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Global Employee Relations: Home and Host Country Effects Download paper http://independent.academia.edu/DonnaZeller

• Conceptual Case Study: • United States-based multinational corporation, with transnational practices

and policies, and subsidiaries in host countries, Germany and France.• Issue:

• Regulations and polycentric practices make global employee relations (ER) the most difficult to transfer and the most subject to the host-country effect. • Therefore, the issue is of interest as firms attempt to juggle the integration of the

requirements of local cultures and regulations, with practices and policies that align with the corporate strategic goals.

Zeller Global Employee Relations: Home & Host Country Effects

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Frameworks (1 of 2)

• Frameworks help us to break down national culture into its constituent parts; hence, we can use these as tools for describing corporations and the cultural context in which they operate.

• Four multinational corporations (MNCs) frameworks (Bartlett and Ghoshal, 2009):• Multidomestic (Low pressure for integration - high pressure for differentiation); • International (Low pressure for integration - low pressure for differentiation); • Global (High pressure for integration - low pressure for differentiation); and • Transnational (High pressure for integration - High pressure for differentiation).

• Geert Hofstede’s 5 fundamental dimensions of national cultures include • power distance; • uncertainty avoidance; • masculinity vs. femininity; • individualism vs. collectivism; • and long vs. short term orientation (Hofstede & Hofstede, n.d.).

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Frameworks (2 of 2)

• Home Country: United States• Has a shareholder value model, generally defined as one which holds the interests of stockholders

over stakeholders within the organization (Almond, Edwards, & Clark, 2003, p. 432). • The culture is identified as being one of low uncertainty avoidance, small power distance, high

individualism, and a high masculinity index (See e.g. Brewster, Sparrow, & Vernon, 2007, pp. 22-26).

• Host Country: Germany• The stakeholder value model is encouraged through multiple laws protecting the rights of workers

to participate in decisions; i.e., the Co-Determination Act of 1976. • The culture is described as being one of strong uncertainty avoidance, small power distance, and a

high masculinity index. (See e.g. Brewster, Sparrow, & Vernon, 2007, p. 26).• Host Country: France

• With labor laws designed to protect the interests of employees, it is identified as a stakeholder value model.

• The culture is identified as being one of a strong uncertainty avoidance, large power distance, high individualism (though not as high as the United States), and a low masculinity index. (See e.g. Brewster, Sparrow, & Vernon, 2007, pp. 22-26).

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Transferring Global Employee Relations

• The transferability of the different aspects of ER is political, involving numerous organizational actors with varying levels of influence (Edwards, 2004, p. 392).• Rational approach

• Employment practices are considered a source of efficiency (Edwards, 2004, pp. 391-2).• Culturalist approach

• The transfer of practices is based on the national and corporate cultures, and not as a process governed by competition (Edwards, 2004, p. 392).

• Political approach • The organization’s actors may select the process of transfer in order to legitimate and advance their own

interests (Edwards, 2004, p. 393).

• These approaches are further influenced by • The country-of-origin of a firm, as MNCs are embedded in the country of origin; • The dominance of successful economies that results in the borrowing parts of that business system by firms in other

countries; • The drive for increased international integration that may be based on several factors, including consumer demands. • The “host-country effect”, particularly with regards to cultural barriers, is considered an obstruction to the transfer of

practices (Edwards, 2004, pp. 394-8).

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Fundamental Issues

• Some of the fundamental issues of employee relations involve communications, employee relations systems, corporate strategy, and trade union impact.

• Recent studies have indicated that many firms experience a • Lack of alignment between ER and the corporate strategy and culture; • Lack of commitment of line management to implementing ER policies; • Lack of flexibility in the ER policies themselves to meet shifting business demands;

• Thereby, indicating the relevance of understanding the impact of global employee relations in meeting business objectives (The Pennsylvania State University, 2012).

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Conceptual Frameworks• Employee Communications

• Global employee communications are influenced by several factors, including national culture, socio-political institutions, and business organizations.

• For example, in Hall and Hall’s 1990 study, the researchers acknowledged that in low context cultures, such as Germany and the United States, individuals “require detailed background information every time they act” (Hall & Hall, 1990, p. 7 as cited in Cahill, 2006, p. 57).

• Employee Relations Systems• For example, the legislative system; as in Germany and France, may require companies “to consult and

negotiate with employee representatives”; thereby, providing a means of expression for the blocking or contesting of employment practices (Edwards, 2004, p. 390).

• Conversely, companies may consult and negotiate with employee representatives in the voluntarist systems found in the United States; however, the agreements are not legally enforceable.

• Corporate Strategy and Global Employee Relations• The unitarist approach, common to the United States depicted as the home-country in this paper,

focuses on the goal to have the organization succeed in the marketplace.• The partnership approach accommodates the aforementioned work councils, such as those of

Germany. • The contingent approach, determined by the local context, accommodates the roles of the “state,

legislation, unions and ownership patterns” (Brewster, Sparrow, & Vernon, 2007, p. 71).

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Changing Policies, Practices, and Trends

Are United States-based multinational corporations having an effect on existing employee relations practices and trends in other countries; such as in France and in Germany?• Legislation

• Corporations in Germany, with the traditions of strong ‘insider’ management and employee rights, have been affected by the 2002 Transparency and Disclosure Law.

• Similar to the United States, the law strengthens the trend toward including outsiders by requiring managers to make information available to shareholders (Almond, Edwards, & Clark, 2003, p. 440).

• Employee Representation• The Germany Employee Works Councils allow only employee participation; management is not included

(Worker-Participation.eu, n.d.). • Nonetheless, beginning in the 1980s, the indirect method of communication through Employee Works Councils

changed as companies began to use “attitude surveys, quality circles, and employee meetings”; thereby, leading to more direct methods of communication practice similar to the United States (The FreeLibrary by Farlex, n.d.).

• The Role of Trade Unions• Although trade unions in Germany are required in companies over a certain size; as unemployment rises, the

trend has moved away from extending worker’s rights to improving and creating employment; • Similar to the United States, this trend is reducing the unions’ strength.

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Conclusion

• The multinational corporation, with a transnational approach, selected for this conceptual study:• Invites the transfer of practices to, from and within the affiliates;• The parent organization and subsidiaries are aware of their own role as well as the role of others. • However, that is not to disregard the fact that “co-ordination is needed across multiple dimensions (e.g.

functions, products and geography)” (Brewster, Sparrow, & Vernon, 2007, p. 212).

• Some of the key challenges discovered: • The juxtaposition of the United States and Germany’s low-context culture with the high-context culture of

France; • The evolving legislative and voluntarist systems and their influence on the ability of employees to effect

management decision; • The strength of the prevailing corporate governance model and the effect on corporate strategies; • And the influence of the changes in collective bargaining and the number of workers protected by unions and

work councils.

• Given the differences between the home and host countries, there is also some convergence on the horizon as the structures and roles of legislation; employee representation and trade unions; and direct and indirect forms of communication continue to evolve.

• Ultimately, economic issues, such as increased unemployment, appear to have a direct influence on revisions to existing practices and on the acceptance of transferred ‘home country’ employee relations.

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References (1 of 2)• Almond, P., Edwards, T. & Clark. (2003). Multinationals and changing national business systems in Europe:

towards the "shareholder value" model? Industrial Relations Journal 34, no.5: 430-445• Ancona, D., Kochan, T., Scully, M., Van Maanen, J. & Westney, D. (2005). Managing for the Future: Organizational

Behavior & Processes, 3rd Ed. Thompson Publishing • Bartlett, C. & Ghoshal, S. (2009). Global Strategies for MNCs: Christopher A. Bartlett & Sumantra Ghoshal.

BusinessMate.Org. From http://www.businessmate.org/Article.php?ArtikelId=13• Brewster, C., Sparrow, P., & Vernon, G. (2007). International Human Resource Management, 2nd Ed. London: CIPD • BusinessMate.org (n.d.). What are Geert Hofstede’s 5 cultural dimensions? BusinessMate.org. From

http://www.businessmate.org/Article.php?ArtikelId=4.• Cahill, D. (2006). Customer loyalty in third party logistics relationships: Findings from studies in Germany and the

USA. Springer. From http://books.google.com/books?id=PcafV4MM1BkC&pg=PA56&lpg=PA56&dq=Hofstede%27s+framework+U.S.+Germany+France&source=bl&ots=43kT0BPOIw&sig=4QBhuvoCcrM7DZZsoUEGJCxIaAg&hl=en&sa=X&ei=GO6ST_k5pIjoAcTYtJME&ved=0CE4Q6AEwBw#v=onepage&q=Hofstede%27s%20framework%20U.S.%20Germany%20France&f=false

• Edwards, T. (2004) Transfer of Employment Practices Across Borders in Multinational Companies. International Human Resource Management, pp 389-410, London: Sage

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References (2 of 2)

• Hofstede, G. & Hofstede, G. (n.d.). Dimensions of national cultures. From http://www.geerthofstede.nl/dimensions-of-national-cultures

• OECD (Organisation for Economic Co-operation and Development) Employment Outlook (2004) Chapter 3, Wage Setting Institutions and Outcomes. From http://www.oecd.org/employment/emp/34846881.pdf

• The FreeLibrary by Farlex (n.d.). Unitarism, Pluralism and Human Resource Management in Germany From http://www.thefreelibrary.com/Unitarism,+Pluralism,+and+Human+Resource+Management+in+Germany.-a057816024

• The Pennsylvania State University (PSU), (Spring, 2012). HRER800 Online Commentaries Retrieved From https://courses.worldcampus.psu.edu/sp12/hrer800/001/toc.html

• Worker-Participation.eu (n.d.). Frequent Questions Frequently Asked Questions on European Work Councils (EWC) From http://www.worker-participation.eu/European-Works-Councils/Frequent-Questions