Chapter 12

Human resource management – an international dimension

Chapter content

• Opening case: McDonald’s Global HR• Introduction• How is HRM influenced by globalisation?• Key debates in the field of international human

resource management (IHRM)• Universal and contextual paradigm• Convergence versus divergence • Cultural and institutional influences• Nature of IHRM• Key developments in IHRM• International assignments

Four key debates

How do organisations (that operate in many countries) cope with the cultural and institutional differences?

• Universal and contextual paradigms in HRM• Comparative and international HRM• Convergence and divergence in HRM• Cultural and institutional explanations of differences

in HRM

Universalist and contextual paragdigms

• Universalist paradigm– Scientific approach– HRM seen as __________– Assumes the purpose is to improve the way that

organisations strategically manage human resources

Universalist and contextual paradigms (cont.)

• Contextual paradigm– Ideographic– Does not look at universal laws, but

___________________________________________–

Comparative and international HRM

• Human resource management is one of the areas where organisations are most likely to maintain a 'national flavour'

• HRM can be examined comparatively – how does it vary from __________?

• Dilemma for internationally operating companies• Benefit of scales• Want to get the advantages of integration –

ensuring that HRM policies and practices are as far as possible similar in all countries

• They have to be sensitive to national differences

Cultural explanations of differences in HRM

Why are there differences between countries that seem to persist over time?

• Cultural and institutional explanations– Are the differences between countries "sustained

because people find it repulsive, unethical or unappealing to do otherwise….[or] …because a wider formal system of laws, agreements, standards and codes exist?“

• Culture is not easily defined by one definition• Organisations represent ……….

Cultural explanations of differences in HRM (cont.)

• “Culturalist" school includes many different approaches, but they share the notion that it is not possible to depart radically from established rules and norms

• Culture is shared by ……….• National culture has an influence, and organisations

should not ……….• Differences in what is good/bad, honest/dishonest

and fair/unfair• Cultural differences will inevitably be reflected in

differences in ……….

Institutional explanations of differences in HRM

• Institutions of a society are what keeps them distinctive

• Variations between countries ……….• Perhaps neither an exclusively _______ nor an

exclusively ________ approach can be satisfactory

- See institutions as being ……….

• Institutional writers:

- Include culture as one of the institutional elements explaining _________. Institutions cannot survive without legitimacy, but the way they operate also affects the views of people in a society about what is legitimate

• Cultural writers:

explore the same factors from different points of view

Convergence and divergence

Are the differences between societies (in the way that people are managed) being reduced as globalisation increases?

• Early management theorists thought that a form of "social Darwinism" =

• Widespread emphasis on the benchmarking practices of organisations (and attempts at the diffusion of _______ practices have been noted

Convergence and divergence (cont.)

• Theoretical possibilities:– No common model in foreseeable future (due to

……….) – Divergence: what is usually meant is _________– Institutions and cultures don’t change quickly or in

ways that are the same as other countries - managers behave differently from country to country

– Superficially universal principles may be interpreted ________ in different countries

– Convergence in some aspects of HRM but not in others

Convergence and divergence

directional convergence

final convergence

International HRM: What’s special about "international" ...?

• Not limited to: _______, _______, _______ and not-for-profit organisations

• Comprehensive understanding of global operations also incorporate learning from international family business units, overseas networks of entrepreneurs, and illegal gangs (who have learned how to operate globally)

International HRM: What’s special about "international" ...? (cont.)

• Need to assess what we mean by the term _______; how we are to conceptualise it; what areas and activities it includes; and model its drivers and enablers

• IHRM originally consisted of:– – –

Expatriation

• Cross-border assignments of employees that last for a significant period of time

• For many organisations IHRM = expatriate management– – They, and their management, have issues and

problems that go beyond those of most other employees

–

IHRM –broader than management of expatriates

• Involves the worldwide management of people• Adler and Ghadar:

–

–

Four approaches to International human resource management

IHRM

• Schuler, Dowling & De Cieri:– "human resource management issues, functions and

policies and practices that ……….“

Factors in strategic IHRM

Model of Global HR

International transfers

• Need to fill and manage important assignments that may not be in the home country

• People involved are invariably expensive to service• Increasing pressure to cut costs:

– –

International transfers (cont.)

• “One-off" approach• Reasons for undertaking international assignments:– – – –

International transfers (cont.)

• Is evidence that there are variations between firms in the use of expatriates based on size, organisational age and nationality

• Knowledge transfer: the ability of the organisation to move information and understanding from one country to another– Key task and one that can be undertaken through a

variety of mechanisms, but is not without its problems

International transfers: cheaper and/or better

• Doing it cheaper: alternatives to expatriation– – – Use of third country nationals– – International commuters– –

International transfers: cheaper and/or better (cont.)

• Doing it more effectively: the expatriate cycle– Selection of expatriates – – – – – Repatriation of expatriates

Key competencies for successful global employees

Allowance to expatriates

• Foreign service premiums• Hardship allowance• Cost of living allowance• Housing allowance• Utility allowance• Furnishing allowances• Education allowances

Allowance to expatriates (cont.)

• Home leave allowances• Relocation allowances• Medical allowances• Car and driver allowances• Club membership allowances• Taxes

Strategy and attention to detail

• Complexities of IHRM are a reflection of ..........• Unlikely to be exact or final answers to the questions

raised by international HRM• Many international organisations struggle with the

issues of what elements of their HR policies and practices can be centralised and which decentralised

• Pay and conditions of expatriates