International human resource management - Chapter 8 potx

Standardization of work practices• Depends on – Receptivity of local workforce to adhere to corporate norms of behaviour – Effectiveness of expatriates as agents of socialization – W

Chapter 8

HRM in the host country context

strategic importance In this chapter, we attempt to redress the balance by examining HRM issues in subsidiary operations

We cover the following aspects:

Chapter objectives (cont.)

• Retaining, developing and retrenching local staff.

• HR implications of language standardization: HCN

selection, training and promotion on the basis of language skills.

• Monitoring HR practices used by foreign subcontractors.

– The level of equity involved

– Factors within host-country environments that facilitate or constrain the transfer of global

management practices and business processes

Standardization of work practices

• Depends on

– Receptivity of local workforce to adhere to

corporate norms of behaviour

– Effectiveness of expatriates as agents of

socialization

– Whether localization is timely (not just

prompted by cost considerations)

– Appropriateness to the local environment

Factors influencing

standardization

• Host-country culture and workplace

environment

• Mode of operation involved

• Size and maturity of the firm

• Relative importance of the subsidiary

Host-country culture

• Work behaviour is culturally determined

• Whether corporate culture supersedes or

supplants other ‘cultures’ is a subject of

much debate

• Often, what is meant by corporate culture

translates into universal work behaviours – standardisation of work practices

Figure 8-1: The linkage between culture and behaviour

Mode of operation

• Choice of mode of operation important in

determining standardization of work

practices

• Ownership and control important factors –

wholly owned subsidiaries provide greater

opportunities for transferring work practices than in IJVs

Figure 8-2: Factors influencing standardization of work practices

Work standardization

• The size of the firm, maturity and

international experience also important

• Motorola in China a case in point:

– Large size

– Wealth of international experience

– Management could draw on these aspects when entering China

Subsidiary mandate

• The position a subsidiary holds within the

global ‘family’ is an important aspect when discussing the transfer of work practices

• Transferring knowledge and competence is difficult as subsidiary initiatives are often

not seen as relevant (corporate immune

system)

• Staff movements can assist here

Global or local work practices?

• Not a case of ‘either-or’

• As Huo et al conclude:

“While the recruiting practices used in different

countries are inching toward global

convergence, we expect national cultures to

continue affecting the hiring practices …

The best IHRM practices ought to be the ones

best adapted to cultural and national

Retaining local staff

• The paradox – ‘expense of cheap labour’

• Poaching of key subsidiary staff

• Access to skilled labour as important as unit cost (eg attraction of India for the IT

industry)

• The amount and quality of training is an

important consideration

Developing staff

• Investing in human capital

• Providing training and career development can assist in retaining good local staff

• A fair environment and good management

practices play an important role in countries such as China

Retrenching staff

• The reverse of the employment ‘coin’

• Strategic decisions regarding foreign

operations have HR implications, including retrenchment

• Not confined to subsidiary operations but

may affect home base - eg transferring call centres from UK and US to India

Monitoring host country

subcontractors

• Outsourcing activities to host-country

subcontracting firms requires some

monitoring of HR practices

• Vocal groups have accused multinationals

of condoning work practices that would not

be permitted in their home countries

HR’s role

• Drawing up and reviewing codes of conduct

• Conducting a cost-benefit analysis to justify an

expatriate as a monitor

• Championing local operators as monitors

• Being a member of the team who conducts periodic

‘checking’ visits

• Overseeing external monitors and auditors where

used

• Checking rewards and performance systems take

compliance into consideration

Chapter summary

This chapter has focused on issues relating to HRM and work

practices in the host-country context We chose four main areas to examine:

• The standardization versus adaptation debate as it relates to

subsidiary operations We identified four inter-related factors that influence the multinational’s ability to impose or transfer its preferred work and HR practices:

– The host-country culture and workplace environment We looked at the interplay between values, attitudes and work behavior and the role of

corporate culture in assisting work outcomes.

(cont.)

Chapter summary (cont.)

– Mode of operation Managerial discretion to introduce its own practices

is higher in wholly owned subsidiary operations than in IJVs

Acquisitions may be constrained by the inherited workforce We also looked at management contracts as a mode of operation that may

influence standardization of work practices in foreign operations.

– Firm size, maturity and level of international experience Firms such as Motorola can draw upon experience and resources to an extent not

possible for smaller and less-experienced international players.

– Subsidiary mandate The position of the subsidiary in the

intraorganizational network and level of interdependence between units for resources can assist in the transfer of ‘best practice’.

(cont.)

Chapter summary (cont.)

• Retaining, developing and retrenching local staff Aspects such as the paradox of cheap labor, the skill level of the

local workforce and training were examined, along with

poaching of staff and job-hopping Although our examples are drawn from Chinese and Indian situations, these issues are not confined to these two countries.

We also looked at the impact of strategic decisions on subsidiary operations – such as plant closures and

rationalization – that result in employee retrenchments at the

subsidiary and in the home-country operations.

(cont.)

Chapter summary (cont.)

• The HR implications of language standardization The decision to use a corporate language – usually English – has implications for subsidiary staff in areas such as selection for positions, attendance at company training programs and promotion.

• Monitoring the HR practices used by international subcontractors This discussion opened up a

somewhat contentious issue for multinationals who are expected to monitor the work practices

employed by international subcontractors Mechanisms used to monitor adherence by these firms to multinationals’ codes of conduct include using internal agents, such as expatriates or ‘flying’ visits by headquarters or regional staff, external agents such as local buyers and auditors.

(cont.)

Chapter summary (cont.)

It should be noted in conclusion that there is a wealth of literature covering comparative management and HR systems We drew a

little on this literature to highlight general HR issues in the host

context that multinational firms confront and deal with However, it was not our intention to cover in detail specific host-country cultures and management practices as that is outside the scope of this book Our aim has been to raise issues relating to IHRM in the

multinational context from the perspective of the subsidiary.