Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37

Human Resource Management refers to the activities an organization carries out to use itshuman resources effectively

◦ Four major tasks of HRM

◦ Staffing policy

◦ Management training and development

◦ Performance appraisal

◦ Compensation policy

International Human Resource Management :

Strategic role: HRM policies should be congruent with the firm’s strategy and it’s formal andinformal structure and controls

1 / 12

Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37

Right People, Right Place, Right Time

Basic Steps in International HRM :

International businesses have choices of hiring three categories of employees :

◦PCNs – Parent Country nationals

The employees working in the country of the company belonging to some other countries.

◦HCNs- Host country Nationals

Employees of same country where the company belongs to.

◦TCNs- Third country Nationals

Employees working in a country other than their home country with the headquarters of the

2 / 12

Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37

company in some third country.

Strategy, Structure and Control systems :

Staffing policy :

- Staffing policy - Selecting individuals with requisite skills to do a particular job - Tool for developing and promoting corporate culture - View People as Resource ($in profit out)

Ethnocentric policy ;

3 / 12

Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37

Key management positions filled by parent-country nationals

Advantages:

◦      Overcomes lack of qualified managers in host nation

◦      Unified culture

◦      Helps transfer core competencies (and skills back)

Disadvantages:

◦      Produces resentment in host country

◦      Can lead to cultural myopia

Polycentric policy :

4 / 12

Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37

Host-country nationals  manage subsidiaries

Advantages:

◦      Alleviates cultural myopia.

◦      Inexpensive to implement

◦      Helps transfer core competencies

Disadvantages:

◦      Limits opportunity to gain experience of host-country nationals outside their own country.

◦      Can create gap between home-and host-country operations

Geocentric policy :

Seek best people, regardless of nationality

◦      not  always possible

5 / 12

Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37

Best suited to Global and trans-national businesses

Advantages:

◦      Enables the firm to make best use of its human resources

◦      Equips executives to work in a number of cultures

Disadvantages:

◦      National immigration policies may limit implementation

◦      Expensive to implement due to training and relocation

◦      Compensation structure can be a problem.

6 / 12

Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37

Comparison of staffing approaches :

The Expatriate problem :

Expatriate: citizens of one country working in another

◦      Expatriate failure: premature return of the expatriate manager to his/her home country

7 / 12

Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37

◦      Cost of failure is high: estimate = 3X the expatriate’s annual salary plus the cost ofrelocation (impacted by currency exchange rates and assignment location)

Inpatriates: expatriates who are citizens of a foreign country working in the home country oftheir multinational employer

Expatriate failure rates :

Reasons for Expatriate failure :

8 / 12

Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37

Expatriate selection :

◦ Reduce expatriate failure rates by improving selection procedures

◦ An executive’s domestic performance does not (necessarily) equate his/her overseasperformance potential

◦ Employees need to be selected not solely on technical expertise but also on cross-culturalfluency.

Four attributes that predict success :

◦   Self-Orientation

◦   Possessing high self-esteem, self-confidence and mental well-being

◦   Perceptual Ability

◦      The ability to understand why people of other countries behave the way they do

◦      Being nonjudgmental and being flexible in management style

◦   Cultural Toughness

9 / 12

Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37

◦      Relationship between country of assignment and the expatriate’s adjustment to it.

Training and Management Development :

Training: Obtaining skills for a particular foreign posting

◦      Cultural training : Seeks to foster an appreciation of the host-country’s culture

◦      Language training : Can improve expatriate’s effectiveness, aids in relating  more easily toforeign culture and fosters a better firm image.

◦      Development: Broader concept involving developing manager’s skills over his or her careerwith the firm

◦      Several foreign postings over a number of years

◦      Attend management education programs at regular intervals

Repatriation of Expatriates :

10 / 12

Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37

Management Development & Strategy : Development programs designed to increase the overall skill levels of managers through: ◦      On going management education ◦      Rotation of managers through a number of jobs within the firm to give broad range ofexperiences Used as a strategic tool to build a strong unifying culture and informal management network Above techniques support transnational and global strategies Performance appraisal : Problems : Unintentional bias �  Host-nation biased by cultural frame of reference �  Home-country biased by distance and lack of experience working abroad Expatriate managers believe that headquarters unfairly evaluates and under appreciates them Compensation : Two issues: ◦      Pay executives in different countries according to the standards in each country? or Equalize pay on a global basis? ◦      Method of payment Compensation for 4 positions in 26 countries :

National differences in Corporate-Compensation :

National differences in CEO pay for Midsized Companies :

Compensation issues :

Expatriate pay Typically use balance sheet approach ◦      Equalizes purchasing power to maintain same standard of living across countries ◦      Provides financial incentives to offset qualitative differences between assignmentlocations. . Components of Expatriate pay : ◦Base Salary : Same range as a similar position in the home country ◦Foreign service premium : Extra pay  for work outside country of origin The Balance Sheet :

Some Theories of the Labour Market : - The Cost of Labour varies inversely to the Unemployment Rate and directly tothe Quality of Labour .

Data on hourly wages in USA

Data on hourly wages in Europe

Data on hourly wages in Japan

Section 2 : Industrial and Business Policies Introduction Industrial Relations:IR is concerned with the relationship between management & workers andthe role of regulatory mechanism in resolving any industrial dispute through:-

Importance of IR Key Approaches to Industrial Relations:

11 / 12

Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37

3 Major Parties to Industrial Relation

Workers and their associations: The personal characteristics of workers, their culture, educational attainments, qualifications,skills, attitude towards work, etc. play an important role in industrial relations. It is also calledTrade Union IR Strategy : It is  necessary to have an unambiguous  strategy for IR .Generally  employer- employeerelations are usually presumed to be satisfactory until they get out of hand, managers, rarely,feel the need to act before the trouble breaks out. Internal Factors : -  Attitudes between management ,employee and unions. -  using absolute authority  management enforce decisions to the employee and unions. -  Difference in opinion between management and union. -  Present and future strength of the unions. -  Technological  changes, expanding and running down also affect the employment andopportunities  . External Factors : -  Authority and Effectiveness of the employers association. -  To carried out bargaining at national, local or plant level. -  Employment and pay situation –Nationally and locally. -  Legal frame work with in which IR exists. Role of HRM : -  To keep the workforce motivated, competent and trouble-free. -  Ensure better recruitment and hiring, induction, training and development, safety andhealth, remuneration, welfare etc. -  Contribute to the quality of work life (QWL) of the employees. Trade Union : -   In India as per Trade Unions Act, 1926, Trade Unions are voluntary organisations ofworkers or employers formed to promote and protect their interests through collective action. -   To regulate among workmen, between workmen and employers or among employersthemselves. Reasons for joining unions : DISSATISFACTION ◦      Unsatisfied personalities, interests and preferences. ◦      Unrealistic job previews given creating expectations ◦      Poor day-to-day management and supervisory practices LACK OF POWER ◦      Instrument to influence the management UNION INSTRUMENTALITY ◦      Instrument of removing dissatisfaction Strategic Choices before Unions : -  Bread and Butter vs Political Objectives : Economic issues and Political participation -  Adversarial vs Co-operative Role : Challenge Management or Co-operate withmanagement -  Traditional Issues vs New Services : Stick to old issues or accommodate changes insocial attitude. Union Tactics : STRIKE ◦      Temporary suspension of funtions POLITICAL PATRONAGE ◦      Making recognition and patronage to a political party for direction and influencinggovernment BLACKMAIL ◦      Threat of discontinuing operations and non-cooperation with the management. Trends in Trade Union Movement : -   Change in attitude of union towards management, industry, and government -   Depoliticisation of unions taking place -   Formation of union on basis of religion and caste -   Associations are highly fragmented thus multiplicity of unions -   Phenomenon of outside leadership Personnel Research Range of research areas include: - Wage surveys : They reveal the level of employee satisfaction among other factors. - Effectiveness of various recruitment sources - Test validation : In a dynamic labor market, tests tend to get outdated frequently, sovalidating is imperative before applying any test. - Effectiveness of training efforts : Essential for ensuring efficiency in employeeperforrmance - Supervisor’s effectiveness survey : Another key factor in deciding employeesatisfaction. - Job analysis : Specific approaches such as result oriented, contextual or potential basedapproach need to be adopted as per the specific work environment. - Performance appraisal validation : Most critical aspect of any modern PerformanceManagement System - Turnover analysis : Reveals the success or failure of the Industrial relation policy. This article has been authored by Sayantan Banerjee from PGDM IMT

12 / 12