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Q1) Answer- International HRM (IHRM) is the process of procuring, allocating, and effectively utilizing human resources in a multinational corporation, while balancing the integration and differentiation of HR activities in foreign locations (Briscoe et al, 2009). IHRM should function in a way it should avoid cultural risks, regional disparities and must manage diversified human capital. The managerial responsibilities must include developing a global “mindset” by weighting on informal control mechanism, fostering horizontal communication, using cross-border and virtual teams and using international assignments.
They should create cultural synergy and use cross-cultural skills daily and must treat foreign colleagues as equals and use foreign assignments as career development (Dowling, 2008). IHRM has paralleled the internationalisation of business whereby large corporations increasingly produce and market beyond their countries of origin. This process has also signalled the internationalisation of employees as well, which has shifted HRM to a business activity of strategic importance (Armstrong, 2001) .
It could be argued that the practice and study of international HRM has evolved alongside globalisation; business is operating in an increasingly international environment. In fact, ‘International HRM’ is often the term given to the management of HR in Multi National Corporations (MNCs) (Almond et al. 2004). IHRM concerns the extent to which these core tasks change when HRM is practiced across national boundaries.
On this basis, Morgan (1986 ) presents a model of IHRM based on the interplay between human resource tasks or activities, the national or country categories involved in HRM and the categories of employees in an international firm. The functions of HRM for an organization to go abroad should tally with the expectations of that host country where a subsidiary may be located, the home country where the firm is headquartered and other countries that may be the source of labour, finance and other inputs.
In this model, internationalisation adds layers of complexity to the task of HRM within a particular firm. (Dowling et al, 2008) Based on the work of Perlmutter (1969 ), MNCs then face three strategic choices to function and to cope with this complexity: ethno-centric, polycentric and global. An ethnocentric strategy is where a company uses the same HR practices overseas as it does at home. By contrast, a polycentric strategy involves a company following local HR practice in its overseas operations.
A global strategy is where a company attempts to implement common HRM policies for all its overseas operations (Myloni 2002). Ofcourse, this implies an element of choice for senior managers and the reality is that hybrid strategies will emerge. Torrington et al. (2005 ) argue that International HRM is also concerned with decentralisation: As an organisation increases its international activities, it inevitably steps up the degree of decentralisation, but internationalisation is not simply a form of decentralisation.
It is the most complex form of decentralising operations and involves types of difference – language, culture, economic and political systems legislative frameworks, management styles and conventions – that are not found in organisational growth and diversification that stay within national boundaries. The further success of firms lies in how the international HR manager identifies and copes with these ‘types of differences’.
Another point about international HRM is that MNCs will also wish to use HRM policies as mechanisms for the central coordination and control of international operations, in addition to shaping the organisational culture (Myloni 2002) . Inevitably, there are a number of models of International HRM that attempt to explain how the strategic objectives of the organisation are balanced with local employee needs and values. In that case, it is perhaps more useful for managers to focus on specific HR policies and practices within the context of international organisations.
Armstrong (2001) identifies the following functions for IHR managers: * Apply all possible approaches of Employment policies. * fill all key positions with parent country nationals * appoint home country nationals * appoint the best people regardless of nationality. * Recruitment and Selection should be without any partiality and the following criteria should be applied in that- 1 persons who show better competency – technical, language skills, motivation etc. 2 applicants who have previous overseas experience will be an asset for the organization. persons who show cultural adaptability and evidence that the person shares the values of the culture in which he or she might work. 4 family circumstances should be considered– both the person and spouse/partner adaptable to working overseas. * International Employee Development should be adopted– the aim is to enable people to become more effective in their present job in an overseas location; account will need to be taken of cultural factors (in terms of how development programmes are delivered), and the extent to which there is central direction of programmes from the organisation, although they may be delivered locally. Almond et al, 2004) Thus it is clear that Domestic HRM is only concerned with managing limited number of HRM activities at national level, where as IHRM has concerned with managing additional activities such as expatriate management. IHRM is very complicated as it is affected heavily by external factors such as cultural distance and institutional factors. So if it is not well planned and executed, it will be hard for the organization to expand and stand in global market.
Q-2) HRM practices should be done with a conscious mind keeping in terms of national differences and cultures as they are relevant for any organizational existence. National differences take many forms (Armstrong, 2001). To give one example: each country has its own code of employment law, which determines whether strikes are legal or illegal, and whether public employees have a great deal or very little security of tenure.
However, it is sometimes asserted that differences between countries are more deep-seated than mere legal differences (which, in principle, can be changed at the stroke of a pen) and that they reflect different assumptions about behaviour: for example, the level of respect which should be given to authority and the extent to which individuals consider themselves to be part of a collective or to be separate individuals apart from the collective. It has been argued that such differences of national culture have a bearing on the practice of human resource management (Almond et al, 2004).
To take one example, it has been suggested that methods of performance management and appraisal, which emphasise the individual as the unit of performance, will not take root in countries that have a ‘collective’ culture. Anthropologists have long studied such differences between countries. In recent years, however, writers on organisations have begun to argue that there are cultural differences between organisations just as there are between nations, and that they too have a bearing on the practice of human resource management (Armstrong, 2001).
National culture dimensions tend high for collectivism, power distance, masculinity and uncertainty avoidance and they are most significant aspects of national culture, which can have direct impacts on HRM practices. National culture can influence career development and compensation. Therefore the divergence theory which states that the human resource management practices are culture-bound is well acceptable (Dowling et al, 2008) Laurent (1986) stated that every culture has developed specific and unique blindspots in the art of managing and organizing.
The notion that human resource pratice is universal has been questioned. A number of human resources policy that successfully practiced in a certain country, may not successfully applied in another country. For example, pay for performance schemes which is very popular and effective in the United States and United Kingdom, it cannot successfully be a practiced in another country. The same goes for quality circle program, it has practice widely and successfully in Japan, however quality circle has not successfully been implemented in the United States (Newman & Nollen, 1996).
National culture also influenced on the strategic decision making and leadership style (Smith, 1992), and human resoure management practices such as performance appraisal (Luthans, Welsh & Rosenkrantz,1993). In culture with high power distance, loyalty and obedience to superior is required. Therefore, management usually used performance appraisal based on the behavioral criteria rather than results criteria. Employees or subordinates have a minimal risk when they follow the established procedure rather than make a new breakthrough which may cause failure.
Basically, performance appraisal can be differentiated based on its orientation i. e. behaviour orientation or results orientation (Luthans, Welsh & Rosenkrantz,1993). ). A number of human resource practices have specific characteristic related to specific country. For example, life-time employment policy is very popular in Japan, however, it is uncommon practice in USA. On general, Japanese companies spend more money for social activites and recreational facilities than that of American companies (Newman & Nollen, 1996).
National culture can positively influence on the human resource practices like staffing participative management, career development and compensation. Collectivism, which is a part of national culture dominate every day life of workers. Power distance can also influence the practices of HRM. Generally, an employee may prefer a superior who act like a father (paternalistic style) is charismatic, protec subordinate and nurturant. Masculinity-Femininity dimension is even important in an employee’s view point and can effect HR practices.
Most employees may prefer to live with family rather than get promoted in the job but live in another city without family. Power distance also influence on work team formation. In high power distance country, work team does not work effectively because members of team who belong to lower class are not comfortable to encounter face to face with other member who belong to higher position in the organization. (Newman ; Nollen, 1996) National culture can positively influence on career management.
In high masculinity society, performance is highly valued, therefore person career can be predicted from what one does, and every one may compare oneself to another based on what one has achieved. Conversely, in low masculinity society, (high femininity), career management will be based on who one is. Thus, positions in the organization will be occupied by people who are considered to be humble, loyal and good character. Even national culture can affect compensations (Dowling et al, 2008). Thus I believe that national culture positively influence on HRM practices.
Therefore, it is important for practicing managers to take cultural factor into account in formulating and adopting HRM concept from other country (espesially from Western countries). The reason is that HRM concepts always contains unspoken assumption that is underlying values in the certain society. Q-3) Answer- In the developed countries, corporate universities are one of the fastest growing sectors of higher education, with almost 1800 operating in the US alone (Bradshaw, 2000). If this trend continues, corporate universities will outnumber traditional higher education establishments within the next decade.
Traditionally seen as a particularly American creation, corporate universities are now to be found in many of the world’s major corporations. This can be viewed as a consequence of organisations recognizing the power of learning and knowledge as drivers of competitive advantage (Briscoe et al, 2009). Corporate universities were perceived as a particularly US phenomenon. They were regarded as little more than re-badged training departments and viewed with considerable scepticism by both HRD specialists and academics alike (Walton 1999).
Though this position may have been true in the past, today it is coming under increasing pressure, as more and more organisations are making serious attempts to create corporate universities that manage a range of individual learning needs and organizational development requirements. General Electric at Crotonville, New Jersey is credited with the establishment of the first corporate university in 1955. Meister (1998) and more recently Walton (1999), in analyzing the growth of these organisations, state that over the last half century their role has undergone a number of changes and developments.
At their inception, Meister argues that the US organisations were perceived as little more than centres designed to up-grade the skills of professional employees. This remained their primary purpose until the 1980’s when high technology companies, with substantial research and development budgets, fuelled a new period of growth. A good example being Motorola’s Corporate University established in 1981. The speed with which the number of corporate universities proliferated can be gauged from US data (Walton 1999). Peak (1997) has shown that in 1988 there were some 400 corporate training institutions in the US.
By 1997 there were 1,000 and recent figures suggest that now there are now nearly 1,800 corporate universities in North America (Bradshaw, 2000). This rapid increase can be linked to a number of related trends. First, a number of authors have documented the breakdown of the hierarchical organization and the growth of teamwork and empowerment of the workforce to cope with the increasing pace of competition and change ( Walton 1999). Second, the rise of the networked and virtual organisation has been brought about by developments in information and communication technology (Walton 1999).
These trends have raised the profile of individual and organisational learning, knowledge creation and knowledge management as ways in which organizations can fashion a competitive advantage over their rivals (Smith, 1992). Today some companies are responding to such trends by seeking to become learning organisations. Walton (1999) has argued that one visible sign of an organisation responding to these challenges is in establishing a corporate university to act as a catalyst to champion both individual and organizational learning activities.
Surveying the practitioner literature, reveals a number of espoused motives behind the development of some of the emerging corporate universities. First, corporate universities can provide the learning and development opportunities to attract, retain and enhance the employability of staff . Second, they can be used to develop and spread a common culture throughout the organization. Third, a corporate university can be used as a vehicle to centralise training thereby reducing cost and making it easier to align its training and development activities to the strategic objectives of the business (Coulson-Thomas1999).
In the UK, latest estimates suggest that around 200 organisations have established corporate universities. An excellent example of this emerging view was articulated by Thomas (1999), who argued that the role of the corporate university was increasingly becoming a focus for the learning and developmentof its employees; a vehicle for knowledge management; a centre of excellence – in effect the organisation’s thought leader.
Thomas (1999) argued that such a vision is likely to be achieved through raising the profile and re-branding the organisation’s corporate learning and development activities; building partnerships with the world’s best learning organisations; exploiting leading-edge learning technology (Arkin 2000) In reference to the above, a number of important observations can be made. First, the concept of the corporate university, as it is emerging in some of the UK’s leading organisations, appears to be one of focusing upon the promotion and facilitation of individual and organisational learning and knowledge management as a core activity.
Second, as Carnell (1999) stated the debate about the nature and development of corporate universities is not really about them as entities on their own. It is rather an examination of how organizations co-ordinate and maximise the value of their training and development activities and processes. From this perspective, it can be argued that in exploring the concept and position of such institutions, it is necessary to move beyond issues of definition and labeling (Smith, 1992) A more fundamental analysis of how organisations are managing their key rocesses to maximise the knowledge and learning that occurs within the workplace should be undertaken. It should also be recognised that there is no ideal model for corporate universities, or a desired set of functions that they should perform, as they are essentially the products of their organisation’s engagement with a number of complex and dynamic internal and external factors. It follows, therefore, that corporate universities are going to be a diverse collection of real and virtual institutions. Q 4)- Answer-
Performance Management is a means of getting better results from the organizations, teams and individuals within an agreed framework of planned goals, objectives and standards. The essence of performance management is the development of individuals with competence and commitment, working towards the achievement of shared meaningful objectives within an organisation which supports and encourages their achievement (Dowling et al, 2008). A well structured performance management system is essential for any firm.
But for an international company which runs with managers and employees from different cultures, the establishment of a standardized performance management system is arguable. Cultural difference and power distance is something that should be dealt very carefully. An international performance management system can be applied in such cases with varied flexibility. It should have a communication tool to measure each individual’s contribution. The system should be capable to evaluate talent and achievement with sensible consistency and accuracy (Walton 1999).
The performance management system shouldn’t be standardized as the fit of international operation in multinational strategy is inevitable. There can be complex and volatile environments in international settings. Time difference, distance separation and Local cultural situation can devote changes in the way employees are performing in work space. In most cases, the groups evaluate the performance of expatriate managers in different way. Even host nation managers and home office managers – and both are subject to unintentional bias. Home country managers tend to rely on hard data when evaluating expatriates.
Even possibilities are there for host country managers to get biased towards their own frame. Thus for expatriate performance appraisal, certain things should be considered and it must fit the evaluation criteria to strategy. Multiple sources of evaluation with varying periods of evaluation should be used (Briscoe et al, 2009). To reduce bias in performance appraisal most expatriates believe more weight should be given to an on-site manager’s appraisal than to an off-site manager’s appraisal. A former expatriate who has served in the same location could be involved in the appraisal process to help reduce bias.
When the policy is for foreign on-site mangers to write performance evaluations, home office managers should probably be consulted before an on-site manager completes a formal termination evaluation (Briscoe et al, 2009) The Expatriate Manager Compensation should also be considered which provides a compensation package that equates purchasing power. Allowances for cost of living, housing, food, recreation, personal care, clothing, education, home furnishing, transportation, and medical care should be termed according to the embloyee and manager.
For example an international manager should be given some back up for accommodation, meanwhile a host country manager may prefer more bonus or allowances. This approach equalizes purchasing power across countries so employees can enjoy the same standard in their foreign positing that they enjoyed at home (Smith, 1992). Balance sheet approach should be used in adjusting manager’s compensation so that manager receives same standard of living as in the home country, in addition to extra pay for locating overseas.
The packages are complex and should be based on difference in currencies, variance in tax rates, & determining what benefits can be utilized & are of value in foreign countries. Challenges in appraising overseas managers is a real concern, where who should appraise the manager, the factors to base the appraisal, the expatriate appraisal process,and assignment’s difficulty level creates ambiguity. Weigh the evaluation more toward the on-site manager’s appraisal than toward the home-site manager’s.
If the home-office manager does the actual written appraisal, use a former expatriate from the same overseas location for advice (Dowling et al, 2008). Most international performance dimensions, however, are included within four broader categories of performance dimensions: task, organisational, intercultural, and developmental dimensions. The first two, the technical and organisational performance dimensions, are present among all international assignments whereas the intercultural and developmental performance dimensions are present in only some international assignments.
The main performance appraisal should have variations in its way of occurrence. * Technical performance may vary: this represents tasks or duties international assignees perform. They are the easiest to identify and most tangible because they mirror the technical dimensions of those with the same title in a domestic context. For example, within the same business unit, stage of product maturity etc. a brand manager relocated from Italy to Ireland for a product launch should have responsibilities comparable to the Indian brand manager in India doing the same product launch.
The fundamental outcome (or performance dimensions) of the job are likely to be similar. However, the way in which these jobs are conducted may differ dramatically as a result of the country or cultural context. * Intercultural performance can be a key, but not a merit: with respect to intercultural performance dimensions, some assignments will have an extensive need for intercultural communication or intercultural effectiveness in order for the assignment to be deemed successful. Others will rely on technical performance alone with less variation as a function of the cultural or country-level context.
Some performance dimensions are bound by the assignees’ ability to be effective in the host country specifically. Examples include negotiating an international joint venture, conducting training seminars in another country, working on a multicultural research and development team, presenting to internal or external clients in different countries, adapting a marketing plan to a local context. * Developmental performance: while many international assignments are developmental experiences, developmental dimensions are not always an organisationally-desired outcome of the assignment.
Examples include knowing the cultural limits of one’s knowledge (and knowing when to bring in local expertise) and knowing what to do with cultural, political, and local market knowledge in subsequent situations. These developmental performance dimensions are more intangible and the most difficult to embed into the ROI equation. They should not be overlooked because their implications are that they build global competence, over time, in the organisation. (Dowling et al, 2008) These sets of performance dimensions can help guide the discussion for performance criteria to be developed and performance management systems to be put in place.
Challenging, however, does not mean impossible and this is becoming easier among organisations with more strategic alignment for talent management. There are others, such as who should be conducting the assessments, what method of assessment should be used, when assessments should be conducted, and the like. Q 5- Answer- Multinational Companies are placed all over the world with subsidiaries or joint ventures to gain a competitive advantage on other companies. A multinational company is a company with a global strategy with production bases all over the world to achieve cost advantages through economies of scale and low labour costs.
Normally MNCs have a home country which supported the company in the beginning and sometimes these big companies where even build by governments to create a national champion through tax and other cost benefits. There are different reasons for a company to go into another country, for example the home market is saturated and growth potential is declining, other reasons are that in other countries resources like labour are cheaper and therefore the company could get more cost efficient.
In the second case those countries will be preffered by MNCs which have unregulated labour markets (Coulson-Thomas1999) For the last decade MNCs changed their strategy and entered developing countries like China and India, because of huge growth potential and lower costs of labour. The goals of MNCs are the same now as they were 50 years ago, to generate huge profits by driving down costs through economies of scale and the usage of synergies between different countries. In developing countries unemployement is a major problem and thus cheap labours will be available who are ready to work more time for less cost.
Also in countries with unregulated labour markets, the entrance of MNCs can be justified as an approach motivated by less labour protecting laws and lack of minimum wage prtotocol. Also many temporary workers are available, for whom the company doesn’t have to provide with extra allowances, bonuses, and retirement schemes (Newman & Nollen, 1996). Companies such as Reebok, Nike, and Levi Strauss have exploited and are exploiting the human labor in developing countries massively (UN Committee on Trade and Development, 2002, p. 4). Therefore these companies are called sweatshops.
For example, workers in Indonesia live under inhumane circumstances and barely earn $39 a month for producing thousands of products worth a few hundred dollars. Developing countries like Indonesia are booming because of massive direct foreign investment while workers are suffering from degrading living conditions and really low wages. But the entry of such firms cannot be criticized and stopped as this firms are creating job opportunities along with them paying higher wages than the local firms. Furthermore export oriented companies pay higher wages the non exporting ones. In Mexico, for example, exporting firms (i. . 80% of all sales are for export) paid wages at least 58 percent higher than non export oriented firms. In 2001 a study found that foreign-owned plants, mostly MNCs, “in Indonesia paid 33 percent more for blue-collar workers and 70 percent more for white-collar workers than locally owned firms” (Lozaday, Carlos, 2001). Also in countries with unregulated labours the MNC may find it easy to influence governments (Lozaday, Carlos, 2001). Due to the great mobility of MNCs, they have quick access to cheap labor and are relatively free to leave a country at any time they want.
Many times, the country’s economy depends on the jobs given to its laborer by the MNC. If the MNC leaves, that country now has a great unemployment problem where many are suddenly left stranded (Lozaday, Carlos, 2001). Because of this fear governments of developing countries fail to enforce human and labor rights effectively, however MNCs have been accused of infringe workers either human or labor rights. To stop this helplessness of the host countries many OECD countries appealed to MNCs to respect international labor standards anywhere in the world, even if a country has no such norm.
But how far it is working out is another thing to point on. In some countries lack of restriction in child labour also paves way for MNC to play the game. Advocates of a free market traditionally consider the term to imply that the means of production is under private, and not state control or co-operative ownership. In its purest form of free labour market, the government plays a neutral role in its administration and legislation of economic activity, neither limiting it (by regulating industries or protecting them from internal/external market pressures) nor ctively promoting it (by owning economic interests or offering subsidies to businesses or R;D). Although an economy in this most radical form has never existed, efforts to liberalise an economy or make it “more free” attempt to limit such government intervention. The theory holds that within an ideal free market, property rights are voluntarily exchanged at a price arranged solely by the mutual consent of sellers and buyers (Lozaday, Carlos, 2001) A free market does not require the existence of competition, however it does require that there are no barriers to new market entrants.
Hence, in the lack of coercive barriers it is generally understood that competition flourishes in a free-market environment. It often suggests the presence of the profit motive, although neither a profit motive or profit itself are necessary for a free market. Also the tax free nature of free market influences a MNCs decision to establish a root in the soil of new country, where importing and exporting costs will be less too. Q-6) Answer- Labor relations is the relationship between the employees and the employers. It is the practice of managing the unionized employment situations.
Labor relations is a sub area under human resource management dealing with the labor history, labor law, union organizing, contract administration and other important contemporary topics. Different countries have different regulations and acts for both private sector and public sector to safeguard the labor force. Here the two countries discussed are the UK and India The source, nature and differences are discussed (Briscoe et al, 2009). The first source of trade union act which came to existence on 1926 provided fortification for the growing Indian Labor union movement.
The labor policy was introduced in 1938 called the Employment of Children act which prohibited the employment of young children below the age of 15. The Minimum Wages Act of 1948 revised the minimum rates of wages. According to the bill, the minimum wages is to be set around 20 percent and 50 percent of the GDP per capita of each state. The constitution of India defines “labor as a subject in the Concurrent List where both the Central & State Governments are competent to enact legislation subject to certain matters being reserved for the Centre”.
There were about 9 million memberships totally in 1990s. The first labor policy to be introduced in the UK was the Factory Acts of 1802 and 1833 and the Master and Servant Act in 1832 (Bradshaw, 2000) There are 3 sources of the labor policies: Acts of Parliament called Statutes, Statutory Regulations and Case Law. The Law of Contract formed the bases of the employment law before 1960. The Equality movement and the European Union are the main reasons for expanding the labor policies. The Equal pay act of 1970 was introduced to bring out the equality for women in the workplace.
The Trade Union and Labor Relations (Consolidation) Act 1992 is a UK Act of Parliament which regulates British labor law. The Act applies in full in England and Wales and in Scotland, and partially in Northern Ireland (Bradshaw, 2000) The nature of the Indian labor policies is problem oriented since it deals with solving the labor problems and also between labor and the management. It is development oriented because its overall aim is the development of the industry. The nature of the policies in India can be categorized in two, that is pre independence and post independence policies.
The post-independance policies were mostly influenced by the pre independence policies resulting in strikes and lockouts. More than 1800 strikes and lock outs were recorded in 1990. This lead to the loss of 24 million workdays. In the rural areas, the practice of bonded labor is very common. In bonded labor, the person who works for the creditor for nominl wages continues to work like that by paying the creditor very high rates of interest. This sometimes extends to the debtor’s wife and children too. The Indian Supreme Court prohibited such a kind of labor in 1976.
But now the scenario has changed with the introduction of many labor policies and strong management of labor force. The minimum wages has increased from Rs100 from Rs80 with effect from November 2009. The current minimum wage from april 1st 2011 is Rs115 per day (Dowling et al, 2008). The nature of the policies implies the right of workers in a union without being discriminated, protect the right of workers in a union to take action, if necessary by strike, to support and defend their interests, when reasonable notice is given. Labor law can be analysed as either “individual labor law” or “collective labor law”.
Individual labor law involves basic rights of people at work. . Under the labor policies every UK worker has the right to a minimum wage, no longer working hours than he consents. The right to leave for child care and the right to request flexible working patterns. Collective labor law concerns the central right of workers to participate in decisions about their enterprise. In larger firms with over 50 staff, workers must be consulted and informed about major economic developments at their work, particularly about business difficulties, and works councils to communicate between workers and management are growing.
Industrial action and union membership in the UK has decreased steadily since the early 1980s. . The Employment Rights Act 1996 adds that in the event of dismissal, working people have a minimum level of job security, so every employer must give reasonable notice after one month of work, backed by a sufficiently fair reason after one year of work, and with a redundancy payment after two years (Walton 1999). The labor laws differ in many ways in UK and India in many contexts. The minimum wages act differ in the countries. The UK government pays the wages in monthly and hourly rates with minimum of ? . 93 – the main rate for workers aged 21 and over. From October 2011, the NMW will be increased to ? 6. 08. In India, the wages are paid daily not based on hourly rates. The main difference in the labor policies are clear in the way the labor markets work in prejudistic society where there are much discriminations and reduced cost of labor in developing countries like India. The policies to protect women and children is also seen variant in both these countries where occupational health hazards and work exploitations are more in countries like India and China.
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