MGT 430 - 2015CLASS 19 Chapter 15

GLOBAL HUMAN RESOURCES MANAGEMENT

CHANGING ROLE OF HRMFrom TMT/CEO Perspective

Help us…

• Increase profit• Decrease cost• Emphasis on ROI, a.k.a.

Value-adding deliverables• Strategy vs. Administration• Maintain & increase competitive advantages• Linkage to strategic business plan

WHAT’S GOING ON

Two Things

Globalism

Technology

WHY DO COMPANIES GO GLOBAL

Increased market share Emerging marketsBetter business climate Technologically feasibleLower production costs Closer to the customerLegal considerations Competition

Better access to resources

Diversity of business ideas and practices

Lack of growth in domestic markets

Global Companies Doing Business In Albany

Olive oil for pizza Greece/ItalySilicone wafers at GF DubaiGE turbines AsiaHospital X-ray readingsIndiaLipton Tea – Dove Soap – Ben & Jerry British / DutchHannaford Grocery BelgiumNanotech Research Korea, Japan, UKCaviar RussiaBeer/Wine Germany/FranceHonda / Toyota JapanMahogany HondurasCoffee Columbia

Capital Region CompaniesConducting Foreign Trade

GE TurbinesAlbany International Fine papersSch’dy International ChemicalsPort of Albany ShippingSUNY-Poly SemiconductorsComfortex Window Dressing Ducommun Aviation

Globalism – Falling Barriers

• Trade barriers – EU, NAFTA, 24/7

• Lines of business – Conglomerates vs. single product/service

• Banking in the USCity-County-State – National – International

• Political changesRussia – China – Egypt – Syria – Middle East

GlobalizationFalling Barriers

• CharacteristicsFalling trade & political boundaries

• ChallengesEconomic competencePolitics – Fraud - CorruptionTrade – Labor – Uneven playing field

• EncouragesCreative thinking

GLOBALISM ENCOURAGES

• Re-thinking business strategies• Re-thinking political support or blockages• Emerging markets – China, Asia, Gen Y• New ideas – products – services (think

Borders & Kodak)• Re-evaluating what we think in B-School• Multi-culturalism

TECHNOLOGY

• Internal

• External

Technology

• Internet Social media E-everythinge.g. books – film – travel tickets – e-payroll

• Tabulate everything – evaluate everything• Labor reduction = cost reduction• Easier to track performance• Virtual management – Key focus for HRM• Public availability of information• Fraud & privacy/confidentiality concerns• More work with less people at same pay = happy

CFO

TECHNOLOGY - Internal

• Re-thinking all work processes• Digitize everything• Multi-media (LinkedIn, Facebook, Twitter)• Matrix management• Virtual management• HRM - Delegating processes to line managers

e.g. Payroll, benefits, recruiting• AMAZON.COM

HRM in a Global Environment

Global activities are simplified and encouraged by trade agreements among nations.

Increase and change demands on HRM.

Organizations need employees who understand customers and suppliers in foreign countries.

Organizations need to understand laws and customs that apply to employees in other countries.

Employers in the Global Marketplace• International organization – sets up one or more facilities in one or

more foreign countries.• Multinational company – builds facilities in a number of different

countries in an effort to minimize production and distribution costs.• Global organization – chooses to locate a facility based on the

ability to effectively, efficiently, and flexibly produce a product or service using cultural differences as an advantage.

• Expatriate—citizen of one country and lives and works in another country

• Transnational corporation – a firm with highly decentralized operations in many countries. Has little allegiance to its country of origin and weak ties to any country

Some More Definitions

• Parent country – Country in which the company is headquartered

• Host Country – country in which an expatriate works

• Third party national – native of one country who is working in a 2nd country that is owned by a 3rd country corporation

Employees in an International Workforce

Parent-country nationalAn employee who was born and works in the country in which an organization’s headquarters is located.

Ex. Yvonne (France) works for Air France (France) in Paris (France)

Host-country nationalAn employee who is a citizen of the country (other than parent country) in which an organization operates a facility.

Ex. Nigel (Great Britain) works for General Motors (US) in Liverpool, England

Employees in an International Workforce

Third-country nationalAn employee who is a citizen of a country that is neitherthe parent country nor the host country of the employer.

Ex: Siegfried (Austrian) works for Rolls-Royce (English) in Athens (Greece)

Ex-patriateNative born employees of the parent company assigned to work in another country

Ex: Ken (US) is assigned to work for Ben & Jerry’s in Monte Carlo (France)

Transnational HRM System

Transnational HRM system:• makes decisions from a global perspective• includes managers from many countries• based on ideas contributed by people representing a variety of

cultures

• Decisions that are the outcome of a transnational HRM system balance uniformity (fairness) with flexibility (accounting for cultural and legal differences).

Factors Affecting HRM inInternational Markets

Global HRM

Culture

Education Economic Systems

Political-Legal

Systems

Culture

Culture – a community’s set of shared assumptions about how the world works and what ideals are worth striving for.

• Is greatly affected by a country’s laws.

• Influences what people value, so it affects people’s economic systems and efforts to invest in education.

• determines effectiveness HRM practices.

Culture

• Organizations must prepare managers to recognize and handle cultural differences.• Recruit leaders with knowledge of other cultures• Provide training

• For expatriate assignments, organizations may need to conduct an extensive selection process to identify individuals who can adapt to new environments.

Geerte Hofstede’s Five Dimensions of Culture

1. Individualism/Collectivism Describes the strength of the relation between an individual and other individuals in the society.

2. Power Distance Concerns the way the culture deals with unequal distribution of power and defines the amount of inequality that is normal.

3. Uncertainty Avoidance Describes how cultures handle the fact that the future is unpredictable.

4. Masculinity/Femininity The emphasis a culture places on practices or qualities that have traditionally been considered masculine or feminine.

5. Long-term/Short-term Orientation

Suggests whether the focus of cultural values is on the future (long term) or the past and present (short term).

Geerte Hofstede – Power distance

• Power distance is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally.

• Individuals in a society that exhibit a high degree of power distance accept hierarchies in which everyone has a place without the need for justification.

• Societies with low power distance seek to have equal distribution of power.

• Cultures that endorse low power distance expect and accept power relations that are more consultative or democratic.

• Example (out of 100): USA = 40 - The extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally.

• A society’s inequality is endorsed by the followers as much as by the leaders

Geerte Hofstede - Uncertainty avoidance

• A society's tolerance for uncertainty and ambiguity.• It reflects the extent to which members of a society attempt to cope with

anxiety by minimizing uncertainty. • People in cultures with high uncertainty avoidance tend to be more

emotional. • They try to minimize the occurrence of unknown and unusual circumstances

and to proceed with careful changes step by step planning and by implementing rules, laws and regulations.

• In contrast, low uncertainty avoidance cultures accept and feel comfortable in unstructured situations or changeable environments and try to have as few rules as possible. People in these cultures tend to be more pragmatic, they are more tolerant of change.

• Example: USA = 46; Should we try to control the future or just let it happen

Geerte Hofstede – Individualism (vs. collectivism)

The degree to which individuals are integrated into groups. • The stress is put on personal achievements and individual rights. • People are expected to stand up for themselves and their immediate family, and to

choose their own affiliations. • In contrast, in collectivist societies, individuals act predominantly as members of a

lifelong and cohesive group or organization • People have large extended families, which are used as a protection in exchange for

unquestioning loyalty.

• Example: USA = 91 - Liberty & justice for all – emphasis on equal rights in all aspect of American society and government

• Example: Saudi Arabia = 25 – People’s self image is defined in terms of “I” or “We”.• In Collectivist societies people belong to ‘in groups’ that take care of them in exchange

for loyalty.

Geerte Hofstede – Masculinity vs. Femininity

• The distribution of emotional roles between the genders.

• Masculine culture values are competitiveness, assertiveness, materialism, ambition and power

• Feminine cultures place more value on relationships and quality of life.

• As a result of the taboo on sexuality in many cultures, particularly masculine ones, this dimension is often renamed by users of Hofstede's work to Quantity of Life vs. Quality of Life.

• Example• USA = 62 – Male - driven by competition; Female – driven by caring for others and

quality of life

Geerte Hofstede – Long Term vs. Short Term Orientation

• It describes societies‘ time horizon.

• Long-term oriented societies attach more importance to the future.

• In short term oriented societies, values promoted are related to the past and the present, (see Wall Street).

• Example: USA = 26

Geerte Hofstede – Indulgence vs. Restraint

• The extent to which members of a society try to control their desires and impulses.

• Whereas indulgent societies have a tendency to allow relatively free gratification of basic and natural human desires related to enjoying life and having fun, restrained societies have a conviction that such gratification needs to be curbed and regulated by strict norms.

• Example:• USA = 68 – work hard – play hard – with immediate gratification• Japan = 42 – a culture of restraint

Cultural Dimensions

Dimension USA China S. Korea France

PDI 40 80 60 68

IDV 91 20 18 71

MAS 62 66 69 43

UAI 46 30 85 86

LTO 29 118 75 39

Education and Skill Levels

• Companies with foreign operations locate in countries where they can find suitable employees – with the right and necessary KSAs – and with the capability to acquire those KSAs.

• Education and skill levels of a country’s labor force affect how and extent to which companies want to operate there.

• In countries with a poorly educated population, companies will limit their activities to low-skill, low-wage jobs.

Economic System of a Country

• Economic systems provides many incentives or disincentives for developing the value of the labor force.

• In developed countries with great wealth, labor costs are relatively high, impacting compensation recruiting and selection decisions.

• Income tax differences between countries make pay structures more complicated when they cross national boundaries.

Political-Legal System

• Country’s laws often dictate requirements for HRM practices, e.g. training, compensation, hiring, firing, layoffs & labor relations.

• An organization that expands internationally must gain expertise in the host country’s legal requirements and ways of dealing with its legal system.

• Organizations will hire one or more host-country nationals to help in the process, e.g. contractors or consultants.

HR Planning in a Global Economy

• HR planning involves decisions about where and how many employees are needed for each international facility.

• Decisions about where to locate include considerations such as cost and availability of qualified workers which must be weighed against financial and operational requirements.

Criteria for Selection of Employees for Foreign Assignments

1. Competency in employee’s area of expertise2. Ability to communicate verbally and nonverbally in the

foreign country3. Flexibility, tolerance of ambiguity, and sensitivity to

cultural differences4. Motivation to succeed and enjoyment of challenges5. Willingness to learn about the foreign country’s culture,

language, and customs6. Support from family members7. Overcoming culture shock