05 Dec 2015International Human Resource Management

Course Outline

1. Internationalisation of HR activities2. Multiculturalism3. HR in a comparative perspective4. Strategic IHRM5. Global staffing & global workforce training and development (CCT- x cultural trg)6. Developing international staff and multicultural teams7. Cultural factors / issues in performance management 8. International compensation management9. Repatriation10. International industrial relations11. IHRM practices

Activity - Travelling to Unknown Lands

Hi Christy, I am Bhushan,

1. Where are you from in Rimal and what do u do?2. I have a place in florentine plaza, 33rd street, Rimal Boulevard. Any idea how is the locality?3. When did Mograland come into existence? Have Mograns heard of Mahatma Gandhi?4. What is the major religion and large spoken language?5. Are there many expats and is it increasing or decreasing lately? 6. What is the staple food?7. Do shops and business establishments accept the US dollar as currency or only Mogrees?8. Is it a 6 or 7 day work week? Is it a fast paced life or leisurely?9. Have you heard of Symbiosis industries? 10. Care to join me for dinner tonight, of course to learn more about Rimal and Mograland?

Experts say these should be covered

1. What is the local greetings to say hello, thank u and good bye?2. Is it expected to offer gifts? What is appropriate?3. What’s best to eat and drink?4. Are there any religious taboos I should know about?5. Are there any questions I should not ask?6. Do Mograns attach importance to personal relationships in business?7. Do they worry about punctuality and business?8. Is documentation important in business?9. What’s everyone in Mograland talking about nowadays?10. Do Mograns have stereotypes about my culture?

Who is an expatriate ?

- An employee who is working and temporarily residing in a foreign country- some firms use the term “international assignees”- PCN - Parent country nationals - firms headquarters- HCN - Host country nationals - subsidiary is located- LCN - Local nationals- TCN - Third country nationals - belongs to any other country

Global flow of HR - more complexity in activities and more involvement in employees lives.

Cultures

- Professional culture- National culture- Organisational culture- Subsidiary culture

Why Expatriates are selected?

- Broaden international perspectives - 23- New ventures - 22- Train locals - 20- specific expertise - 20- Protect company interest - 16- Developmental assignments - 12- Technology or skills transfer - 10- Management development - 6- Sales - 5- All others - 10

Inpatriation - employees from host country move to headquarters in a foreign country to work.

12 Dec 2015

Classification factors for culture assimilation

- Language- Eg: K-Mart example in Prague of not wearing “I am here to serve you”.- Eg: American Airlines positioned a “Rendezvous Lounge” in Portugal, where in Lisbon it

meant Red light area.- Values & Attitudes

- Eg: In Mexico in 1990, a nationalist movement was on. Walmart revamped all stocks & made everything in Mexico.

- Manners and Customs- Eg: British Airways Flight Attendant saying “Namaste” in India- Eg: Amway CEO learnt to break coconut in one shot.- Eg: Hotels in Europe change the wall papers, flowers etc for Japanese guests.

- Material Culture- Gold and India- Gujarathis and share markets- Andhraiites & gold- Eg: EDLP - every day low price in Walmart- Spain and bank densities being high- Mexico and detesting of plastic money

- Aesthetics- Eg: Glossy red colour and the chinese obsession with that kinda colour- Eg: In Saudi Arabia, Nike symbol is inverted- Eg: In Pakistan, Woodlands has a base colour of Blue.- Eg: Islamic Banking - Eg: Kurta - pajama for an occasion in India, for an expat

- Educational & Social institutions- Rituals- Patriarchal society- The above two are social institutions- ( go through the advertisements of coca-cola and see six ads of coke in turkey, Saudi

Arabia, US, Scandinavian countries and Japan)- Eg: Metlife in India, had a tagline, “ Have u met life today??”. In US, “Get met. It pays!!”- Eg: A Japanese student will not interrupt a class. In Spain, classrooms are large, and they

continue to speak even during the lecture.

EXPATRIATE ASSIGNMENT LIFE CYCLE

Determining the need for expatriate

The selection process

Departure

Pre-assignment training

Crisis and adjustment

Post arrival orientation & training

Crisis and failure

Reassignment abroad

Repatriation & adjustment

Or

Or

Diversity as an Organisational and HR challenge in MNE

Age

RACE

Physical Abilities

A model of IHRM

Human Resource Activities- Procure - Allocate- Utilize

- Host- Home- Other

Type of employees- HCN- PCN- TCN

What does IHRM add into the traditional framework of IHRM?

- Types of employees- Within and cross cultural workforce diversity- coord- comn

- HR activities- Procurement- Allocation- Utilisation of HR

- Nation/ country categories where firms expand and operate- Host country- Parent country- Third country

Assignment 1 : 25 Marks

SAT : 25 marks

Quiz : 25 Marks

Case Study written test : 25 marks

Assignment 1

- on Multiculturalism- Case based assignment- A company would be given, with its national location of headquarters. an employee from a

different county will be chosen and then we have to give a fitment score for hiring this particular employee, to decide if he could be hired or not.

MULTICULTURALISM

International Business Failures

- Why did Walt Disney (Disney World) struggle in France?- 1992 opens - only in 2008 shows first profit- Restaurants had inadequate seating capacity - europeans like sit-down meals rather than

foo-on-the-go.- Europeans take fewer but longer vacations, unlike Americans- Wine was not served during meals - wine is integral to french culture.- Europeans were used to walking & did not use the expensive tram system.- French employees did not appreciate the strict grooming rules for Disney staff.

- Why did Walmart exit germany?- 1997 WM acquires 21 hypermarkets from German retailer wertkauf and 1998- 74 more

from Interspar, finally 2006 closure of operations in Germany.- American hire & fire policy did not work.- Friendly ‘greeter’ at the door and ‘ten-foot’ rule not appreciated by german customers.

Germans do not like over-friendly gestures.- English imposed as working language.

- Why did the Daimler- Benz Chrysler merger fail?- 1998 - German Co Daimler- Benz AG & US auto co chrysler merged, 2001 Chrysler losses,

US management team removed, losses continue, till 2007 Daimler Chrysler sells Chrysler to a private Equity famine NY- renamed Daimler AG.

- Germans spoke in German during meetings in the USA.- HQ of Chrysler shifter to Stuttgart, Germany.- Mismatch of informal, outward looking and flexible culture in Chrysler with conservative,

rigid and hierarchical culture of Daimler-Benz.

Cross-cultural Barriers Faced

- Ethnocentricism - Believing that the people, customs and traditions of your own race or nationality are better than those of other races.

- Self- reference criterion - Judging another person’s culture by the yardsticks of your own culture.

Globalisation

- Trade, JVs, M & As have increased dramatically, leading to : - Workforce diversity- Outsourcing and off-shoring- Business and social networking- Virtual teams with members spanning the globe- Increase in number of international assignments

Drivers of globalisation

6 Key drivers : -

- Developing economies with huge markets- Move to low wage and low cost countries- Changing demographics- Declaration of regional trading blocks

- Declining trade and investment barriers- Technology shrinking the world

What is culture?

- Culture can be defined as a patterned way of thinking, feeling and reacting that exists within a particular group, organisation, profession, sub group of society, nation, or a group of nations (Carrol and Gannon, 1997)

- Culture is the collective programming of the mind - the software of groups in society.- Coca Cola, McDonald’s, CNN, Nike - Global consumer lifesyle has led to a global homogenous

culture - geocentric organisations- High technology has linked the world in a tight web.

Note : Do a study on youtube , of the type of coca cola ads from world over.

Nation

Sub-culture

Org

Individual Emp

Profession

Cultural pre-dispositions

- Ethnocentric - From HQs of origin country. Eg: German auto companies- Polycentric - Completely local Eg: Coca Cola- Regiocentric - from Particular region- Geocentric - From anywhere in the world

Organisational Culture types

- Autocratic or feudal culture- Bureaucratic culture- Technocratic culture - quality standards and adherences- Entrepreneurial culture

Influence of culture on individuals

(Ashwath Thapa and dash - case study on website)

( written assignment - 25 marks minimum - 10 pages, hand written, to be put in a folder and submitted on or before 26 January- Analyse the problems and come up with the interpretation, with only culture as the barometer.

Use the above diagram for the assignment)

9th January - Situation assessment test - 25 marks

Individual attitudes,values, beliefs, behaviour

National Culture: Religion,

Language, ethnicity

Company culture: history, size, type of

biz ldrship

Professional culture: Culture,

education, training, function

Individual personality

Influence of individual culture

- individual personality- professional culture- the country culture- the company culture

Cultural Dimensions

- cultures are diverse and complex - managers cannot study each nation’s specific culture in detail.

- Identifying common dimensions and quantifying these dimensions for different cultures help to ease the international manager’s task.

Kluckhohn and Strodtbeck - Six Value Dimensions

1. How do we view the environment?2. How do we see relationships among people?3. How do we view our role in the world?4. What is basic human nature?5. How do we think about and use time?6. How do we think about and use space?

- Influence on workplace policies - in societies that believe that human beings are basically evil, management control systems

will be very tight.- In societies that are oriented towards the future, rewards will be contingent on performance.- In societies which believes man is dominant over nature, goals will be specific and confident

Geert Hofstede’s Four Dimensions

- Dutch Social Scientist - often regarded as one of the founding fathers of cross-cultural management

- Did a seminal study among IBM employees in the 1960s in 64 countries which validated four dimensions of national cultural differences. Later added one more dimension.

1. Relationships - The importance of the individual vs the collective; importance of relationships

6. Priorities in Life - Is success defined by money and material goods or a work-life balance?

2. Inequality - How much inequality do people accept?

7. Risk - taking - How willing are people to take risks?

3. Time - How do people treat time? 8. Emotions - Do people feel free to express their emotions?

4. Space - How is space used? Is privacy important?

9. Rules & regulations - Do people take rules and regulations very seriously?

5. Language - What are the relative roles of verbal and non-verbal communication

10. Control over destiny and nature - Do people feel that they ave control over their destinies and over nature.

1. Power Distance1. Power distance is the degree to which people in a society accept inequality2. High Power distance cultures - India, China, Malaysia, Philippines3. Low Power distance cultures - Australia, NZ, Sweden Denmark

2. Individualism and collectivism1. Individualism pertains to societies in which the ties between individuals are lose and

everyone is expected to look after themselves and their immediate families: Examples - US, UK, Canada, Netherlands

2. Collectivism pertains to societies where the identity of the individual is based on the identity of the group he or she belongs to, whether family, village or company ; Eg : Guatemala, Ecuador, Panama, Venezuela

3. Masculinity and Femininity1. Masculinity - Pertains to societies where men are supposed to be assertive, tough and

focussed on material success, whereas women are supposed to be modest, tender and concerned with quality of life. Eg: Japan, Austria, Venezuela, Italy , Switzerland

2. Femininity pertains to socities in which social gender roles overlap i.e., both men and women are supposed to be modest, tender and concerned with the quality of life. Eg: Sweden, Norway, Netherlands, denmark, Costa Rica

4. Uncertainty Avoidance1. Uncertainty Avoidance can be defined as the extent to which members of a culture feel

threatened by uncertain and unknown situations2. It is not the same as risk avoidance3. Risk is focussed on a specific event; It is the probability that a particular event will happen.4. UA leads to reduction of ambiguity and people in such cultures look for structure in their

organisations5. Eg; Greece, Portugal, Uruguay, Belgium, Guatemala

5. Long -term Orientation1. The fifth dimension was measured in a study among students in 23 countries around the

world using a questionnaire by Chinese scholars.2. Values associated with LTO are thrift and perseverance and respect for tradition, fulfilling

social obligations and protecting one’s ‘face’.3. China has highest LTO score4. eg: Hong Kong, Vietnam, Korea and Japan5. India has a moderate LTO score6. Countries like the US, UK, Germany, Norway, NZ and Sweden have a short term

orientation

30 JAN

Trompenaars Framework

- A European researcher who conducted a research with 1500 managers from 28 countries, representing 47 cultures. Uses 7 dimensions to describe culture also called 7d cultural dimensions model.

- Universalism Vs Particularism- Individualism Vs Collectivism- Neutral Vs Affective- Specific Vs Diffuse- Achievement Vs Ascription- Sequential Vs Synchronous- Inner-Directed Vs Outer-Directed

Universalism Vs Particularism

- Universalism - Rules and principles are always applicable. The universalist approach is that in which rules and principles are always applicable. Eg: US, UK, Switzerland, Germany, Australia, Norway, Sweden. Legal contracts are readily drawn up and a deal is a deal.

- Particularism - While in this approach, the application depends on the context. Eg: China, India, Malaysia, Spain, Russia, Indonesia, Venezuela. Relationships and circumstances take precedence over the rules and exceptions are accepted easily.

- Individualism and collectivism-

Individualism pertains to societies in which the ties between individuals are lose and everyone is expected to look after themselves and their immediate families: Examples - US, UK, Canada, Netherlands

Collectivism pertains to societies where the identity of the individual is based on the identity of the group he or she belongs to, whether family, village or company ; Eg : Guatemala, Ecuador, Panama, Venezuela

Neutral Vs Affective

- Neutral - The person would not express. Whether it is acceptable to express emotions or whether interactions should be objective and detached. Expressing emotions is not appreciated. Eg: Japan, Germany, Indonesia, UK, Sweden, Norway

- Affective - Emotions can be expressed. Eg: France, Spain, US, India

Specific Vs Diffuse

- Specific - Relationships are confined to specific areas such as business and personal. Eg: US, UK, France, Germany

- Diffuse - Where people you work with know you personally and accept the way you are. there are no boundaries. Different areas and relationships function at all levels. Eg: China, Hungary, Russia, Italy, Spain, India

Achievement Vs Ascription

- Achievement - “What did u study?”. Getting things done, as we are valued for ‘what we do’. An individual is judged by their recent achievement and by their work record. Eg: US, UK, Australia, France

- Ascriptive - “ Where did you study?” Being true to who we are for we are valued for who we are rather than what we do. An individual is judged on the basis of his family background. Gender, Age and educational record are also accorded a lot of importance. Eg: Italy, China, Japan, India

Sequential Vs Synchronous

- Sequential - Tend to perceive time as starting from zero and passing in a straight line. working step-by-step to achieve targets.

- Synchronous - Think of time as move in a circle. Deadlines can often be missed and requests for relaxation of tight schedules is common.

- Inner -directed vs outer-directed

- Outer directed - perceive the environment to be more powerful than themselves. Where people believe that what happens to them is beyond their control. Eg: China, Egypt, Japan, Turkey, UAE, Nigeria

- Inner directed - Perceive that the major forces reside within themselves, where motivations and values are derived from within. Where people believe what happens to them is of their own doing. Eg: US, Switzerland, Canada, Germany, Argentina

Effective International Manager

Effective International

Manager

Business and technical skills

Cross cultural skills Experience

13 Feb 2016

Importance of global HRM

- Global competition- market access opportunities- International M & A - Foreign HR

Types of organisations

x axis - Global efficiency - origin - low; opposite - high

Y axis - Local responsiveness - Origin - Low ; Opposite - high

The Expatriate Problem

- High expatriate failure rates- Average cost per failure to the parent firm can be as high as three times the expatriate’s annual

domestic salary plus the cost of relocation- Between 16% & 40% of all American employees sent abroad to developed nations and almost

70% sent to less developed nations return home early.

Reasons for Expatriate Failure

- Inability of spouse to adjust- Manager’s inability to adjust- Other family problems- manager’s personal or emotional maturity- Inability to cope with larger overseas responsibility

Global

Views the world as a single market; operations are controlled centrally from the corporate office

- Firm that has integrated worldwide operations through a centralised home office

Transnational

Specialised facilities permit local responsiveness; complex coordination mechanisms provide global integration

- Firm that attempts to balance local responsiveness and global scale via a network of specialised operating units

International

Uses existing capabilities to expand into foreign markets

- Domestic firms that uses its existing capabilities to move into overseas markets

Multinational

Several subsidiaries operating as stand-alone business units in multiple countries

- Firm with independent business units operating in multiple countries

- Lack of technical competence- Difficulties with new environment

Three Approaches to IHRM

- Cross cultural management- Examine human behaviour within organisations from an international perspective

- Comparative HRM and industrial relations- Seeks to describe, compare and analyse HFM systems and IR in different countries.

- HRM in multinational firms- Explore how HRM is practiced in multinationals

International HR activities

- human resource planning- Difficulty in implementing HR procedure in host countries- Difficulty in aligning strategic business planning to HRP and vice-versa- Providing developmental opportunities for international managers

- Employee hiring- Ability to mix with organisation’s culture- Ethnocentric, polycentric or geocentric approach to staffing- Selection of expatriates- Coping with expatriate failures- managing repatriation process

- Training & Development- Emphasis on cultural training- language training- Training in manners and mannerisms

- Compensation- Devising an appropriate strategy to compensate expatriates- Minimising discrepancies in pay between parent, host and third country nationals- Issues relating to the re-entry of expatriates into the home country.

- Performance Management- Constraints while operating in host countries need to be considered- Physical distance, time difference and cost of reporting system add to the complexity- Identification of raters to evaluate subsidiary performances.

- Industrial relations- Who should handle industrial relations problem in a subsidiary?- What should be the attitude of the parent company towards unions in a subsidiary?- What should be union tactics in subsidiaries?

Variables that moderate differences between domestic HR & IHRM

- domestic and international activities of the HRM function- The cultural environment- The industry (or industries) within which the multinational is primarily involved- Complexity involved in operating in different countries and employing different national

categories of employees- Attitudes of senior management- Extent of reliance of the multinational on its home-country or domestic market.

- More HR activities : taxation, culture orientation, administrative services- The need for a broader perspective : Cater to multiple needs- More involvement in employees’ personal lives : adjustment , spouses , children- Changes in emphasis as the workforce mix of expatriates and local varies : fairness- Risk Exposure : expatriate failure, terrorism- Broader external influences : governmental regulations, ways of conduct

Strategy is commonly articulated as : -

- Corporate level strategy- Business level strategy- Functional level strategy

- IHR initiatives could be driven by the parent company/ headquarters and commonly implemented globally across all businesses- Creating the global visions and committing to set of value for organisation- Assisting with establishing the HR delivery framework for the new subsidiary- managing Hr challenges arising during global mergers and acquisitions- Responsible for strategic decision to retrench/ downsizing or shutting down of operations at a

remote location.- Supporting decisions related to increasing the size of subsidiary

- strategy when driven by localisation- IHR which is localised and deployed at the business unit level

- Local hiring norms and practices and prevailing methods to attract and retain talent- Salary structures job bands, hierarchies/levels, titles and associated perks and benefits.- Work practices that are locally prevalent and unique to the country and the culture of the

host subsidiary- Ensuring strategic compliances with the statutory requirement as per country norms- Coping with HR related challenges due to shifts in the local market place, competition or

the advent of new technologies

Stages of Internationalisation

1. First step - Exporting - Sales subsidiary2. Second step - Licensing - Foreign production - network of subsidiaries3. Third step - Subcontracting - network of subsidiaries

Sales Subsidiary

- Replace foreign agents / distributors with own through sales or branch offices / subsidiaries- Maybe prompted by : -

- Problems with foreign agents- more confidence in international activities- Desire for greater control- Give greater support to exporting activities

PCNs may be selected, leading to some HR involvement.

International Division

- Creation of a separate division in which all activities are grouped.- Resembles miniature replica of domestic organisation- Subsidiary

Global product / Area Division

Global product division (GPD)

- corporate product division is on the same level as marketing and finance etc- below this is the various products listed, like TV, fridge- Below this is the geographical distribution like, asia, europe etc- below asia, the divisions could be company wise- below this is the marketing and HR and finance etc once again

Global Area Division (GAD)

- In this model, the products will be listed in the last stage,… where the top most would be directly the geographic distribution.

Next saturday : third internal : Case study

differences between the two

- GPD - in companies with high value products, but limited range. eg: Samsung- GAD - in FMCG Eg : P & GS.No GPD GAD

1 Samsung Unilever

standardised product customised product

2 Manpower higher. cost is higher Manpower lower

3 HR functioning is complicated as all products report independently. culture management is easier

HR functioning is simple. culture management is tougher.

4 More line managers speak to HR. HR speaks to HR

5 Tougher job for HR, as company executives are deeply involved in HR processes

Slightly easier

6 Recruitment cost is high Recruitment cost lower

7 Personnel is specialised. Product knowledge higher

Personnel is generalised. Market knowledge higher

8 PCNs integration is easier HCNs will be good enough

9 Poaching difficult Poaching is possible

10 Re-alignment of HR policies difficult HR policy changes possible

The Matrix

- An attempt to integrate operations across more than one dimension- Violates Fayol’s principle of unity of command- Considered to bring into the management system a philosophy of matching the structure to the

decision making process

11 Attrition less Attrition more

12 Compensation higher compensation lower

13 Strategic HR implementation is easier SHRM is slightly more time consuming

14 Appraisals easier Appraisals are localised

15 Talent identification easier talent identification more difficult

16 IJTs less IJTs more

17 seniority performance