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INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Chapter 20

Human Resource Management

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Introduction• International operations are becoming increasingly

important • Organisations must develop global business objectives

and strategies to succeed.• It is now necessary to consider the influence of

differing national cultures on an organisation, its strategic business objectives, its culture and the way in which it operates.

• The organisation must decide when and how it will be sensitive to national cultures while remaining true to its core values and strategic business objectives.

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Major Differences Between Domestic and International HRM:

• Additional activities such as taxation, international relocation, expatriate remuneration, cross-cultural training and repatriation

• Increased complexities such as currency fluctuations, foreign HR policies and practices and differing labour laws

• Increased involvement in the employee’s personal life — assistance with personal taxation, housing, children’s education, health, recreation and spouse employment

• A more complex employee mix, e.g. different cultures and ethnic backgrounds

• More complex external influences, such as different cultures, political systems, ethics and laws

• Increased risks, such as emergency exits for illness, personal security, kidnapping and terrorism.

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International HRM Policy

The key questions to ask when developing an international HRM policy are:– What type of organisation is desired (an Australian

organisation with overseas operations, an Australian multinational or a truly global organisation with its headquarters based in Australia)?

– What are the organisation’s key values?– What makes this organisation successful?– What is the organisation’s purpose?– What type of corporate culture is desired?– Possible international set-ups?

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Specific examples of HRM Policy that may need to be addressed include:

• Should pay-for-performance programs be transplanted without alteration to seniority-oriented societies such as South Korea and Japan?

• Should the Australian organisation’s posture on EEO be applied irrespective of the social, legal and/or political situation in foreign locations such as Indonesia, South Korea, Japan, Malaysia and Saudi Arabia?

• Should Australian or local job titles be used?• What is the organisation’s attitude towards industrial

relations?• Should the Australian mix of cash compensation and

benefits be applied in overseas locations?

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Global View

• HRM policies must reflect an international view

• Managers must have global vision.

• The task of transforming domestic managers into international managers is a strategic HRM problem facing many multinationals.

• One writer puts it very bluntly: ‘The choice facing the multinational firm is clear: either increase its global character in order to compete worldwide or give up and disappear’.

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Key Cross-Cultural Issues

• Communications

• Ethics

• Trust

• Management Style

• Equal Employment Opportunity (EEO)

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HRM AND GLOBAL MANAGERS

• Corporate decisions are increasingly driven by the dictates of global competition, not national allegiance: ‘The logic of the global manager is clear: to undertake activities anywhere around the world that will maximise the performance of the company, enlarge its market share and boost the price of its stock’.

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Performance Appraisal• Fundamental questions such as:

– “What do we mean by performance?” – What performance criteria will be used? – Will the same criteria be used for head office

employees, expatriates and local employees? – Will performance be assessed on an individual or a

group basis? – Are programs such as management by objectives

(MBO) culturally appropriate?

• Simply exporting the head office program may end in disaster if it is not culturally sensitive.

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Training and Development• Matters relating to the diversity of the work force, language and

cultural differences impinge on all aspects of the training and development activity. – Should programs be conducted in English or the host-country

language? – Are there cultural attitudes which conflict with company

philosophies and practices?– For example, how will employees in the host country relate to

women managers? – Is a participative learning style the most effective?– Are some topics taboo? – Should programs be formal or informal? – How should training be evaluated?

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Compensation• National culture is an important consideration in strategic

compensation. • Cultures that value hierarchy and status differentials will

employ compensation strategies that promote and reinforce differences in status.

• Individualistic cultures, (Australia, USA) will adopt compensation strategies which reward individual performance and the acquisition of individual skills and know how.

• In collectivist or group oriented cultures, (China, Korea, Japan), organisations will base their rewards more on group performance and individual seniority (in recognition of the employees time as a group member).

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Industrial Relations• Industrial relations philosophies and practices vary

around the globe. Less than 40 per cent of the Australian work force is unionised, but union membership is even lower in Hong Kong and the USA.

• Australian industrial relations is characterised by a ‘them and us’ attitude; Singapore’s is characterised by co-operation, and Japan’s employees strongly identify with the organisation and its objectives.

• Cultural, economic and political differences clearly express themselves in industrial relations.

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An Australian Head Office should not ignore Industrial Relations, but ensure coordination so that:

– practices adhere to core corporate HRM philosophies and policies

– concessions granted in one location do not create damaging precedents for the rest of the organisation

– ethical and legal obligations are met.