Chapter 13.docx

9 Pages

Management and Organizational Studies
Course Code
Management and Organizational Studies 4485F/G
Linda Eligh

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Chapter 13 – Managing Human Resources Globally Enter the World of Business From Nunavut to Kosovo: Powering Change and Renewal  FreeBalance Inc. o Financial management software firm battling wages of war, corruption and injustice  System of choice among Canadian government departments  Started with Nunavut, realizing it could help others. o Used to stabilize countries financially Introduction  Most organizations now function in the global economy  People are utilizing other countries’s low cost of labor o Mexico’s $2.75 vs. canada’s $25.74  Emerging economies are new markets with large numbers of potential customers  International competition is the number one facto affecting HRM o Globalization ranked 4 o Example: Deciding whether to enter foreign markets and whether to develop plants or other facilities in other countries. Current Global Changes  Accelerated movement toward international competition European Economic Union  Run individually for years, due to geographic proximity their economies have become intertwined  EU is a confederation of most of the European nations agreeing to engage in free trade with one another o Continuing to attract more members  The Euro ties the member’s economic fates even more closely o Sweden, Denmark and U.K. do not use the euro North American Free Trade Agreement (NAFTA)  Between U.S. , Canada, Mexico o Created free trade market even larger than EU o Expanded to other Latin American countries, such as Chile  Many Low-skilled jobs went south.  Increased employment opportunities for Ca/US higher-level skills The Growth of Asia  China opening its markets to foreign investors  Recession has only slowed its rate of growth  Brazil is another huge growth market General Agreement on Tariffs and Trade (GATT)  International framework of rules and principles for reducing trade barriers around the world o Consists of more than 100 member nations o Recent negotiations has reduced tariffs by 40%, reduced subsidies to business, expanded protection of intellectual property  Established World Trade Organization (WTO) to dispute problems among members Factors Affecting HRM in Global Markets  Countries differ along a number of dimensions that influence the attractiveness of direct foreign investment in each country. Culture  Most important factor is the culture of the country in which a facility is located  Culture defined as: the set of important assumptions that members of a community share  Important because: o Determines the other three factors affecting HRM  Greatly affect a country’s laws  Affects human capital (the level of education that is valued)  Cultures and economic systems are closely intertwined o MOST IMPORTANT: Determines the effectiveness of certain HRM practices  Practices effective in Canada may not be effective ina culture that has different beliefs and values Hofstede’s Cultural Dimensions  Four dimensions o Canadian Michael Bond added a fith  Power Distance (PD): describes how a culture deals with hierarchical power relationships o Particularly the unequal distribution of power o Cultures with small power distance eliminate this difference  Israel, Denmark o Large power distance maintain those differences  India, Philippines o Differences in power distance often result in miscommunication  Calling first names is normal in US/CA is normal, not in other cultures  Individualism-Collectivism (ID): describes the strength of the relation between an individual and other individuals in a society o Individualistic cultures, people look after their own interests  Canada, Britain, Netherlands, US o Collectivist Cultures, people look after the interest of the larger community  Colombia, Pakistan, Taiwan, Japan  Masculinity-Femininity dimension (MA): describes the division of roles between the sexes within a society. o Masculin cultures showing off, achieving something visible, making money o Stress performance, success and competition  Germany, Japan o Feminine cultures value putting relationships before money, helping others, preserving environment o Stress service, care for the weak  Sweden, Norway  Uncertainty Avoidance (UA): describes how cultures seek to deal with an unpredictable future o Weak uncertainty avoidance easy going, and flexible, takes each day as it comes  Singapore, Jamaica o Strong uncertainty avoidance seeks security through technology, law and religion  Clear rules how you should behave  Greece, Portugal  Long-term/Short-term orientation (LT): describes how a culture balances immediate benefits with future rewards o Long term hold values in the present, such as thrift saving and persistence, that do not provide immediate benefit  Tradition, fulfilling social obligations  Many Far east such as China hold this orientation o Short term  North America, Russia, West Affrica Implications of Culture for HRM  Culture can affect education-human capital, political-legal system and the economic system  Differ on how subordinates expect leaders to lead o Germany through technical skill, Netherlands through consensus  Culture may influence appropriateness of HRM practices o HR Assessment changes on how individualistic a culture is  Culture can influence compensation systems o More individualistic cultures have greater disparity in pay  Culture can affect communication o Collectivist cultures value group discussion, same with those of low power distance Education-Human Capital  Potential to find and maintain workforce is important decision to expand into any foreign market  Human capital refers to the productive capabilities of individuals, knowledge, skills and experience that have economic value.  Major variable in a country’s human capital abilities is their education o Level of investment = greater human capital Political-Legal System  Regulations from governments have strong effect on HRM  Dictates requirements for practices such as training, compensation, firing, hiring and layoffs  Legal system is outgrowth of culture of the country  Employees could have contractual rights, such as right to read their personnel files or right ot be informed about how their pay is calculated  EEC’s Charter provides fundamental social rights to workers. o Freedom of association, collective bargaining, equal treatment for men and women, etc. Economic System  In socialist communities, investment in the country results in promotion, not investment in human capital. Investment costs less though.  In capitalist systems, investment in human capital is rewarded. Investment costs more though.  Labor costs are high in developed countries compared to developing countries  Tax systems are different, socialist redistribute wealth while capital systems allow them to keep more of their earnings  Have profound impact on pay systems, especially in global companies Managing Employees in a Global Context  Different Categories of Countries o Parent country: is the country in which the company’s corporate headquarters are located o Host Country: is the country in which the parent country organization seekst o locate or has already located a facility o Third Country: a country other than a host or parent country  Different Categories of Employees o Expatriate is an employee sent by his or her company in one country to manage operations in a different country o Parent-Country nationals (PCNS) – employees who were born and live in a parent country o Host-Country Nationals (HCN) – employees who were born and raised in the host, not the parent, country o Third-Country Nationals (TCNs) – employees born in a country other than the parent or host country  A manager born and raised in Brazil, employed by an organization located in Canada, assigned to manage an operation in Thailand. Levels of Global Participation Domestic  Most companies begin operating domestically  Builds facility to produce product at quantity to meet needs of small market  Requires recruiting, hiring, training and compensating individuals in this process  As growth occurs, might product other facilities o Must choose where to locate, and attractiveness of the local labour markets  Diversity an issue, less of one than internationally. International  As more competitors enter the domestic market, companies face the possibility of losing market share, so they seek other markets for their products o Initially exporting products but ultimately by building production facilities in other countries  All the problems of domestic facilities are magnified o Availability of human capital is of utmost importance  Legal system is important o France has relatively high minimum wage, drives up labor costs o Makes it difficult to fire or lay off an employee  Have to conform HRM practices to the Host country’s
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