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T10.1-3 SHRM in a global environment (Ch15) (Factors affecting HRM in…
T10.1-3 SHRM in a global environment (Ch15)
Challenges in the global environment
Expatriates
Terrorism and increasing hostility to expats
Tending to commit to shorter-terms now
High cost of compensation packages to entice people
Security/welfare is making it harder and more expensive to get people to take overseas postings in some places
Reasons for going global
Cheaper labour
Tax advantages
Gain economies of scale
Larger/new markets
Technology growth making it easier to be geographically dispersed
Using time zones to offer 24/7 service
Increased/cheaper transport options
Current global changes impacting on organisations
North American Free Trade Agreement (NAFTA) (US/Canada/Mexico free trade and may expand to other South American countries)
The growth of Asia - especially China
European Economic Community (EEC) and the EU
General Agreement on Tariffs and Trade (GATT)
Factors affecting HRM in global markets
Education - human capital
Differences
What is a common level of education in the country?
How much does the govt support education?
Implications
Low-cost but high skill labour will attract outside investment
Low-skill countries will be hard to recruit for certain roles and force expatriate requirements
Explained: productive capabilities of individuals (knowledge, skills and experience that have economic value)
Example: Ireland/NZ have high than average graduate rates due to good govt financial support for tertiary studies. As Ireland is so accessible to Europe and post GFC had high unemployment rates, organisations needing high-skill labour were attracted there
Economic systems
Socialist economy
Free education so easy to build human capital
No financial incentive to do so
Capitalist economy
Costly education so difficult to build human capital
Strong financial incentives to do so
Compensation packages
Explained: need to balance the trade-off between cost control and the need for local operators to compete in the relevant labour market
Factors to consider:
Global firm strategy
Local regulatory/political context
Institutions and stakeholders
Local markets
National culture
Implication: For expatriate managers, organisations must present a package that reflects the 'take-home pay' that is competitive in their country of origin.
National cultures
Impacts on all other factors listed below
Explained: 'the set of important assumptions (often unstated) that members of a community share.' (beliefs and values)
Classifications
Individualism v Collectivism - (USA 91H, NZ 79H, China 20L)
Power distance (cultural impact on hierarchical relationships) Real risk of cross-cultural misunderstandings related to respect, i.e. using John or Mr Smith to address people- (Philipines 94H, NZ 22L, Israel 13L)
Uncertainty avoidance (cultural impact on unpredictable future - 'weak' avoidance = easy-going, happy with less structure, 'strong' avoidance = structured) - (Greece 100H!, NZ 49M, Singapore 8L)
Masculinity v femininity - (Japan 95H, NZ 58M, Sweden 5L)
Long-term v short-term orientation (cultural impact balance immediate benefits with future rewards) - (Japan 88H, NZ 33L, USA 26L)
Indulgence (not in text but on Hofstede website) - (Angola 83H, NZ 75H, Egypt 4L)
HR areas impacted
Manager-subordinate relationships
Decision-making processes
Selection processes and priorities - i.e. is person-job fit more/less important than person-organisation fit?
Compensation systems, i.e. reflected in the differentiation ee lowest and high paid roles in an organisation.
Fundamental approaches to communication, coordination and information sharing
Link Hofstede's country comparison
Findings on economic health, p.636 - Individualistic nations were more wealthy, collectivist cultures with high power distance were all poor.
Recent findings p.637: caution is advised on viewing everything through the lens of 'culture' - wider 'cultural' diversity can be viewed within a nation or an organisation than is sometime seen between actual 'cultures'. Also individuals, regardless of where they live, will be drawn to organisations that 'fit' them.
Political-legal system
HR areas impacted:
Compensation
Employees' rights
Equity
Anti-discrimination provisions
Dismissal
Labour management relations
Training
Some examples:
Legal right to 'codetermination' in Germany
Social rights of workers under EEC's Community Charter, e.g. freedom of movement, association and job choice.
Equal employment opportunity in USA
NZ - Health and Safety at Work (General Risk and Workplace Management) Regulations 2016
Managing employees in a global context
Types of employees
Parent-country nationals (PCNs)
Host-country nationals (HCNs)
Expatriates (key points summary p.655)
Selection considerations
Flexibility and adaptability (adaptive skills p.646)
perception dimension
relationship dimension
self dimension
Job knowledge and motivation
Relational skills
Extracultural openness
Family situation
New construct - Cultural Intelligence (CQ)
'Inpatriates' p.644 - people from host nations working in the parent nation head office to provide transnational representation
Training and development
Understanding of own culture and how host country perceives it
Specific aspects of new culture
Language / communication requirements
Appreciation of host country cultural
Compensation
For expatriate managers, organisations must present a package that reflects the 'take-home pay' that is competitive in their country of origin.
Organisation needs to cover extra costs like tax, cost-of-living, healthcare, etc
Reacculturation
Key minimisers
Communication - info from home while abroad
Validation - Recognition for work done and future direction
20-25% of expat managers turnover within 1yr of return
Third-country nationals (TCNs)
Adler's Levels of global participation - p.643
International (one or more facilities in one other country)
Multinational
One or more facilities in a number of different countries
Develop and distribute identical products worldwide
Domestic only (still face some cultural diversity challenges)
Global
Customised products or services for clients in many countries
Synergy with local cultural variations
Multiple headquarters around the world - decentralised decision-making
Requires managers and executives that are transnationally competent
Requires
Transnational HRM systems
Transnational scope -
HRM decisions with an international perspective - fair across the org, but flexible for the local environments
Transnational representation
- multicultural composition of management team
Transnational process
- planning and decision-making processes include representations and ideas from a variety of cultures