Class Notes (806,933)
Canada (492,530)
Economics (680)
ECO244Y5 (9)
Lecture 2

Week 25

6 Pages
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University of Toronto Mississauga
Reid/ Curran

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.
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