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Cross Cultural ManagementCulture

Session 2

Yoginder Kataria

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Brain Teaser 1

Imagine you are a Manager for a domestic company

that is planning to extend its operations

internationally. You are responsible for handling the

CCM implications.

What questions should you be asking the senior

management team?

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Why CCM?

Multinationals are becoming

increasingly dominant.

Technological changes make it easier to

spread the business across the globe.

Globalization.

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IHRM

IHRM is

Human resource management issues,

functions and policies and practices that

result from the strategic activities of

multinational enterprises and that

impact on the international concerns

and goals of those enterprises. Schuler, Dowling and De Cieri, 1993

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What does IHRM add into the

Traditional Framework of HRM?

Types of employees Within and cross-cultural workforce diversity

Coordination

Communication

Human resource activities Procurement

Allocation

Utilization of human resources

Nation/country categories where firms expand and operate

Host country Parent country

Third country

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Adapted from PV Morgan

A Model ofIHRM

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Some Terms Defined

Host Country National (HCN): Belongs to the

Country where the subsidiary is located

Home Country National (HCN): Belongs to theCountry where the firm has its headquartersalso might be calledParent Country National (PCN)

Third Country Nationals (TCN): Belongs to

any other country and is employed by the

firm

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HRM emphases in 7 European countriesRole of HRM Den Fr Ger Net Sw UK

Comp Ad

SHRM

Decentralization of HR activities

Integration of HR functions

Individualization of emprelationship

Clark, T. and Pugh, D. (2000). Similarities and differences in European

conceptions of human resource management.

International Studies of Management & Organizations, 29(4), 84-100.

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Evidence of Trends

Evidence that increasing responsibility is

being devolved (decentralize) to the line in

Europe.

Recruitment and selection, health and

safety, and workforce expansion/reduction

would go to the line; whilst ER and training

would stay with HR.

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The IHR Department

Ensure IHR is involved in global strategy formulation for the

firm

Ensure managers have the necessary competence to

contribute to the global management of the firm

Prepare issues/concepts for inclusion in global strategies

Prepare a framework to ensure global management

are aware of the growing complexity of the business

Distribute and share the responsibilities for IHR

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Operation of the Department

IHR will be linked to business at both strategic and

operational level

IHR will shift from being a purely operational function to one

of strategic input and operational implementation

IHR will shift from doing HR, to advising line managers HRissues involved with their teams

IHR will focus on internal and external issues

Staffing the Department:

Fewer specialists, more generalists

Greater business focus; managers with line experience

Experience of global working, and global teams

Development of coaching and counselling skills

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HRM functions in a global setting

Recruitment methods

Headquarters vs. local practices

Selection criteria:

Ability, education, experience, . . . (achievement focus)

Age, gender, religion, sex, . . . (ascriptive focus)

Performance evaluation Centralized or decentralized policies & practices

Compensation & benefits

Local market conditions vs. common compensation

Labour relation strategies Centralised or decentralised

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Glossary of Terms

Home country where a firm is headquartered

Host country - where a subsidiary may be located

Other country may be a source of labour or

technology

PCNs parent country nationals

HCNs host country nationals

TCNs third country nationals

MNEmultinational enterprise

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IHRM

Ethnocentric (parent control)

Polycentric (Keeping PCNs and HCNs

separate)

Regiocentric (Asia-Pacific, Eastern

European regions)

Geocentric (pick talent from wherever

possible)

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Four Approaches to International

HRMPerlmutter (1969); Dowling and Welch (2004)

The ethnocentric HR orientation- All key positions in

the host country are occupied by parent company

nationals. Ensures tight control and good

communication. Typically deployed during the early

stages in establishing a new business presence.

The polycentric orientation- Host country nationals

manage all operations in their own country. Thishelps avoid intercultural management conflict and

also promotes the corporations image.

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Four Approaches to IHRM/cont

The geocentric orientation- A meritocratic approach.

The best people are deployed throughout the

organisation and may be sourced from any region of

the world. This enables corporations to build

international executive teams.

The regiocentric orientation- Results in staff being

developed and deployed within specific regions ofthe world eg. Europe, S.E. Asia etc.

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Brain Teaser 2

What are the potential disadvantages for each of these

approaches?

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Schulers integrative framework for strategic HRM in MNEs

Schuler et al (1993)

SIHRM issues

Interunit linkages

Internal operations

Local sensitivity

Strategic fit

SIHRM

Functions

Orientation

Resources

Location

SIHRM Policy

Staffing

Appraising

Compensating

Developing

MNE concerns

& Goals

Competitiveness

Efficiency

Local responsivenessFlexibility

Learning & transfer

Endogeneous factors

Structure of international operations

HQ international orientation

Competitive strategy

Experience in managing international operations

Strategic MNE

Components

Interunit linkages

Internal operations

Exogenous factors

Industry characteristics

Country/regional characteristics

See Fig 31 BS&V

pp 215

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IHRM practices

Compensation: Seniority-based, team-based vsMerit-based, individual-based

Selection: De-emphasize experience?

Appraisal: Low (collectivist) to High(individualistic)

Training & development vs Outsourcing (e.g.US)

SHRM: low cost and differentiation strategies(Asia) to no linkage (Mexico)Von Glinow, M.A., Drost, E.A. and Teagarden, M.B. (2002). Converging on IHRM bestpractices: Lessons learned from a globally distributed consortium on theory and practice.Human Resource Management, 41(1), 123-140.

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Thank you