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Lecture 2

Week 25

6 Pages
58 Views

Department
Economics
Course Code
ECO244Y5
Professor
Reid/ Curran

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Textbook:
How Intercountry Differences Affect HRM:
To a large extent, companies operating only within Canadas borders have the luxury of dealing with a relatively
limited set of economic, cultural, and legal variables. However, a company that is operating multiple units abroad
does not operate in an environment of such relative homogeneity with respect to HRM.
For example, minimum legally mandated holidays may range from none in the United States to 5 weeks per
year in Luxembourg. In addition, although there are no formal requirements for employee participation in
Italy, employee representatives on boards of directors are required in companies with more than 30
employees in Denmark.
Other issues such as kidnaping and corruption would make HR policies and procedures differ among
countries in which each subsidiary is based.
Intercountry Differences:
Cultural Factor :
oWide-ranging cultural differences from country to country demand corresponding differences in
HR practices among a company’s foreign subsidiaries. The first step is understanding the
differences in underlying cultural values in different societies.
oFor example, societies differ in power distance: an inequality in some countries (such as Mexico
and Japan) than others (such as Sweden.) Abuse of managerial power in the form of bullying and
harassment is widely tolerated in Japan.
oSocieties also differ when it comes to individualism vs. collectivismthe degree to which ties
between individuals are normally loose rather than close.
oIn more individualistic countries such as Canada, individuals look out for themselves and their
immediate families. However, in more collectivist countries such as China, and individual’s
identity is very strongly linked to their extended family group, and sometimes even to their work
group.
oSuch intercountry cultural differences have several HR implications.
They suggest the need for adapting HR prices, such as training and pay plans, to local
cultural norms. They also suggest that HR staff members in foreign subsidiary should
include host-country citizens.
A high degree of sensitivity and empathy for the cultural and attitudinal demands of co-
workers is always important when selecting expatriate employees to staff overseas
operations.
Such sensitivity is especially important when the job is HRM and the work involves
human” jobs like interviewing, testing, orienting, training, etc.
Economic Systems :
oDifferences in economic systems among countries also translate into intercountry differences in
HR practices.
oIn free enterprise systems, the need for efficiency tend to favour HR policies that value
productivity, efficient workers, and staff cutting where market forces dictate. Moving along the
scale toward more socialist systems, HR practices tend to shift toward preventing unemployment,
even at the expense of sacrificing efficiency. For example, in communist Vietnam, workplace
culture involves a siesta after lunch for workers, and managers spending a lot of time out of the
office enhancing personal and social relationships.
Legal Systems :
oLabour laws vary considerably across the world.
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oWhen it comes to employee termination, the amount of notice with pay to be provided,
continuation of benefits, notification of unions, and minimum length of cervices to qualify for
severance payments vary significantly and can in some cases have a major impact on labour costs.
oHealth and safety laws vary from non-existent to which tightens liability of senior management for
health and safety offences.
Labour Cost Factors :
oDifferences in labour costs may also produce differences in HR practices. In order to maintain the
competitive advantage of lower labour costs in China, the concept of investing in employees
through training and development is seen as an unnecessary cost. High labour costs can require a
focus on efficiency and on HR practices (like pay for performance) aimed at improving employee
performance.
Industrial Relations Factors :
oIndustrial relations, and specifically the relationship among the workers, the union, and the
employers, vary dramatically from country to country and have an enormous impact on HRM
practices.
oIn Germany, codetermination is the rule. Here, employees have the legal right to a voice in setting
company polices. In this and several other countries, workers elect their own representatives to the
supervisory board of the employer, and there is also a vice-president for labour at the top
management level.
oLikewise, in many other countries, the state interferes little in the relations between the employers
and unions.
oIn China, company unions fall under the administration of the local Communist Party committee,
which often shares long-term goals with the company. Thus unions seldom play an effective role
in labour disputes.
Summary:
oIntercountry variations in culture, economic systems, labour costs, and legal and industrial
relations system complicate the taste of selecting, training, and managing employees abroad. These
variations result in corresponding differences which make the job of expatriate managers much
more complex and difficult than when at home. International assignments thus run a relatively
high risk of failing unless these differences are taken into account when selecting, training, and
compensating international assignees.
Selection for Global Assignments:
International managers can be expatriates, locals, or third-country nationals. Most managerial positions
are filled by locals rather than expatriates in both headquarters and foreign subsidiary operations.
Advantages for using locals:
oThere are several reasons to rely on local, host-country management talent for filling the
foreign subsidiary’s management ranks.
Many people simply prefer not to work at a foreign country, and in general the
cost of using expatriates is far greater than the cost of using local management
talent.
Also, there may also be a fear that expatriates, knowing that they are posted to the
foreign subsidiary for only a few years, may overemphasize short-term projects
rather than focus on perhaps more necessary long-term tasks.
Disadvantages:
oThere are also several reasons for using expatriates either parent-country or third-
country nationals- for staffing subsidiaries.
The major reason is technical competence. (Unable to find locals with the
required technical qualifications.)
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Description
Textbook: How Intercountry Differences Affect HRM: To a large extent, companies operating only within Canadas borders have the luxury of dealing with a relatively limited set of economic, cultural, and legal variables. However, a company that is operating multiple units abroad does not operate in an environment of such relative homogeneity with respect to HRM. For example, minimum legally mandated holidays may range from none in the United States to 5 weeks per year in Luxembourg. In addition, although there are no formal requirements for employee participation in Italy, employee representatives on boards of directors are required in companies with more than 30 employees in Denmark. Other issues such as kidnaping and corruption would make HR policies and procedures differ among countries in which each subsidiary is based. Intercountry Differences: Cultural Factor: o Wide-ranging cultural differences from country to country demand corresponding differences in HR practices among a companys foreign subsidiaries. The first step is understanding the differences in underlying cultural values in different societies. o For example, societies differ in power distance: an inequality in some countries (such as Mexico and Japan) than others (such as Sweden.) Abuse of managerial power in the form of bullying and harassment is widely tolerated in Japan. o Societies also differ when it comes to individualism vs. collectivism the degree to which ties between individuals are normally loose rather than close. o In more individualistic countries such as Canada, individuals look out for themselves and their immediate families. However, in more collectivist countries such as China, and individuals identity is very strongly linked to their extended family group, and sometimes even to their work group. o Such intercountry cultural differences have several HR implications. They suggest the need for adapting HR prices, such as training and pay plans, to local cultural norms. They also suggest that HR staff members in foreign subsidiary should include host-country citizens. A high degree of sensitivity and empathy for the cultural and attitudinal demands of co- workers is always important when selecting expatriate employees to staff overseas operations. Such sensitivity is especially important when the job is HRM and the work involves human jobs like interviewing, testing, orienting, training, etc. Economic Systems: o Differences in economic systems among countries also translate into intercountry differences in HR practices. o In free enterprise systems, the need for efficiency tend to favour HR policies that value productivity, efficient workers, and staff cutting where market forces dictate. Moving along the scale toward more socialist systems, HR practices tend to shift toward preventing unemployment, even at the expense of sacrificing efficiency. For example, in communist Vietnam, workplace culture involves a siesta after lunch for workers, and managers spending a lot of time out of the office enhancing personal and social relationships. Legal Systems: o Labour laws vary considerably across the world. www.notesolution.com
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