BU354 Chapter Notes - Chapter 14: Human Resource Management, Coevolution, AssertivenessPremium
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Chapter 10 – Global Human Resource Management
Human Resources in a Multinational Enterprise
• Globalization of business has increased significantly over past decade
• Business ecosystem: a series of tightly knit intercompany relationships that allow the business to
attain a competitive advantage
o Co-evolution and white space are also used to describe how firms capitalize on global
opportunities
o These terms describe organizations as a system – one that interacts with many stakeholders
(suppliers, customers, competitors)
o Successful companies will be those that get others into their network to buy into their vision,
find opportunities that will be of mutual benefit, and create a win-win scenario for all
▪ Learning organizations do this by pursuing mergers and acquisitions, joint ventures and
strategic alliances
▪ Organizations must be flexible, adaptable, ready to seize the chance
• International resource management (IHRM): is about the worldwide management of talent from a
staffing perspective
o Provides HR support for different nationals and across different countries
o Addresses the needs of people working abroad (expatriates), frequent commuters, cross-
cultural team members, and experts
• Global human resource management (GHRM): Has been used to describe a broader IRHM process
o Not only concerned with staffing, but also organizational efficiency, information exchange, and
knowledge transfer
• The degree of internationalization of an organization can be defined by the # of countries in which it
operates
• As organizations grow, HR must grow too, offering more value-added services and resources across a
wide range of geographic locations
Four Stages of Corporate Evolution
• Domestic, international, multinational, global/transnational
Parent country nationals (PCNs): citizens of country where the headquarters is located
Host country nationals (HCNs): citizens of a county of a foreign subsidiary, hired to work at a subsidiary
located in their home country
Third country nationals (TCNs): citizens of a country other than the parent country or the host country
Contextual Factors
External Contextual Factors
Country culture
• Important for HRM to develop a greater understanding of a culturally diverse work environment with
its varying degrees of work ethics, norms, values, and business protocols
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• HR must educate workforce on cultural diversity, and train its employees to be sensitive to differing
cultures and to develop tools and processes to ensure workforce is ready to work with others from
diverse backgrounds / appreciate differences
• Employing managers from different countries means that organizations have the potential to draw on
a wealth of knowledge about customs/ country requirements
o Also increases the diversity of viewpoints in terms of defining problems and can increase
decision quality
o However, when people lack intercultural skills miscommunications can occur, leading to poor
business relationships + diminished productivity
• Some cultures easier to adapt to than others. Western Europe, north America, south east Asia easy.
Japan, north Asia, south Korea hard
Cultural Dimensions
• Nine key dimensions used to determine differences in cultures:
• 1. Assertiveness- how assertive people are in society and the degree to which they are confrontational
• 2. Gender differentiation- how society views differences in gender roles and affords higher status to
certain roles
• 3. Uncertainty avoidance- the degree to which people are consistent and seek structure in their lives
• 4. Power distance- the degree to which people are separated by power and authority
• 5. In-group collectivism- the degree to which a society feels loyal either toward their family or other
collective groups
• 6. Performance orientation- the extent to which society recognizes and rewards performance
• 7. Humane orientation- the degree to which societies focus on altruistic behavior and generosity
• 8. Institutional collectivism- the degree to which institutions want individuals to integrate into the
larger structure, even if this is at the cost of individual freedom
• 9. Future orientation- refers to the degree to which people are willing to delay rewards
Communication and Language
• Must understand various cultural communication styles:
o Direct, indirect, high-low context, nonverbal, avoiding conflict, saving face
o Ex: Australia prefers direct culture (clear, succinct messages that are to the point, France
prefers indirect communication)
Labour Economy
• Complexity of operating in countries with a different labour economy is a challenge
• Examples:
o There is a skill shortage in the call center industry in India
o Chinese IT and telecom markets are growing exponentially
o China has the highest labour force participation rates for men and women
o Mexico and Korea had the lowest rates of unemployment
Labour Legislation
• Each country has its own rules regarding employment standards such as hours of work, rest periods,
overtime, termination provisions, and vacation
• Knowledge of legislation has an impact on employee relations as the organization must decide whether
it is ethically comfortable with employment practices in the host country and the balance between
headquarters policies and local policies
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Immigration Policies
• HR planners must be aware of countries’ immigration policies when planning for resources as it affects
a firm’s recruitment and staffing policies
• Must also understand types of visas requires, procedures that must be followed, details to be obtained
from applicant, length of time that it takes to seek approval, renewal requirements, and potential
road-blocks that may impede this process
Internal Contextual Factors
Commitment to Corporate Social Responsibility
• Corporate social responsibility (CSR): a way to demonstrate through proactive programs, a company’s
commitment to economic, social, and environmental issues which influence its operations and ethical
approach to labour
• Parent firm might set overarching CSR principles for, however, usually it is the responsibility of
subsidiaries to align its programs accordingly
• Countries across the globe can have very different views about the importance of being socially
responsible- global firms must make decisions with respect to the country they will operate in/ how
they will conduct themselves with respect to employment practices
Staffing Preferences
• Relates to the degree of control an organization feels it should have over its subsidiary
• Consist of ethnocentrism, polycentrism, geocentrism, regiocentrism
Ethnocentrism
• Refers to the view in which managers use a home-country standard as reference for managing
activities
• Home-country standards
• Individuals from headquarters fill key positions in subsidiaries
• Decision making is centralized and is driven from the home country where control over operations is
exercised
• Controlled by the PCN and there are very few opportunities for HCDs to hold key positions/ be
promoted outside their operation
• This strategy is based on transferring and adapting the parent company’s knowledge and expertise to
foreign markets while maintaining considerable influence
Polycentrism
• Describes policies under which subsidiaries are staffed by host-country managers and are
characterized by decentralized and autonomous operations
• Home-country standards
• Subsidiaries are managed via tight financial and operational controls from headquarters
• The opportunity for promotion within subsidiaries is available, but limited externally. Host-country
positions filled by HCN
Geocentrism
• Focuses on creating a global network, following a strategy that integrates and is dependent on the
global firm’s strengths
• Is the view that the best person for the job can be found anywhere
• Standard followed: global strategy to fit standards across countries
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