1_intro to IHRM - International Human Resource Management...

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Unformatted text preview: International Human Resource Management Mgmt 472 Spring 2008 Dr. Dave Woehr What do we mean by "human resource management"? is international HRM? What Why How do we need "IHRM" does IHRM differ from HRM? Human Resource Management Involves all management decisions and practices that directly affect or influence the people in the organization HR activities Human resource planning Staffing Recruitment Selection Placement Training and development Compensation (remuneration) and benefits Industrial relations Economy Government External Environment Labor Markets Competitors Demographics Human Resource Functions Planning for Jobs & Personnel Strategic HRM HR Planning Job Analysis Acquiring Human Resources Recruitment Selection EEO Facilitating Performance Training HR Development Productivity and Quality Rewarding Employees Performance Appraisal Compensation and Benefits Maintaining Human Resources Safety and Health Labor Relations Organizational Exit Managing Multinational HRM Organizational Environment Management's Goals & Objectives Corporate culture Strategy Technology Structure Size Employees Motivation Abilities Interests Personality Attitudes Jobs Requirements Rewards Job Outcomes Performance Productivity Quality Satisfaction Retention Organizational Outcomes Survival Competitiveness Growth Profitability Recurring Themes in HRM Strategic Approach International HR Maintaining Ethical Policies and Behavior Benchmarking, Measuring and Evaluating HR Results Strategic HR Planning Session Increasing Globalization The conduct of business is increasingly global. Increasing Globalization USA is the largest exporter and importer (followed by Germany, Japan, UK) USA is the largest recipient of immigrants Internationalization of US economy aprox 10% (as a function of GDP) Increasing Globalization As of 2003, globally: 60,000 MNE's with 800,000 subsidiaries and $16 trillion in sales Employ 45 million people worldwide (2 x 1990) Overall level of foreign direct investment est. at $3.2 trillion (80% coming from and going to developed countries) Increasing focus on developing countries (Brazil, Mexico, India, China, Singapore, Hong Kong, & Eastern Europe) Many countries whose exports are 30% or more of their GDP (Belgium, Netherlands, Austria, Switzerland, Denmark, Germany, Sweden, Canada, UK) Increasing Globalization Fifty years ago US accounted for 53% of global GDP, today 18% Est. by 2010: 90,000 MNE's with 15 million subsidiaries and $25 trillion in sales Employ 75 million people worldwide Facilitators of increased globalization Increased Travel Rapid and extensive global communications Rapid transfer of new technology Growing trade and exposure to foreign competiton Improving education Emigration of large numbers of people Globalization Drivers Increased pressure on costs Search for new markets Greater customer demands on product & service qualities Government policy Technological development Worldwide communication and information flow Globalization Drivers Greater international interdependence (EU, NFTA, ASEAN, Mercosur [Brazil, Argentina, Uruguay, & Paraguay]) Integration of cultures and values Larger, more highly educated workforce worldwide Decreasing trade barriers & opening markets E-commerce Forces for change Global competition Growth in mergers, acquisitions and alliances Organization restructuring Advances in technology and telecommunication The International Imperative Why organizations expand internationally: To capture enhanced market opportunities that foreign countries may present. To achieve economies of scale in production and administration by expanding the scope and volume of operations to international markets. Keeping up with industry leaders may require that an organization enter foreign markets. Acquiring ownership of a foreign-based organization or subsidiary. Impacts on multinational management Need for flexibility Local responsiveness Knowledge sharing Transfer of competence Managerial responses Developing a global `mindset' More weighting on informal control mechanisms Fostering horizontal communication Using cross-border and virtual teams Using international assignments Figure 1-5: Factors influencing the global work environment International Human Resource Management Focuses on understanding, researching, applying and revising all human resource activities in their internal and external contexts as they impact the process of managing human resources in enterprises throughout the global environment to enhance the experience of multiple stakeholders, including investors, customers, employees, partners, suppliers, environment and society. How International and Domestic HRM Differ International HRM requires: Managing a broader range of functional areas. Becoming more involved in employees' personal lives. Setting up several different HRM systems for different geographic locations. Dealing with more complex external constituencies Participating in international assignments that have heightened exposure to personal risk. What else? Figure 1-4: Variables that moderate differences between domestic and international HRM Understanding the Terms Global corporation a corporation that has become an "insider" in any market or nation where it operates and is thus competitive with domestic firms operating in local markets. Unlike domestic firms, however, the global corporation has a global strategic perspective and claims its legitimacy from its effective use of assets to serve its far-flung customers Expatriate also known as a foreign-service employee, is a generic term applied to anyone working outside her or his home country with a planned return to that or a third country What is an expatriate? An employee who is working and temporarily residing in a foreign country Some firms prefer to use the term `international assignees' Expatriates are PCNs from the parent country operations, TCNs transferred to either HQ or another subsidiary, and HCNs transferred into the parent country Understanding the Terms Home country the expatriate's country of residence Host country the country in which the expatriate is working Third-country national an expatriate who has transferred to an additional country while working abroad Figure 1-3: International assignments create expatriates Figure 2-1: A model of IHRM Strategic HR Issues in International Assignments (cont'd) Expatriate Issues Recruitment and selection Orientation and training Adjustment Compensation Repatriation HR factors HR issues and activities that affect the successful functioning of international joint ventures include: Assigning mangers to the joint venture Evaluating their performance Handling aspects pertaining to career path Compensation benefits Strategic HR Issues in International Assignments Approaches to sending employees abroad: Administrative approach involves merely assisting the employee destined for an international assignment with paperwork and minor logistics Tactical approach involves managing the "risk or failure" factor of overseas assignment by providing paperwork assistance and a modest amount of training. Strategic approach involves extensive support and coordination of the international assignment and a strategized repatriation program at the end of the assignment. The path to global status Causes Strain structural responses, due to: imposed by growth and geographical spread Need for improved coordination and control across business units The constraints imposed by host-government regulations on ownership and equity Evolution path common but not normative Figure 2-1: Management demands of international growth International Expansion Strategies for expanding internationally: Exporting locally produced goods to the host country. Subcontracting or licensing the production of certain goods or services to a foreign partner. Entering into a joint venture with a foreign partner. Setting up operations (making a direct investment) in the form of a foreign branch or subsidiary. Figure 2-2: Stages of internationalization Stages of internationalization: Exporting Typically Usually the initial stage of international operations handled by an intermediary (foreign agent or distributor) Role of HR department unclear at this stage Figure 2-3: Export department Sales subsidiary Replacing foreign agents/distributors with own through sales or branch offices/subsidiaries May be prompted by: Problems with foreign agents More confidence in international activities Desire for greater control Give greater support to exporting activities PCNs may be selected, leading to some HR involvement Figure 2-4: Sales subsidiary International division Creation of a separate division in which all international activities are grouped Resembles `miniature replica' of domestic organization Subsidiary managers report to head of international division Objectives regarding foreign activities may determine approach to staffing of key positions Expatriate management role of corporate HR Figure 2-5: International division Global product/area division Strain of sheer size may prompt structural change to either of these global approaches Choice typically influenced by: The extent to which key decisions are to be made at the parent country headquarters or at the subsidiary units (centralization versus decentralization) Type or form of control exerted by parent over subsidiary Figure 2-6a: Global product division Figure 2-6b: Global area division The matrix An attempt to integrate operations across more than one dimension Violates Fayol's principle of unity of command Considered to bring into the management system a philosophy of matching the structure to the decisionmaking process Figure 2-7: The matrix Problems with the Matrix Bartlett and Ghoshal Dual reporting Proliferation of communication channels Overlapping responsibilities Barriers of distance, language, time and culture Leads to conflict and confusion Creates informational logjams Produce turf battles and loss of accountability Make it virtually impossible to resolve conflicts and clarify confusion Beyond the matrix Less hierarchical structural forms Heterarchy Transnational Networked firm Figure 2-8: The networked organization Figure 2-9: US, European and Japanese structural changes Control mechanisms "Globalization brings considerable challenges which are often underestimated.... Every morning when I wake I think about the challenges of coordinating our operations in many different countries" Quote by Accor CEO Figure 2-10: Control mechanisms Mode of operation and HRM Not just subsidiary operations Firms may also adopt contractual modes Licensing Franchising Management contracts Projects And/or cooperative modes (such as joint ventures) Figure 2-11: Linking operation mode and HRM Interfirm linkages Alliance (strategic alliance, cooperative venture, collaborative venture or corporate linkage) A form of business relationship that: Involves some measure on interfirm integration Stops short of a full merger or acquisition ...
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