Title: INTERNATIONAL%20HUMAN%20RESOURCE%20MANAGEMENT
1INTERNATIONAL HUMAN RESOURCE MANAGEMENT
2HRM 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
3HRM 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
4Managing 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
5Managing 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
6Organizational 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
7Organizational 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
8Organizational 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
9The 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
10HRM 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
11HRM 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
12The 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
13The HRM Function in the Export Context (1)
14The 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
15HRM 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
16Challenge 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
17The 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
18The 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
19The 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
20The 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
21The 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 -
22The 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
23Control 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
24Control 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
25The 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