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International HRM Day 2 Wednesday 15 th February 2017 Paul Hunter Email: [email protected] Understanding of HRM Functions & Activities. Emergence of HRM need for critical competitive differentiators. Growing importance of IHRM. The need to understand the ‘mega environment’ and ‘host country environment’ – PESTEL. Need for HR Managers to develop a global mind -set. Demographic changes, cultural differences and institutional differences. Day 1 Review Day 2 IHRM – Academic Models, Theories and Debates Storey (1989, 1992) suggests that the key theories and values of HRM also relate to IHRM: 1. The belief that human capability and commitment is a distinguishable factor. 2. HRM is of strategic importance and needs to link to corporate plan & business strategy. 3. HRM has long term implications and is integral to core performance of the organisation inc training, reward and job design. A key differences include the relationship between headquarters and subsidiaries HRM and IHRM Similarities Structural Forms of International Organisations Bartlett and Ghosal (1989) Multinational (multi -domestic) • Organisation is responsive to local needs. • Little control from the centre and subsidiaries are largely autonomous Global • Centralised decision making and HQ tries to replicate their practices abroad • Limited responsiveness to local needs. International • Organisation adapts parent company expertise worldwide. • Local tastes, suitability is catered for. Transnational • No hierarchy between HQ and subsidiary but control is dispersed through a network (unit is are highly interdependent) ) Structural Forms of International Organisations Examples Multinational Global International The Configuration of the IHRM Function Recap on the definition of IHRM • “The set of distinct activities, functions and processes that are directed at attracting, developing and maintaining an MNC’s human resources. It is thus the aggregate of the various HRM systems used to manage people in the MNC, both at home and overseas” (Taylor et al, 1996). Integrative Framework for IHRM Many different models of IHRM many of which have common threads of external and internal factors togethger with IHRM functions and MNC goals (see Bjorkman and Welch, 2014) T he most cited and holistic is Schuler et al’s (1993) integrative framework of IHRM They suggest that strategic MNE components, exogenous factors and endogenous factors influence on HRM and affect: The orientation of policies – centralised or decentralised The amount of financial and time resources committed to the development of international managers Where activities are located – HQ or subsidiary A Useful Integrative Framework for IHRM? (Schuler et al, 1993 thru Crawley et al, 2013) Group Exercise Considering Schuler et al’s framework reflect upon the role of the HRM function at the headquarters and the subsidiary level. • In what ways might the HQ versus the subsidary differ in terms of the scope of their activities, the types of employees they support and the competencies need by HR professions? • W ould you expect the subsidiary level HRM function to be a replica of the HQ HRM function? Evaluation of the Model • Strengths: – Holistic – Provides an overview of IHRM process • W eaknesses – Doesn’t explain the micro -political process between HQ and subsidiary – Tendency to focus on management employees rather than really all employees Recent Attempts to Define IHRM • Bjorkman and W elch (2015) attempted to redefine IHRM. See page 138 of their article “Framing the field of international human resource management research”. • Assesses different levels of analysis (macro, MNC, unit and individual) • W hat do you make of this model? Assumption is that there is one best way to manage organisations and US MNE’s will spread this practice across the globe. It is suggested this perspective is linked to an environment where freedom is given in the approach to managing people. Trade unions have little power in the USA High road approach? ‘Welfare capitalism’ (non unionised and strong mutual commitment between employee and employer) Low road approach? ‘Traditional unitarism ’ (work intensification, low wages and de -skill labour) American philosophy linked to purpose of HRM being strategic. The American Perspective on IHRM Is there a such a thing as a European approach? Europe is made up of a very diverse set of nations. Certain shared features do exist in terms of higher rules and regulations for organisations and dominance of trade unions part of a wider environment? Recognises importance of external factors, more likely to criticise management practices and considers the consequences for the community as well as the organisation. The European Perspective on IHRM Do MNCs have a Common Philosophy for IHRM? Brewster et al (2005) suggests that the field of IHRM and the need for a strategic mind -set is changing significantly : • Central HR Philosophy: There is a need for common philosophy and coherent practice across countries and workforces. i.e.
developing a suitable culture across the world in terms of product and work culture. A push towards uniformity, transferring best practices, cost effective and the search for ‘optimal management practices’ Assumes there is one best way… Internationally operating organisations need to continuously balance central co -ordination and control with the need to adapt to the local context . For MNCs key questions are: • How much do they want to develop policies that will apply across the world? • How much can they develop policies that will apply across the world? • How much do they need to tailor policies and practices to suit local conditions? The interpretation and global v local balance varies IHRM Dilemma: Integration/Differentiation Paradox Convergence: the coming together of a set of HR management policies and practices around a Western (capitalistic) model . ‘Globalisation ’ (a hot debate); the role of MNCs in convergence ? Global strategies encourage greater homogenisation to create greater efficiency. Best practice: spreading learning; consistency; efficiency; and fairness…Best practice = HQ practice? Convergence Strategies It is suggested that Convergence is more suitable if: • the organisation has a strong organisational culture which gives it competitive advantage worldwide – i.e. MacDonald's, Apple and Starbucks; and • wants to build a global presence; and • is bound by regional regulations and restrictions - more likely to need a common set of policies. Convergence Strategies Divergence: the separation of HR policies and practices according to country or differences in culture. The influence of local contexts on HRM? Policies and actions that fit locally are often most efficient; Best fit to cultural and institutional context; Divergence Strategies Background differences: • geography; climate; wealth; personal values; technological development; and education system ; Labour market differences; Language; Role & prominence of religion, e.g. prayer, taboos, holidays; Regulatory differences: • legal system and laws; employment legislation; power of trade unions & pressure groups; Institutional Differences Diverse Industrial Relations Systems (Harzing & Pinnington , 2015 ) Countries provide very different levels of statutory healthcare, unemployment benefits, pensions, sick pay, paid maternity and paternity leave. Varying obligations on employers to pay social security contributions may influence their choice of employment contracts. Where welfare provision is limited, MNCs may fill the gap by providing company pensions or health insurance (e.g. United States), but this may reduce worker mobility between firms. In some countries employers may be expected to organize working time to fit expectations of shared family leisure time. MNCs need to be responsive to country differences in employment rates of mothers and rights to return to work after maternity leave. Diverse Welfare, Family & Gender Systems It is suggested Divergence is more likely if there are strong differences evident in: • labour markets • cultures • economic and legal rules e.g. Walmart and McDonald’s have to adapt to local needs/cultures and amend their IHRM policies to suit. Divergence Strategies Does It Have to be All or Nothing? • Is global versus local IHRM strategies a dichotomy? So is it a case of either convergence or divergence? • Recent evidence that there are elements of hybridization (for example see Chung et al, 2014). • Their study of 9 MNC in Korea suggested that: – Some HR practices had globally standardised practices while other practices were devolved to the subsidiary to be adapted to the local context – Typically performance management metrics were global (for benchmarking purposes) while the scope of job specifications for example were local • A need for a more nuanced analysis to IHRM Strategy? Some MNCs gain consistency from developing corporate values that guide the development of local policies leaving local HR departments to develop locally relevant processes . But still a problem as previous research has shown that misunderstandings may surface from the way subsidiary employees read corporate messages, particularly if institutional and social distances between corporate headquarters (HQs) and subsidiaries are wide . So realising a consistent and coherent corporate values that are socially legitimate at a local level is easier said than done. A Different Take on Hybridisation: Employer Branding? A Different Take on Hybridisation: Employer Branding? Some recent research by Al Taj, Pate and Martin ( 2016), under review in the International Journal of HRM. • Employer branding is ‘a generalized recognition for being known among key stakeholders for providing a high quality employment experience and a distinctive organizational identity which employees value, engage with and feel confident and happy to promote to others ’ Martin et al. (2011, pp. 3618 -3619). • A qualitative study of 2 MNC: – Organisation 1: HQ in Sweden and the subsidiary was in Pakistan – Organisation 2: HQ in UAE and the subsidiary was also in Pakistan A Different Take on Hybridisation: Employer Branding? • Given the distaste of universal practices and hostility to Western cultural imperialism in Pakistan, such cultural and religious sensitivities take on greater meaning in this setting • Findings suggest that the process is all important and giving expression to the local voice. • Corporate values and mission was initially created by HQ • Given to subsidiary senior managers for comment (they tended to agree with HQ – is there a corporatisation of senior managers going on here? • Vital element was given front line employees a voice and also to actively amend the corporate message and values – this is the only way to actively gain local social legitimacy HSBC in East Asia Case Study Review Day 3 Cultural Approaches & Perspectives
