INTERNATIONAL HUMAN RESOURCE MANAGEMENT

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INTERNATIONAL HUMAN RESOURCE MANAGEMENT

• Week 8

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Labour and Industrial Relations (1)

• Labour and industrial relations is an important
  for all organizations especially for those
  commercial and non-commercial organizations which
  are operating at the international level
• Labour and industrial relations concepts differ
  according to country and region and according to
  the type of industry concerned
• The labour unions and associations in some
  countries yield considerable power which can be
  used to their benefit in their dealings with
  employers
• The evolution of labour or industrial relations,
  and the history of trade unions, has been
  determined to quite a considerable degree by the
  historical and ideological contexts

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Labour and Industrial Relations (2)

• Employers and organizations need to understand
  the structural evolution of how labour unions in
  order to effectively deal with them
• Lack of unfamiliarity with prevailing local
  industrial and political conditions on the part
  of employers can have far-reaching damaging
  consequences for the organization
• Labour and industrial relations policies of
  organizations operating at the international
  level must be flexible and take prevailing local
  factors, considerations and requirements into
  account over time

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Major Determinants of Labour and Industrial
Relations
Political
Determinants of Labour Industrial Relations
Ideological
Cultural
Economic
Structural
Legal
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Labour Relations Strategies

• Due to the context-related differences, labour
  relations systems differ between countries and,
  hence, the task of managing labour relations
  should be handled decentrally
• The headquarters of organizations operating at
  the international level usually try to maintain
  some form of coordination and control over the
  management of labour relations. The level of
  involvement depends on numerous factors and
  considerations
• Two fundamental reasons for the headquarters
  interest in subsidiary labour and industrial
  relations are that agreements made by subsidiary
  units may have possible spill-over effects on the
  organizations international plans, and that they
  may create precedents for negotiations in other
  countries

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Monitoring Labour Performance Across Countries

• Most firms tend to closely monitor and compare
  labour performance in their subsidiary units
• Comparative labour performance data have the
  advantage of yielding useful information as to
  where, for example, new subsidiary units should
  be established, where capital and investment
  should flow to on a priority basis, and where
  production capacities should be rationalized
• Comparative data are especially useful in
  situations where an organization has a spread of
  subsidiary units which are undertaking similar
  activities

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Parent Organizations Involvement in Labour and
Industrial Relations (1)

• Degree of Inter-Subsidiary Production Integration
  Research indicates that a high level of
  production integration between subsidiary units
  (for example, in a transnational perspective, the
  production outputs of one or more subsidiary
  units become production inputs for other
  subsidiary units) determines a high level of
  centralization i.e. involvement by the parent
  organization in determining labour and
  industrial relations throughout the organization
• A global coordinated labour and industrial
  relations policy becomes an important factor in
  ensuring a successful global production strategy,
  and with it, helps ensure the organizations
  growth and sustainability

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Parent Organizations Involvement in Labour and
Industrial Relations (2)

• Nationality of Ownership of the Organization and
  Subsidiary Units The level of involvement by
  the organizations headquarters in its subsidiary
  units labour and industrial relations policy has
  been shown to differ according to the ownership
• U.S organizations tend to exercise more
  centralized control over labour and industrial
  relations than organizations from the European
  Union
• Reasons put forward to explain the difference
  are that U.S. tend to be comparatively more
  integrated, differences between U.S. and European
  labour relations systems, and the more
  ethnocentric managerial style of U.S. organizaions

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Parent Organizations Involvement in Labour and
Industrial Relations (3)

• International Human Resource Management Approach
  The type of staffing approach utilized by
  organizations has an effect on labour and
  industrial relations. Research indicated that an
  ethnocentric approach is more prone to labour
  conflicts than other staffing approaches
• Experience of Organizations in Labour and
  Industrial Relations European Organizations
  have considerable experience dealing with unions
  at the industry level (for e.g. through employer
  associations), unlike U.S firms which tend to
  deal with labour relations at the organizational
  or firm level

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Parent Organizations Involvement in Labour and
Industrial Relations (4a)

• Subsidiary Characteristics A number of
  subsidiary characteristics have been found to be
  relevant in determining parent organizations
  involvement in labour and industrial relations
• Subsidiaries formed through acquisition of
  well-established indigenous firms tend to have
  more autonomy than newly-established units
• The higher the subsidiary units strategic
  importance for the organization, and the younger
  it is, the more the parent organization will seek
  to control its labour and industrial relations
  policy

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Parent Organizations Involvement in Labour and
Industrial Relations (4b)

• If the parent organization is an important source
  of investment or operating funds for the
  subsidiary unit, the more the parent organization
  will tend to be involved in labour and industrial
  relations, and the subsidiaries human resource
  management policy
• If a subsidiary unit does not perform up to the
  desired level of expectation, the higher the
  likelihood that the parent organization will seek
  to become involved in its labour and industrial
  relations, especially if the poor performance is
  linked to problems with labour

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Parent Organizations Involvement in Labour and
Industrial Relations (5)

• Characteristics of the Home (Product) Market If
  the organizations home market is large, and most
  of its revenue is generated there, then the
  organization would tend to regard foreign markets
  as an extension of its home market and would
  usually use home country practices in dealing
  with labour and industrial relations. This is
  typical for U.S. corporations due to the size of
  the U.S. domestic market
• If the organizations home market is small - as
  is the case for many smaller and medium-sized
  European countries and the organization depends
  mainly on foreign markets for its revenue
  generation, then the organization will be more
  likely to adopt its labour and industrial
  relations approach to the conditions prevailing
  in those foreign markets

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Parent Organizations Involvement in Labour and
Industrial Relations (6a)

• Management Attitudes towards Unions
  Historically and ideologically, managements have
  evolved different attitudes towards unions
• In the U.S., the traditional emphasis has been
  on the importance of capital in the factors of
  production unions have traditionally been
  avoided, and the U.S. has a comparatively low
  union-density rate, i.e. the percentage of
  labourers and employees who belong to a union. A
  consequence of this is that U.S. managers will
  have less experience in dealing with unions than
  managers in other countries for example, in
  European countries such as Great Britain, France,
  Germany and Italy

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Parent Organizations Involvement in Labour and
Industrial Relations (6b)

• There has been a general trend away from
  unionization throughout the world in the past
  couple of decades. Reasons include
• Reduction in public-sector employment
• Reduced employment in the manufacturing sector
• New forms of work organization
• Increased job competition and pressure on workers
  and employees
• Legislative changes
• Collapse of the communist bloc

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Labour Unions Effect on International
Organizations

• Unions may have an effect on international
  organizations in three ways
• Influencing wage and salary Levels, resulting in
  higher wages being paid and thus effecting the
  organizations cost-competitiveness
• Constraining the ability of organizations to
  easily change their employment levels, for
  example, by lobbying influential groups such as
  legislators to pass laws (redundancy legislation)
  that make the dismissal of workers and employees
  subject to stringent conditions and an expensive
  undertaking for the organization (redundancy
  allowance, compensation programmes). Many
  countries have such legislation and the
  corresponding judicial infrastructure in place

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Labour Unions Effect on International
Organizations (2)

• Hindering or preventing global integration or the
  operations of international organizations, by
  compelling international organizations to avoid
  integrating their subsidiaries too much in order
  to prevent the potentially damaging consequences
  which may be brought about by potential labour
  and industrial disputes and demands. This results
  in a suboptimal allocation of resources

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Labour Union Concerns About International
Organizations (1)

• Financial Resources International organizations
  have more financial resources than unions, can
  confront unions simultaneously in one or more
  countries where they have their operations and
  still be profitable overall
• Alternative Sources of Supply International
  organizations can limit their vulnerability to
  labour and industrial action by adopting a dual
  sourcing policy and/or by switching production to
  other facilities

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Labour Union Concerns About International
Organizations (2)

• Mobility of Production Facilities International
  organizations may pose a threat to job security
  by relocating facilities to other countries, for
  example, where a more skilled workforce is
  available or where semi-skilled labour is cheaper
• Lack of Information Some unions may find it
  difficult to understand the organizations
  policies, strategies and approach due to lack of
  awareness and access to the requisite information

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Labour Union Concerns About International
Organizations (3)

• Superior Knowledge and Expertise in Labour
  Relations International organizations often
  have a repository of information, knowledge and
  experience in dealing with unions which they can
  utilize to their benefit
• The Investment option International
  organisations may refuse to invest additional
  capital into facilities in case of labour and
  industrial disputes

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Union Responses

• Unions have several options at their disposal to
  enhance their bargaining power vis-à-vis
  international organizations, for example
• Establish institutional links and exchange
  information through international trade
  secretariats
• Legislative and political lobbying in order to
  improve working conditions and pay (e.g. minimum
  wage, limit on weekly working hours, discouraging
  the export of jobs to foreign countries)
• Exertion of influence on international
  corporations through agencies such as the
  International Labour Organization, the United
  Nations Conference on Trade and Development, the
  OECD and the EU