this specific IHR decision was unilaterally made by HQ with no possibilities for input from affiliates or an explanation from corporate HR why and how a dynamic and result-oriented workforce was linked to the company s strategy and/or culture. Of course, one can question whether a two-way communication process or a discussion about the cultural appropriateness of the performance appraisal procedure would have removed all negative reactions. Deciding An IHRM Approach 439
Given the changing power dynamics within the MNC, it may be very likely that the Belgian HR managers would have used culture as a reason for developing its own system, claiming at that moment also back their autonomy. DEVELOPING A CULTURALLY SYNERGISTIC IHRM APPROACH Although IHR manages can theoretically choose among three options: an adaptive, an exportive and an integrative IHR approach, the discussion above indicates that MNCs are confronted with the challenge of simultaneously considering global integration and local adaptation. So, a pure exportive or adaptive IHRM approach doesn t seem advisable to choose. Among the three options, it is the integrative IHRM approach that focuses on substantial global integration with an allowance for local differentiation. In this approach, the balance is being achieved through transferring best practices between HQ and affiliates. However, we would like to develop an approach that designs new combinations of HR practices, instead of only transferring best practices. This approach, a culturally synergistic approach to IHRM, is rather ambitious because it tries to seize the opportunity of mutual dialogue to experiment with creative variations. To develop this IHRM approach, we first rely on existing models of cultural synergy in which new outcomes or solutions come from exploring cultural diversity (Adler, 1997; Hoecklin, 1995) and on Schein s (1999) process model of problem solving. Models of Cultural Synergy and Problem Solving The idea of cultural synergy refers to the creative potential of cultural differences, leading to new solutions and approaches that transcend the existing differences. According to Adler (1997: 108): culturally synergistic organizations reflect the best aspects of all members cultures in their strategy, structure and process without violating the norms of any single culture. Synergies are the benefits resulting from a decision that integrates differences and creates a resolution that has more value and benefits than would be produced by a compromise solution. This idea of cultural synergy can be found in the work of both Adler (1997) and Hoecklin (1995). The difference between the two models seems to be mainly the first step. While Adler takes a problem-solving approach to cultural synergy, Hoecklin adopts a value-added perspective to cultural synergy. Adler s (1997) synergistic approach to problem solving involves three fundamental steps: (1) describing the situation, (2) culturally interpreting the situation, and (3) developing new culturally creative solutions. Managers first define the problem to be solved from the perspectives of all cultures involved. Once they recognize the problem, they culturally interpret the situation by analyzing and explaining the patterns that make each culture s behavior logical from within its own perspective. Third, they develop new culturally creative solutions that foster the organization s effectiveness and productivity without violating the norms of any cul- 440 Journal of World Business / 36(4) / 429 450
ture involved. After implementation, managers refine the solution based on multicultural feedback. An example of this approach is a conflict between American and Japanese sales representatives in a U.S. company. While the American sales representatives want to promise their customers specific delivery dates and hours, their Japanese colleagues often refuse to promise delivery times. A synergistic solution, which assures that neither style is treated superior to the other, would be promising delivery within a range of time rather than at specific times. This solution addresses both the American concern of developing credibility with American customers and the Japanese concern of keeping promises (Adler, 1997). Hoecklin s perspective on cultural synergy (Hoecklin, 1995) is proactiveoriented. She argues that managers from each culture must jointly work through the following steps to consider the value of culture at the start of a working relationship: (1) agreeing on the specific outcomes that are desired from the interaction; (2) understanding each culture s way of doing things in trying to achieve the outcome; (3) agreeing to an approach by creating new alternatives or blending approaches which will lead to achieving the desired outcomes; (4) implementing the solution and reviewing the impact from a joint perspective; and (5) refining the solution based on multicultural feedback. For instance, in the case of a joint-venture, a team of British and Japanese managers agrees upon the objective of a team spirit/equal status culture. For several practices such as conducting meetings, reviewing performance and type of work clothes, they discuss their different approaches and negotiate the most effective way of ensuring the desired outcome. The result is a combination of practices reflecting both the English culture that is more attuned to individual performance and the consensual Japanese way of working. While these two models of cultural synergy offer us the basic steps of a culturally synergistic approach to IHRM, we further draw upon the problem solving model as discussed by Schein (1999). Schein s process model distinguishes two basic cycles of activity one that occurs before to any decision or action, and one that occurs after a decision to act has been taken. The first cycle consists of three stages: (1) problem formulation, (2) generating proposals for action, (3) forecasting consequences of proposed solutions and testing proposals. This cycle ends when the group has made a formal decision on what to do. The second cycle then involves (4) action planning, (5) action steps, and (6) evaluations of the outcomes, often leading back to the first cycle with problem redefinition. For each of these stages, Schein (1999) discusses the different task processes in groups and provides guidelines on when and where to intervene in a group to avoid common traps. Our next step is to translate the steps and insights from these existing models into a culturally synergistic approach to IHRM. Because this approach will be realized at the operational level by workshops, seminars, and structured meetings, we further rely upon studies on multicultural teams (Adler, 1997; Deciding An IHRM Approach 441
Figure 1 A Culturally Synergistic Approach to IHRM Janssens & Brett, 1997; 2000). Insights on the way multicultural teams function will help us to identify practices that facilitate the inclusion of the different cultural perspectives. A Culturally Synergistic Approach to IHRM The culturally synergistic IHRM approach, as presented in Figure 1, consists of 7 steps: (1) felt need for an integrated IHRM practice, (2) developing a superordinate goal, (3) exploring best practices of different cultures, (4) assessing the cultural appropriateness of solutions, (5) decision making by consensus, (6) taking action steps, and (7) evaluating the outcomes of the action steps. 1. Felt Need for an Integrated IHRM Practice The approach starts with the first step of explaining the felt need for an integrated IHR practice. This is crucial because, although the decision to coordinate may be strategically correct from a HQ s perspective, the different affiliates may question the need or relevance of an integrated IHRM practice. As already discussed under the political component of IHRM, corporate HR managers may overcome feelings of reluctance by involving local HR managers in the development of the integrated plan or at least by giving them an explanation for the decision. If affiliate HR managers have an intellectual understanding of the rationale how this decision will support specific organizational strategies, they may be more inclined to implement the decision (Kim & Mauborgne, 1993). 2. Developing a Superordinate Goal Once the different HR managers understand and accept the need for an integrated IHRM practice, the second step refers to determining the desired outcome. To ensure the potential value of their cultural differences, the Group IHR managers needs to agree on the specific outcome that is desired from their interaction (Hoecklin, 1995). However, agreeing on a desired outcome is one of the most difficult steps because the differences between the HR managers may interfere with doing so. One way to overcome these differences 442 Journal of World Business / 36(4) / 429 450
is to develop a superordinate goal. Superordinate goals are goals that are broadly defined, giving only general direction which allows for the incorporation of the team members differences (Adler, 1997; Janssens & Brett, 2000). A helpful guideline to agree upon a superordinate goal may be to formulate the goal as an open task instead of a solution. A goal formulated as a solution often has a convergent, reductionistic characteristic, which only leads to resistance. For instance, setting the goal of installing a pay for performance system is already a very specific practice of a reward system. The convergent nature of such a goal is likely to lead to disagreements among the different HR professionals because this particular solution may interfere with their different perspectives on how to reward employees. In contrast, formulating the goal in a more divergent way may indicate that no right answer exists a priori. For instance, the goal may be to develop a reward system that increases the commitment of employees. The desired outcome is here presented as an open task through which the different team members are more likely to see an opportunity to contribute. 3. Exploring Best Practices of the Different Cultures Once the superordinate goal is agreed upon, the Group HR managers can move on to producing ideas or courses of action that might lead to the desired outcome. A common trap in this step is that proposals are evaluated right away and that the group lapses into debate instead of developing a dialogue format (Schein, 1999). If the group starts an early evaluation and start raising questions that highlight what is wrong, the groups fails to look at a whole array of possible ideas for a desired outcome. One way that might help here is to adopt an appreciative orientation. If the group starts with an appreciative orientation, it will be more likely to follow up with questions that emphasize what is working and appreciating what is in each culture (Barret & Cooperrider, 1990; Cooperrider & Srivastva, 1987). The purpose of this step is therefore to explore best practices from each culture that are possibilities for a solution. Another, most likely, pitfall in this step of exploring possibilities is that the group is being dominated by one person or a subgroup. Dominance by an individual or subgroup is generally counterproductive in an international team because it stifles the contributions of nondominant, low status team members (Janssens & Brett, 1997). Inputs of perspectives are decreasing and therefore also the possibility of learning. Insights on multicultural teams indicate that equal power or power according to each member s ability to contribute to the task is an important condition of stimulating synergies in multicultural teams (Adler, 1997). Therefore, the team of HR professionals may want to decide on a principle that creates opportunities for every party to speak up and be listened to. Although the principle is general, the specific rules need to be designed by the team itself and can take different forms. An example can be found in the Body Shop where there is a hard rule that governs every meeting. This rule states that if conversations be- Deciding An IHRM Approach 443
come heated, people make a circle so no rank exists and pass a talking stick to each other so everybody is listened to. It s a hard rule meaning it is being used with no exceptions (Janssens & Brett, 1997). A specific area of attention for multicultural teams is that of language (Janssens & Brett, 2000). Although English is generally the business language, it is very often the native language of only a few team members. Team members fluency will differ and consequently their capabilities to join and influence the team process. Furthermore, because there is a tendency to judge others based on their language fluency (Louw-Potgeiter & Giles, 1987), admitting a failure to understand requires a great deal of confidence. So, members in this position are sometimes unlikely to even try to participate in team decision making. One way the Group HR managers may want to deal with language differences is to develop rules for speaking up and asking for clarification. Setting rules or agreeing on how the group will deal with lack of understanding will make people more confident to ask for clarification when they don t understand (Janssens & Brett, 2000). Furthermore, the act in itself is a crucial signal of respect and is likely to stimulate cooperation and trust among the team members. Besides language, contribution of a team member may also be influenced by the status of the affiliate that the team member represents (Janssens & Brett, 2000). Affiliates within a MNC can be expected to have differential status or power because of their competitive position, contribution to market share or profitability within the global organization. This differential status of the affiliates may be reflected upon the status of the different HR managers and consequently create personal or subgroup dominance within the international team. To avoid this, the group may want to decide on the simple rule that team members from so-called lower status affiliates will present their best practices first. This insight was, for instance, used by a person managing a network of mayors from large cities all over the world to improve the organization of cities by addressing issues such as crime, pollution, safety. Because the power dynamics in this network were very much determined by the distinction of the rich North versus the poor South, she decided to let mayors from poor cities in the South present their best practice first. By doing so, she encountered a greater willingness of the higher status mayors to listen to these alternatives and a culture of equal contribution was induced. 1 4. Assessing the Cultural Appropriateness of the Solutions Once a number of ideas for a solution have been proposed, the fourth step is to forecast and evaluate the consequences of adopting a particular HR practice or combination of HR practices. This process is difficult because the evaluation criteria are often either not clear or there is disagreement on which ones to use (Schein, 1999). In the context of deciding on an IHRM practice, an important criterion is the cultural appropriateness of implementing the HRM practice in each local affiliate. As already dis- 444 Journal of World Business / 36(4) / 429 450
cussed, the cultural component of HR practices makes it crucial to evaluate its likely impact to avoid rejection or low morale which comes from using a HR practice that is ill-suited to the local culture. Important is also to take enough time because groups typically fail to allow enough time to evaluate the various ideas that they have produced (Schein, 1999). This step may even lead to a reformulation of the superordinate goal because the input from this step may question certain assumptions or alternatives previously taken for granted. Although the iterative nature of this step may take longer and initially appear to be inefficient, failure to evaluate the proposed HRM practice is otherwise likely to lead to rejection in the implementation phase (Schein, 1999). 5. Decision Making by Consensus Cycle 1 ends with the group making a decision to move forward on action. Fundamental to synergy is a decision rule that requires a large proportion of the team s members to agree to the decision, either 2/3 majority, consensus, or unanimity (Brett, 2001). Seeking consensus is also recommended in Schein s process model (Schein, 1999) as one of the most effective but also time-consuming methods of group decision making. According to Schein (1999) consensus doesn t need to mean unanimity. Rather it is a state of affairs where communications have been sufficiently open, and the group climate has been sufficiently supportive, to make all members of the group feel that they had a fair chance to influence the decision. If consensus is crucial for synergy and decision making, the team HR managers may want to develop a decision rule and define how many or which team members must agree for the team to reach a decision. By setting such an integration norm, opportunities for minority members are increased to express their views and influence the decision. However, important in implementing a decision rule in multicultural teams is cultural appropriateness and meaning (Janssens & Brett, 2000). Members may agree on consensus as a decision rule but disagree about what consensus means. For example, while HR managers from egalitarian cultures may be used to discuss options until a consensus is reached, HR managers from hierarchical cultures may view such a prolonged discussion with insiders as inappropriate because it is the outsiders who need to approve. An integrative solution to this dilemma would be that preliminary internal consensus is followed by external consensus, followed by final internal consensus, or some other pattern that mixes internal and external consensus. Because a synergistic approach to IHRM means involving different HR managers from different cultures, it is advisable that the specific decision rules also reflect these meanings. 6. Taking Action Steps As the group reaches some consensus on a proposed HR practice, action steps can be taken. One of the major pitfalls of this step is to make general plans Deciding An IHRM Approach 445
without assigning clear responsibilities to specific members for specific actions (Schein, 1999). Another danger is that the implementation is delegated to some other person or group in the different local affiliates. This may not be a sound approach because this person or group has not been involved in formulating the superordinate goal and exploring and assessing the different alternatives. They may feel less committed to the HR practice or experience the proposal too unclear to permit implementation. Therefore, ideally the HR managers involved in the decision cycle are also responsible for the action cycle. If that is not possible, implementers should be brought into the decision process at the earliest possible stage, or, at least, they should be completely informed about the discussions and decisions made in the previous steps (Schein, 1999). 7. Evaluation The final step refers to the importance of an adequate evaluation. To ensure this, the group is advised to, in advance of taking action, reach consensus on how they will determine whether or not the action steps are achieving the desired outcome (Schein, 1999). Consistent with the logic of cultural synergy, this evaluation step means that the solution is being refined based upon multicultural feedback (Adler, 1997; Hoecklin, 1995). After implementing the synergistic IHR practice, the impact is observed from each culture s perspective. This may imply that the HR practice needs to be modified to fit the cultures or the desired outcome better. The group may therefore need to be even psychologically prepared to go back to the initial step of formulating a superordinate goal before rushing into other alternative HR practices. Applying the Culturally Synergistic Approach to the Belgian Case To demonstrate this culturally synergistic approach to IHRM, we apply the approach to our original U.S.-Belgian story and discuss how corporate HQ could have acted differently. Following the different steps, corporate HR could have started with explaining the felt need for an integrated HR practice. The HQ s decision originated because of the need for a dynamic and result-oriented workforce but this was never explicitly communicated to the Belgian HR managers. The first step would therefore consist of providing Belgian and all other HR managers with information of why and how a dynamic and resultoriented workforce is linked to the overall strategy or the changing business conditions of the MNC. Setting up a two-way communication process about the desired future direction of HR is likely to lead to less resistance than imposing a specific HR practice on affiliates. Once the need for an integrated HR practice is understood and accepted, corporate HR could have developed a superordinate goal together with its affiliate HR managers. Instead of imposing a performance appraisal system reflecting a Gauss curve on those affiliates with a turnover of less than 15%, corporate HQ could have brought together all affiliate HR managers. The objective of this meeting would be to agree upon 446 Journal of World Business / 36(4) / 429 450
an overall goal that will lead to a dynamic and result-oriented workforce. To identify such a superordinate goal, the HR managers will need to discuss what they understand by a dynamic and result-oriented workforce. While a turnover of 15% might be a good indicator for HQ, this might be very different for other affiliates, as is the case for the Belgian affiliate in which low turnover means commitment and loyalty to the organization. The challenge will be to discuss the meaning of a dynamic and result-oriented workforce instead of arguing about specific indicators such as % turnover. If there is a consensus that, for instance, taking responsibility is important, the superordinate goal may be to design a HR practice that will stimulate this type of behavior. Once the superordinate goal is agreed upon, the Group HR managers could move to the next step of exploring each other s best practices. Each HR manager will share a practice that in his/her experience has led to the desired outcome of taking responsibility : a payfor-performance system, a training program about leadership, or the redesign of the tasks into semiautonomous groups. Important in this stage is to ensure that all HR managers feel comfortable to contribute. As discussed above, the group should therefore decide on some principles that create equal opportunities to speak up. After the different experiences are being shared, the next step is to assess the cultural appropriateness of the different proposed solutions. Based upon their understanding of their own and each others culture, the Group HR managers should discuss the likely consequences of adopting a particular HR practice for each affiliate. As indicated above, this will take time and requires an in-depth understanding of the relationship between cultural values and the meaning of HR practices. The result however may be a combination of HR practices that is acceptable for all HR managers as well as addresses HQ s need of a dynamic and result-oriented workforce. For instance, the decision might be to install developmental interviews twice a year in which opportunities for responsibility in the job design are being discussed, combined with a pay-for-performance appraisal at the end of the year. However, the culturally synergistic approach doesn t end with this decision. Corporate and affiliate HR managers will need to test out and evaluate the chosen HR practice. As discussed above, this step may lead to a reformulation of the HR practice or even of the superordinate goal because the input from other parties may question certain assumptions or alternatives previously taken for granted. To conclude, when introducing a culturally synergistic approach for the first time, HQ needs to be aware that the process will be time-consuming. As both indicated by Adler (1997) and Hoecklin (1995), the process of a synergistic approach is not a quick fix but instead a systematic process. In the beginning, the process should be addressed explicitly and formally; later, it will become more informal and considerably less-time consuming because the learning acquired during the initial meetings will become part of the organization s increasingly global perspective and cross-cultural competence. Deciding An IHRM Approach 447
CONCLUSION The purpose of this paper was to offer IHR professionals insights and guidelines of how to decide on an IHRM policy. Following the SIHR models, IHR professionals have the options of an exportive, and adaptive and an integrative IHR approach. The three main criteria that can help making the decision are an assessment of the local and global forces, the cultural component of HR practices and the power dynamics within the MNC. As forces for global integration and local adaptation are simultaneously present, the result may be a mix of the three IHR approaches across different tasks, affiliates and employee groups. Besides an exportive, adaptive and integrative IHR approach, IHR professionals may want to consider a culturally synergistic approach to IHRM. A culturally synergistic approach has the ambition to design new HR practices by recognizing and transcending the individual cultures. It therefore goes beyond an integrated approach which refers only to a global diffusion of best practices and not to a new combination. The advantage of a culturally synergistic model lies in simultaneously considering the need for global coordination, the recognition of the cultural embeddedness of HRM, and the importance of power and autonomy of the local affiliates. Global coordination can be ensured by taking the need for an integrated IHRM practice as a starting point and by evaluating at the end whether or not the chosen solution can serve as the integrated IHRM practice. However, coordination and control in this case does not mean that HQ itself can decide on the type of HR practice. Instead, coordination in a culturally synergistic approach consists of a feedback and monitoring process. The second criterion, the cultural component of HRM practices, is surely recognized because the approach consists of exploring best practices of different cultures, trying to understand how these practices lead to the desired outcome and then trying to create new alternatives by blending and combining practices. And finally, the approach stresses as much as possible a jointly decision making process with equal power as an important condition for stimulating synergies. By choosing this approach, HR managers may become actively involved in developing an organization that values cultural differences and in guiding their organization toward a more inclusive worldview. NOTES 1. This insight was shared by one of the participants in a 4-day workshop on Appreciative Inquiry, October 1996, organized by Taos Institute with David Cooperrider & Diane Witney. REFERENCES Adler, N. J. (1997). International dimensions of organizational behavior. Cincinnati, OH: SouthWestern College Publishing. Adler, N., & Ghadar, F. (1990). Strategic human resource management: A global perspective. In: R. Pieper (Ed.), Human resource management in international comparison (pp. 235 260). Berlin: De Gruyter. 448 Journal of World Business / 36(4) / 429 450