Organizational Behavior

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Organizational Behavior

• Human Resource Management and Labor Relations

Mark McKenna BUS 162, International and
Comparative Management San Jose State University
Chapter s 13-15, Hodgetts, Luthans and Doh,
International Management Culture, Strategy and
Behavior , 6th edition (New York McGraw-Hill
Irwin, 2006) Adapted from PowerPoint slides by
R. Dennis Middlemist, Professor of Management,
Colorado State University
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• Human Resource Management
• Identifying international managers
• Selection criteria
• The compensation package
• Adjustment and repatriation
• Labor Relations
• Definition
• Importance, challenges and strategy
• Comparative labor relations
• Future challenges

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Identifying International Managers

• Home-country nationals (expatriates)
• Preferred in ethnocentric organizations and in
  initiating international new operations
• Host-country nationals
• Preferred in polycentric organizations and when
  local knowledge or lower costs are important
  factors
• Third-country nationals
• Common in regiocentric or geocentric
  organizations and when selection is based
  primarily on expertise
• Inpatriates
• Common in geocentric organizations to promote
  diversity and develop global core competencies

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Selection Criteria

• General selection criteria
• Leadership, motivation, adaptability,
  independence, self-reliance
• Experience, education, knowledge of local
  language
• Physical and emotional health, age, support of
  spouse and children
• Self-evaluation and preparation
• Is an international assignment really for me?
• Does my spouse support the decision?
• Do I have the necessary technical skills?
• Am I ready to invest in learning about the
  country?

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The Compensation Package

• Balance-sheet approach Ensures expatriate does
  not lose money from the assignment
• Complementary approach Negotiation of a mutually
  acceptable ad hoc arrangement
• Localization Expatriate salary comparable to
  salaries paid host-country nationals
• Lump sum method Upfront incentive payment
• Cafeteria approach Compensation package based on
  a series of individualized options
• Regional system Set compensation for all
  expatriates assigned to a particular region

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The Relocation Transition Curve
6. Search for Meaning Understanding reasons for
success and failure. New models/personal theories
created
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3. Interest A deeper exploration of the
environment and a realization that it is
fundamentally different from home
7. Integration of New Skills and Behavior
Acceptance of the new environment
1. Unreality The feeling that the relocation is
a dream
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2
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5. Experimentation and Testing of New
Approaches Practice phase trying to do things
differently Feedback of results success and
failure
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2. Fantasia The feeling of enchantment and
excitement in the new environment
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4. Acceptance of Reality Letting go of past
comfortable attitudes and realizing you are a
stranger in a strange land
Adapted from Figure 142 The Relocation
Transition Curve
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Repatriation of Expatriates

• Reasons for returning to home country
• agreed-on tour of duty is over
• want children educated in a home-country school
• are not happy in the overseas assignment
• failed to do a good job
• Key sources of readjustment problems
• Out of sight, out of mind syndrome
• Organizational changes
• Technological advances
• Adjusting to the new job back home

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Adjustment Problems and Transition Strategies

• The main problems of repatriation include
• Adjusting to life back home
• Financial package not as good as overseas
• Less autonomy in the stateside job
• No career counseling from the company
• Transition Strategies
• Repatriation agreements
• Mentor programs
• Maintaining constant contact
• Cultural re-entry programs

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Labor Relations

• Definition
• The process through which management and workers
  identify and determine the job relationships that
  will be in effect in the workplace
• Labor relations mechanisms are used to determine,
  among others considerations,
• wages
• working hours
• working conditions
• related areas such as vacations and benefits

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Labor Relations and MNC

• Importance
• Directly impact labor costs and productivity
• Indirect impact through linkages to political
  issues
• Increasingly part of global agreements
• Challenges
• Differ significantly from country to country
• Labor relations climates reflect
• cultural values and orientations
• historical development and experiences
• legal regimes, and the relative power of
  government, industry and workers
• Effective worldwide strategies require a
  balancing of global and local pressures

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Challenges for the MNC

• Labor relations differ significantly from country
  to country
• Labor relations climates reflect
• Cultural values and orientations
• Historical development and experiences
• Legal regimes and the relative power of
  government, industry and workers
• Effective worldwide labor relations strategies
  require a balancing of global and local pressures
  and forces

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Labor Relations Strategy

• Management philosophy
• Ethnocentric, poly/regiocentric and geocentric
  approaches
• Managing labor costs
• Pursuing low-cost strategies in emerging
  economies
• Some workers are grossly exploited in some
  countries toiling for long hours, in unsafe
  conditions, for minimum pay.
• Reducing labor costs in home-countries
• Part-time work, shift work, non-permanent
  employment, and subcontracting

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Days Lost to Labor Disputes, 1993-2002
Adapted from Figure 152 Annual Average Days
Lost Due to Labor Disputes in Economically-Advance
d Nations, 19932002
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Labor Relations in the U.S.

• About 12 of US workforce is unionized
• Shift in the US to greater labor-management
  cooperation
• Negotiations generally follow a formalized
  processes of collective bargaining resulting in
• legally binding agreements on wages, hours, and
  conditions of employment
• a definition of grievance procedures and
  conditions that limit strikes
• Non-adversarial approaches to resolving disputes

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Labor Relations in Europe

• European firms typically negotiate agreements
  with unions at the national level
• Many European unions have more political power
  than U.S. unions
• Salaried employees in Europe (including those at
  managerial levels) often have unions of their own
• European unions have existed longer than those in
  the United States and occupy a more accepted
  position in society

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Labor Relations in Japan

• Japanese unions are relatively weak (enterprise
  unions)
• Social custom dictates non-confrontational
  unionmanagement behavior
• Cultural value of Wa
• Disputes are settled in an amicable manner though
  sometimes resolved by third-party mediators or
  arbitrators
• Strikes and lockouts in Japan are very rare
• Strikes severe following WWII, but today only to
  make a point

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Labor Relations in Emerging Economies (China,
India, SEA)

• Organized sector is usually a small part of the
  economy
• Labor unions are generally fragmented (often as a
  result of anti-union legislation)
• Labor unions are politicized or co-opted by
  powerful political actors and elites
• As a result
• employees are less likely to initiate actions or
  organize unions to negotiate for improved working
  conditions, and
• workers are often compelled to accept conditions
  of work set by management

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Industrial Disputes in Emerging, Transition and
Developed Countries
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Future Challenges

• MNCs are under increasing pressure to upgrade
  working conditions and labor practices at
  manufacturing and other facilities
• NGOs and other groups pressure MNCs to adhere to
  international standards and adopt new and more
  stringent codes of conduct
• Increasing standards of living and demands for
  democratization increase local pressure on MNCs
  to improve labor conditions