INTERNATIONAL%20HUMAN%20RESOURCE%20MANAGEMENT

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INTERNATIONAL HUMAN RESOURCE MANAGEMENT

• Week 2

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HRM and the Organizational Context (1)

• HRM activities determine, and are also
  influenced by organizational considerations
• The organizations level of internationalization
• Internationalization strategy in foreign markets
• Control and coordination requirements
• Strategic importance of foreign operations in
  relation to the organizations overall
  profitability

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HRM and the Organizational Context (2)

• Ideally, HRM considerations should play a key
  role in an organizations decision to
  internationalize itself, rather than a
  market-driven strategy, which is usually followed
• HRM constraints and factors may have a
  significant impact on an organizations
  internationalization strategy

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Managing and Staffing Approaches in the
International Context (1)

• The HRM literature identifies the following four
  managing and
• staffing approaches, which are also indicative of
  top management
• attitude
• Ethnocentric Approach High level of control
  exerted by the parent organization / corporate
  headquarters over foreign subsidiaries. Key
  positions in the subsidiaries are managed by
  expatriates from the parent country (i.e. PCNs)
• Polycentric Approach Subsidiaries are treated
  as distinct national entities with a certain
  level of decision-making autonomy. They are
  usually managed by local nationals (i.e. HCNs).
  These are seldom promoted to positions at
  corporate headquarters and, likewise, PCNs are
  rarely transferred to foreign subsidiaries

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Managing and Staffing Approaches in the
International Context (2)

• Geocentric Approach Global perspective
  resulting in there being no discrimination of
  PCNs, HCNs and TCNs, who, depending on capability
  and performance, are given the opportunity to
  work in key positions anywhere (parent
  organization, subsidiaries) in the organization
• Regiocentric Approach Considered a precursory
  step in the direction of geocentricism. Managers
  may be transferred freely within a particular
  geographic region. These may enjoy a considerable
  level of autonomy in decision-making but are
  usually not transferred to the parent organization

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Organizational Typologies (1)

• Bartlett and Ghoshal identify the following types
  of
• corporate organizational modals
• Multinational Modal Characterized by
  decentralization of many of the organizations
  key assets, responsibilities and decisions.
  Management regards overseas operations as a
  portfolio of independent businesses. For example,
  Siemens has many different lines of business
  around the world, but it is not really
  consolidated into one whole, and each country of
  operation is autonomous. Bayer, ADP and Levi also
  fit into this category

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Organizational Typologies (2)

• Global Modal It has a central hub where most of
  the strategic assets, resources and decisions are
  centralized. The management views overseas
  operations as a pipeline to a global marketplace.
  Examples include British Airlines, Deutsche Bank
  and NCR
• International Modal - Sits midway between the
  decentralized and centralized models. Many of the
  key assets, responsibilities and decisions are
  decentralized, but controlled from headquarters.
  Management regards overseas operations as
  appendages to a central, domestic corporation.
  Johnson Johnson fits this description

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Organizational Typologies (3)

• Transnational Modal It's a distributed network
  with distributed resources and capabilities. The
  management oversees a complex process of
  coordination and cooperation in an environment of
  shared decision-making. It has distributed
  control. This kind of corporation can have very
  small corporate headquarters
• Hewlett-Packard and Cendant are examples of
  transnational corporations

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The Internationalization Process

• Organizations have several options available for
  expanding their operations into foreign markets
• The option pursued by the organization depends on
  a host of factors, for example, its size,
  available its resources (including human
  resources), strategy, confidence and
  environmental contingencies
• Linked to the internationalization of
  organizations are the need for effective and
  efficient coordination and control mechanisms
  and, among other things, appropriate HRM policies

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HRM and Soft Modes of Internationalization by
Organizations (1)

• Typical soft modes of internationalization
  include
• Licensing A business arrangement in which the
  manufacturer of a product (or a firm with
  proprietary rights over certain technology,
  trademarks, etc.) grants permission to some other
  group or individual to manufacture that product
  (or make use of that proprietary material) in
  return for specified royalties or other payment.
  Often does not involve a heavy committment of
  human resources
• Management Contracts Involve the transfer of
  experienced managerial and technical staff to
  another organization for a fee and for a
  specified period of time. Management contracts
  usually involves training the organizations
  employees

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HRM and Soft Modes of Internationalization by
Organizations (2)

• Alliances A collaboration between organizations
  under which their resources are pooled, exchanged
  or integrated for mutual benefit. The committment
  of human resources depends on the level of
  inter-organizational interaction
• Projects and Joint Ventures Potentially
  considerable challenges on the human resource
  management function due to the usually close and
  sustained inter-organizational interaction which
  is necessary for such collaborative vventures,
  and the consequent varying management styles and
  philosophies, work ethics and cultures

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The HRM Function in the Context of
Internationalization (Export)

• By and large, little implications for HR policies
  for manufacturing organizations unless their
  export sales reach a critical level
• Service-based industries would establish a branch
  office or go into a joint venture with a local
  partner as the nature of their business (i.e.
  provision of services) would necessitate this

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The HRM Function in the Export Context (1)
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The HRM Function in the Export Context (2)
PCNs HCNs
Firms would tend to replace sales agents and
distributors in foreign markets with their own
sales subsidiaries or branch offices for
any several reasons Problems with foreign agents
and distributors, more confidence in
self-handling international sales activities, the
desire for more control and because of
increasing importance which exporting activity
has on the success of the organization
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HRM in the Context of Internationalization
(Foreign Production)

• There may be several reasons for a firm desiring
  to establish
• production facilities overseas, for example
• Cheaper production and transportation costs
• Host government investment incentives and import
  restrictions
• Maintaining markets
• Means of establishing production facilities
  overseas include
• setting up a facility independently, entering
  into joint ventures or
• acquiring local companies. Usually, going
  international means
• creating an international division at corporate
  headquarters
• At this (initial) stage of internationalization,
  some organizations
• will usually make extensive use of PCNs, others
  will use HCNs to
• capitalize on local conditions or satisfy local
  regulations

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Challenge of Internationalization for
Organizations Centralization versus
Decentralization
Need for national responsiveness Differences
in market structures Distribution
channels Customer needs Local culture Host
Government pressures
Need for more centralization Multinational
Customers Global Competitors Economies of
Scale Flow of Information
Pressure for Decentralization
Pressure for Centralization
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The HRM Function in the Context of
Internationalization (International Division)
Managing Director
Production
Marketing
Finance
Human Resources
Staff selection Expatriates
Domestic Division (Product A)
Domestic Division (Product B)
International Division
Exporting Departing
Subsidiary Country A
Subsidiary Country B
Production
Marketing
Finance
Human Resources
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The HRM Function in the Context of
Internationalization (Global Product Division)
Chief Executive Officer
Marketing
Production
Global Product Division
Marketing
Finance
Human Resources
Product A
Product B
Product C
Product D
Europe
Americas
Asia-Pacific
Pakistan
Human Resources
Marketing
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The HRM Function in the Context of
Internationalization (Global Area Division)
Chief Executive Officer
Production
Marketing
Finance
Human Resources
Americas
Europe
Asia- Pacific
Pakistan
Human Resources
Marketing
Product D
Product C
Product B
Product A
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The HRM Function in the Context of
Internationalization (Matrix)
Chief Executive Officer
Production
Marketing
Finance
Human Resources
Vice-President Global Products
Vice-President International
Americas
Europe
Asia- Pacific
Product A
Human Resources
Product B
Pakistan
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The HRM Function in the Context of
Internationalization (Network Structures)

• The Heterarchy An organization has different
  centers in different locations, for example,
  RD activities are concentrated in one center,
  training in another. It places considerable
  demands on the human resource function management
  (experienced personnel, incentive packages to
  motivate and control employee performance,
  promotion of awareness of common corporate goals)
• The Transnational Characterized by
  interdependence of resources and responsibilities
  across subsidiaries and business units resulting
  in large flows of information, people, resources
  etc. Complex level of communication, cooperation
  and coordination required along with strong
  corporate identity and well-developed worldwide
  management perspective. Seeks to achieve global
  integration while retaining localized
  flexibility. Human resources need to be flexible,
  quickly transferable and think across national
  and subsidiary boundaries

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The HRM Function in the Context of
Internationalization (A Complex Network Structure)
Center e.g. RD
Subsidiary
Subsidiary
Corporate Headquarters
Center (e.g. Training)
Subsidiary
Subsidiary
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Control Mechanisms in a Networked Organizational
Environment
Control Mechanisms
Structure Reporting Systems Budgets Performance
Targets
FORMAL
INFORMAL
Personal Relationships
Corporate Culture
In networked organizational environments, there
is a tendency to rely more on Informal controls
instead of formal controls that are usually
prevalent in the hierarchichal-type environments
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Control and Coordination Issues for HRM in
International Networked Organizational
Environments

• In networked organizational environments, human
  resource
• management has a crucial role to play, for
  example through
• Contact facilitation for information and
  knowledge diffusion
• Training and development for fostering informal
  communication channels and building a corporate
  culture
• Assisting in creating personal networks amongst
  key staff persons
• Staffing Decisions and Transfers

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The ideal Organizational Structure?

• There is no ideal structure for organizations
  which
• are internationalizing. The determination of
• organizational structure will depend on a
  plethora of
• factors and considerations, such as
• Size of the organization
• Management traditions and policies
• Circumstances prevailing in the host countries
• Some organizations have experimented with
  different
• organizational structures with a view to finding
  the
• appropriate structure best suiting their
  requirements