International Human Resource Management

11
HRM in the Local Context: Knowing When and How to Adapt
Dr. K. Nagendra Babu , Professor
2/8/2013
Learning Objectives
Understanding how the national context affects
HRM practices Identify how recruitment and selection practices differ in various national contexts Identify possible host adaptations in recruitment and selection practices
2/8/2013
Learning Objectives
Identify how training and development techniques
are used in different countries Identify sources of high-quality workers in different nations Understand how training must be adapted to host country workers Identify how performance evaluation and compensation practices differ in various national contexts
2/8/2013
Learning Objectives
Identify possible host country adaptations in
performance evaluation and compensation practices for a multinational company Understand how labor costs vary Have an appreciation of how the national context and historical conditions affect the relationship of management and labor
2/8/2013
Why Do Nations Differ in HRM?

Because of the national context
National culture and social institutions influence
how managers make decisions regarding strategies

Countries vary widely with regards to social
institutions and national culture

Multinationals must select and implement practices
that meet national context
2/8/2013
Exhibit 11.1: How the National Context Leads to National Differences in Local HRM Practices
2/8/2013

Resource pool: all the human and physical
resources available in a country

Both from natural and induced factor conditions Include quality of labor, availability of scientific
laboratories
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Key Factors that Influence the Resource Pool

The quality, quantity, and accessibility of raw
material The quantity, quality, and cost of personnel available The scientific, technical, and market-related knowledge available to firms
2/8/2013
Resource Pool
The cost and amount of capital available to firms
for operations and expansion The type, quality, and costs of supporting institutions such as the systems of communication, education, and transportation
2/8/2013

Natural factor conditions: national resources that
occur naturally
E.g., abundant water supply
Induced-factor conditions: national resources
created by a nation
E.g., superior educational system
2/8/2013
Characteristics of the National Context That Affect HRM

Education and training of the labor pool
Laws and cultural expectations for selection
practices Types of jobs favored by applicants Laws and cultural expectations regarding fair wages and promotion criteria Laws and traditions regarding labor practices
2/8/2013
Recruitment Strategies
Walk-ins or unsolicited applications
Newspaper or Internet advertisement

Company Web site job posting Internal job postings Public and private personnel agencies Placement services of educational institutions Current employee recommendations
2/8/2013
Exhibit 11.2: Steps in the Recruiting Process
2/8/2013
Recruitment in the U.S.

U.S. managers tend to see newspapers as one of
the most effective recruitment methods. Fear that recruitment by personal contacts may result in bias against some groups. U.S. value open and public advertisements as a reflection of individualistic culture.
2/8/2013
Exhibit 11.3: Most Effective Recruiting Sources for U.S. Companies
2/8/2013
Recruitment in Korea
Backdoor recruitment: prospective employees are
friends or relatives of those already employed Managers are recruited from prestigious universities
2/8/2013
Recruitment Around the World

Individuals around the world have preferred way
to find jobs International Social Survey Program data was analyzed Looking for jobs through public vs. private agencies
Individuals in former communist and socialist
societies were more likely to rely on public agencies
2/8/2013
Recruitment Around the World (cont.)

Advertising in newspapers and responding to
newspaper ads
Both very public forms of recruitment Individualistic societies have higher preference for
such forms
Apply directly versus asking friends/relatives for
job
Individualistic and high femininity societies more
likely to favor direct application Socialist societies rely on asking friends/relatives
2/8/2013
Exhibit 11.4: Preferred Ways to Look for a New JobPublic vs. Private Agency
2/8/2013
Exhibit 11.5: Preferred Ways to Look for a New Job
2/8/2013
Exhibit 11.6: Preferred Ways to Look for a New Job
2/8/2013
Selection in the U.S.

Job qualifications
Match skills and job requirements

Individual achievements Prohibitions against nepotismthe hiring of
relatives Forbidding managers to supervise family members
2/8/2013
Exhibit 11.7: Typical Steps in U.S. Personnel Selection
2/8/2013
Selection in Collectivist Cultures

Based on the in-group
Preference for family

Value potential trustworthiness, reliability, and
loyalty over performance-related background High school and university ties substitute for family membership
2/8/2013
Implications for the Multinational: Recruitment and Selection

Managers must follow local norms to get best
workers Often a tradeoff between home practices and costs of following local traditions
2/8/2013
Training and Development

Need for training and development varies by
country Differences in training and development due to

Differences in educational systems Values regarding educational credentials Cultural values regarding other personnel practices
2/8/2013
Exhibit 11.8: Training Systems around the World
2/8/2013
Exhibit 11.9: Key Specific Training and Development Characteristics of Selected Countries
2/8/2013
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Training and Development in the U.S.

Companies with over 100 employees invest more
than $60 billion in training costs. Management development and computer skills are the most popular. There is growing pressure for training as the U.S. shifts to the service sectors.
2/8/2013
Exhibit 11.10: Skills Taught by U.S. Organization
2/8/2013
Training and Development in Germany

Two major forms of vocational education
General and specialized vocational schools and
professional and technical colleges Dual system: combination of in-house apprenticeship training with part-time vocationalschool training, and leads to a skilled certificate
Meister: a master technician
2/8/2013
German Dual System

Stems from collaboration among employers,
unions, and the state Costs shared between companies and state Employers have obligation to release employees for training
2/8/2013
Exhibit 11.11: Skilled Worker Training in Germany
2/8/2013
Exhibit 11.12: Germanys Apprenticeship Program under Pressure
2/8/2013
Training and Development in the U.S.

Senior level managers often identify managerial
potential Appraisals of managerial readiness based on

Assessment centers Mentoring Fast track careers
Remains the responsibility of the individual
2/8/2013
Training and Development in Japan

Permanent employment Recruitment directly from universities Join the company as a group Selected on personal qualities that fit the
corporate culture Similar pay and promotion for first ten yearsage seniority Informal recognition of those high performing managers
2/8/2013
Training and Development in Japan

Shifting social institutions: pressures for change
Asahi ties promotions to evaluations Matsushita uses merit pay for managers Honda is phasing out seniority
2/8/2013
Implications for the Multinational: Training and Development

Examine feasibility of exporting training
IHRM orientation affects training needs of local
managers Locations advantages
2/8/2013
Exhibit 11.13: Workers of the Future: Student Math and Science Scores from Selected Countries
2/8/2013
Performance Appraisal
Identifying people to reward, promote, demote,
develop and improve, retain, or fire Not everyone can climb the corporate ladder Need to assess how employees perform
2/8/2013
U.S. Performance Appraisal

U.S. legal requirements regulate performance
evaluation practices to ensure their fairness Performance evaluations must relate clearly to the job and performance Performance standards must be provided in writing Supervisors must be able to measure the behaviors they rate
2/8/2013
U.S. Performance Appraisal (cont.)

Supervisors must be trained to use evaluation
measures Supervisors and subordinates must discuss appraisals openly Appeals procedures must be in place
2/8/2013
Performance Appraisal in Collectivist Cultures

Managers work indirectly to sanction poor
performance Often avoid direct performance appraisal feedback
2/8/2013
Exhibit 11.14: Cross-National Differences in Purposes of Performance Appraisals
2/8/2013
Compensation
Wages and salaries, incentives such as bonuses,
and benefits such as retirement contributions Wide variations on how to compensate workers
2/8/2013
Compensation in the U.S.

Wages and salaries differ based on two major
factors
External: include local and national wage rates,
government legislation, and collective bargaining Internal: include the importance of the job to the organization, its ability to pay, and the employees relative worth to the business
2/8/2013
Compensation: Japan
Traditional approach
Base salaries on positions Skill and educational requirements Age Marital status and family size may count
Bonus system: employees often receive up to 30%
of their base salary during traditional gift-giving seasons
2/8/2013
New Merit (Japanese style)

Can affect pay raises to a greater degree than
traditional position/seniority system Nenpo system: based on yearly performance evaluations that emphasize goals
Although goals are not always the same as in
Western companies
Stresses attitudes as much as performance
2/8/2013
Exhibit 11.15: The Japanese Pay Raise Formula: Changing the Balance
2/8/2013
Implications for the Multinational: Performance Evaluation and Compensation

Match HRM orientation
Seek location advantages in wages
2/8/2013
Exhibit 11.17: Labor Costs and Hours Worked Per Week in Selected Countries
2/8/2013
A Comparative View of Labor Relations

Patterns of labor relations depend on:
Historical factors Ideology reasons Management views of unions
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Union-Membership Density
Proportion of workers in a country who belong to
unions
Germany: estimated 40% belonged to trade unions U.S.: 14.2% of nonagricultural workforce Denmark: over 80% unionized
Great Britain: approximate 50% unionized
2/8/2013
Exhibit 11.18: Union Density in Selected Countries
2/8/2013
Historical and Institutional Differences: Germany

Germany
Formalized, legalistic, and low-conflict bargaining
between unions and large corporations

French
Militant/strong ideologies
U.S.
Bread and butter issues: wages, benefits, and
working conditions
2/8/2013
Union Structures
Enterprise union: represents all people in one
organization, regardless of occupation or location Craft union: represents people from one occupational group, such as plumbers Industrial union: represents all people in a particular industry, regardless of occupational type
2/8/2013
Union Structures (cont.)

Local union: represents one occupational group
in one company Ideological union: represents all types of workers based on some particular ideology or religious orientation White collar or professional union: represents particular occupational group, similar to craft union
2/8/2013
Exhibit 11.19: Popular Form of Unions in Selected Countries
2/8/2013
Implications for the Multinational: The Search for Harmony

Must deal with local labor practices
A factor in location choice
2/8/2013
Exhibit 11.21: Who Gets Along?
2/8/2013

International Human Resource Management

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11

HRM in the Local Context: Knowing When and How to Adapt

Dr. K. Nagendra Babu , Professor

Dr. K. Nagendra Babu , Professor

Dr. K. Nagendra Babu , Professor

Dr. K. Nagendra Babu , Professor

Why Do Nations Differ in HRM?

how managers make decisions regarding strategies

institutions and national culture

that meet national context

Dr. K. Nagendra Babu , Professor

Dr. K. Nagendra Babu , Professor

Why Do Nations Differ in HRM?

resources available in a country

Dr. K. Nagendra Babu , Professor

Key Factors that Influence the Resource Pool

Dr. K. Nagendra Babu , Professor

Dr. K. Nagendra Babu , Professor

Why Do Nations Differ in HRM?

Induced-factor conditions: national resources

Dr. K. Nagendra Babu , Professor

Characteristics of the National Context That Affect HRM

Laws and cultural expectations for selection

Dr. K. Nagendra Babu , Professor

Newspaper or Internet advertisement

Dr. K. Nagendra Babu , Professor

Exhibit 11.2: Steps in the Recruiting Process

Dr. K. Nagendra Babu , Professor

Recruitment in the U.S.

Dr. K. Nagendra Babu , Professor

Exhibit 11.3: Most Effective Recruiting Sources for U.S. Companies

Dr. K. Nagendra Babu , Professor

Dr. K. Nagendra Babu , Professor

Recruitment Around the World

societies were more likely to rely on public agencies

Dr. K. Nagendra Babu , Professor

Recruitment Around the World (cont.)

likely to favor direct application Socialist societies rely on asking friends/relatives

Dr. K. Nagendra Babu , Professor

Dr. K. Nagendra Babu , Professor

Exhibit 11.5: Preferred Ways to Look for a New Job

Dr. K. Nagendra Babu , Professor

Exhibit 11.6: Preferred Ways to Look for a New Job

Dr. K. Nagendra Babu , Professor

Selection in the U.S.

Match skills and job requirements

relatives Forbidding managers to supervise family members

Dr. K. Nagendra Babu , Professor

Exhibit 11.7: Typical Steps in U.S. Personnel Selection

Dr. K. Nagendra Babu , Professor

Selection in Collectivist Cultures

Preference for family

Dr. K. Nagendra Babu , Professor

Implications for the Multinational: Recruitment and Selection

Dr. K. Nagendra Babu , Professor

Training and Development

country Differences in training and development due to

Dr. K. Nagendra Babu , Professor

Exhibit 11.8: Training Systems around the World

Dr. K. Nagendra Babu , Professor

Dr. K. Nagendra Babu , Professor

Dr. K. Nagendra Babu , Professor