Learning Resource on IHRM,International labour relations ,Diversity

1. International Human Resource
Management (IHRM) and Labor
Relations
Jayadeva de Silva.M.Sc,, FIPM, FITD
Strategic Significance of IHRM
The international HRM process involves understanding the strategic context of
HRM within the firm’s overall strategy, recruiting and selecting appropriate
managerial personnel, providing necessary training and development, assessing
performance, providing compensation, and evaluating managerial retention and
turnover.
What are the complications for IHRM compared to HRM?
International HR managers face a more complex task than their domestic
counterparts because
o differing cultures,
o levels of economic development, and
o legal systems among countries
These may require companies to adapt their hiring, firing, training, and
compensation programs to each country.
o Firms must decide whether managers will be selected from the home
country, from the host country or from third countries.
o Training and development in an international firm may be more complex
than in a domestic firm.
o Compensation systems must be adapted to meet the needs of each country’s
labor market.
IHRM Employee Issues
There are two broad categories of Employee facing international human
resource managers:
(1) recruiting, training, and retaining managerial and executive employees; and
(2) recruiting, training, and retaining non managerial employees such as blue-
collar production workers and white-collar office staff.
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2. PA & Compensation for non executives
o For non managerial employees, international firms normally adapt their
compensation and performance appraisal systems to local laws, customs,
and cultures. for example,
o U.S. workers appreciate feedback from an appraisal system,
o German workers are resentful of feedback.
Type of Decision Making
o Firms that centralize decision making at headquarters typically favor home-
country managers while firms that decentralize decision making to the
subsidiary level often employ host country nationals.
o Since most companies do not fall at one extreme or the other, most
companies have a combination of both home and host country managers.
PCNs
o Managers can be hired from three groups: parent country nationals; host
country nationals; and third country nationals.
o Parent country nationals (PCNs) are residents of the international
business’s home country who are transferred to one of its foreign
operations.
Why PCNS
o Communications and coordination with corporate headquarters is
typically facilitated when PCNs are employed because they normally
share a common culture and education background with headquarters’
staff.
Issues with PCNs
o PCNs may however, lack knowledge of local laws, culture, economic
conditions, social structure, and political processes.
o Moreover, they may be expensive to relocate and maintain the host
country.
o In addition, because a host country may impose restrictions on the
number of employees that can be transferred, a company may not have
the freedom to hire whom it wants.
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3. HCNs
o Host country nationals (HCNs) are residents of the host country, and
are the most common choice for mid-level and lower-level jobs.
o Employing HCNs is popular because they are already familiar with local
laws, culture, and economic conditions.
Why HCNs
o Also, HCNs may be cheaper than PCNs because a firm can avoid the
costs such as relocation expenses that are associated with PCNs.
o However, an HCN may not be familiar with the firm’s corporate culture
nor its business practices.
TCNs
o Third country nationals (TCNs) are citizens of neither the firm’s
home country nor of the host country.
o TCNs are most likely to employed in upper-level or technical positions.
TCNs and PCNs are collectively known as expatriates (people working
and residing in countries other than their native country).
Ethnocentric Model
o An ethnocentric staffing model may be used to help a firm choose
among HCNs, PCNs, and TCNs for various positions.
o The model indicates that PCNs staff most higher-level positions.
Poly Centric & Geocentric Models
o Other firms may follow a polycentric staffing model where, based
upon the belief that HCNs know the local market best, the use of HCNs
is high.
o Finally, firms that want to hire the most qualified person for the job,
regardless of the individual’s nationality, follow the geocentric staffing
model.
Skills & Abilities Required by IHR Managers
The skills and abilities needed by international managers fall into two general
categories:
o those needed to do the job and
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4. o those needed to work in a foreign location.
Issue of Talents
o Today, as businesses globalize, the market for executive talent is also
globalizing.
o Top management teams are increasingly diverse in their members.
o While most MNCs do not hire new college graduates to take foreign
positions immediately, many hire graduates with the intention of sending
them abroad in the future.
Expatriate Failure
o The selection process in international firms is particularly important
because of the high cost of expatriate failure.
o Expatriate failure is the early return of an expatriate manager to his or
her country because of an inability to perform in the overseas
assignment.
o The cost of expatriate failure ranges between $40,000-$250,000.
o Expatriate failure rates may be as high as 20-50 percent in many U.S.
companies, higher than for either European or Japanese companies.
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5. What is “Culture Shock”?
o Managers sent on foreign assignments may experience culture shock, a
psychological phenomenon that may lead to feelings of fear,
helplessness, irritability, and disorientation.
o Acculturation typically proceeds through four phases.
What should be done ?
Because an expatriate suffering from culture shock may be less effective and
productive, companies typically take measures to limit its effects such as
providing pre-departure language and cultural training.
Western vs. Non-Western Values
Individualism Collectivism/ group
Achievement Modesty
Equality Hierarchy
Winning Harmony
Internal self-control External control
Pride Saving face
Respect for results Respect for status
Respect competence Respect elders
Time is money Time is life
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6. Critical Cultural Variables
Power
Authority,
Urgency Extent to which responsibility &
power is distributed accountability
Time
The view of and Culture Structure
way time is used Extent to which uncertainty
creates discomfort
Communication
The way and style Individual/group
information is shared Whether individual or
group takes precedence
Commitment
Agreements & contracts
Risk-taking
Conflict
humantalents
Work Goals
Work goals Germany Japan USA
Interesting work 3 2 1
Good pay 1 5 2
Good interpersonal
relations 4 6 7
Good job security 2 4 3
A good match between you
and your job 5 1 4
A lot of autonomy 8 3 8
Opportunity to learn 9 7 5
A lot variety 6 9 6
Convenient work hours 6 8 9
Good physical working
conditions 11 10 11
Promotion 10 11 10
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7. Phases in Acculturation
Honeymoon…> Disillusionment…>Adaptation…> Biculturalism
Difficulties in adapting
In most cases, expatriates fail to complete their foreign assignments because of
an inability of the expatriate manager, or his or her spouse and family, to adapt
to the new location.
What is Repatriation?
o Firms are now beginning to pay more attention to repatriation--bringing a
manager back home after a foreign assignment has been completed.
o Individuals that successfully adapted to the foreign environment may
experience culture shock upon returning to their own country.
Non cultural Issues
Regarding “non-cultural” issues leading to success or failure overseas, managers
tend to be more successful in foreign assignments when 5 conditions are met:
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8. –1. they can freely decide whether or not to accept a foreign assignment
–2. they have a realistic understanding of the new job and assignment
–3. they have a realistic expectation of a repatriation assignment
–4. they have a mentor in the parent firm who will look out for their careers
–5. there is a clear link between the foreign assignment and the manager’s
long-term career path.
Issues of Compensation
Compensating expatriate managers can be a complex process because factors
such as differences in currency valuation, standards of living, lifestyle norms,
and so forth must be taken into consideration.
Allowances
o A cost-of-living allowance may be given to managers to offset
differences in the cost-of-living in the home and host countries.
o A hardship premium (also known as a foreign service premium)
may be paid to mangers who accept assignments in relatively unattractive
locations.
Special benefits
o Special benefits packages that may be provided to expatriate managers
include housing, education, medical treatment, travel to the home
country, and club memberships.
Comparison with locals!
o In many cases the total compensation package offered to an expatriate is
much more lucrative than the package offered to his or her local
counterpart.
Not to take anything for granted
The simplest and most useful advice for those considering an overseas assignment is to
carefully weigh the “flip side” of all the issues just mentioned, from your perspective. And, to
not take anything for granted about how conditions will be when you arrive (doing one’s
homework pays).
What do you mean by Labor Relations?
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9. – Process through which management and workers identify and
determine the job relations that will be in effect at the workplace
– Specific approaches to labor relations varies from one country to
another
Labor Relations in Other Countries
 U.S. Approach to Labor Relations
– Collective bargaining
• Process whereby formal labor agreements are reached by
union and management representatives
• Involves negotiation of wages, hours, and conditions of
employment and the administration of the labor contract
– Germany
• Unions and management have been cooperative in the past
• Labor harmony not adversely affected by unification of
East and West
• Union power is still quite strong
• Rights of workers addressed more carefully by management
– Japan
• Unions and management have cooperative relationships
• Contracts tend to be general and vague
• Disputes regarding the labor contract usually settled
amicably
• Unions most active during the spring and end of the year
Factors Affecting Labor Relations
o A country’s laws, culture, social structure, and economic conditions may
impact labor relations. for example that the role of unions varies greatly
among countries.
o In the U.S. membership in unions has been steadily decreasing, but over
half the world’s workforce outside the U.S. belong to unions.
EU & Japan
o Unions in the European countries tend to be aligned with political
parties, but in Japan are created and run by the firms themselves.
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10. o In fact, labor relations in Japan are so cordial that strikes are rare.
Industrial Democracy & Codetermination
o The premise of industrial democracy--the belief that workers should
have a voice in how businesses are run--is an important influence in
labor unions in Europe.
o In fact, in Germany an approach called codetermination provides for
cooperation between management and labor in running a business.
Social Charter
o The EU’s implementation of its social charter (or social policy)
whereby employment conditions and practices will be standardized
throughout the community is addressing issues such as maternity leave,
job training, and pension benefits.
Globalization..
o Finally, labor unions have had their bargaining power reduced by
globalization.
o However, there is very little coordination between unions in different
countries to counter that reduction in bargaining power.
Demographic Challenges for IHRM
Educational attainment of workers
o Higher education levels coupled with high literacy rates
o Implications: productivity, safety
Aging workforce
o Growing % of workforce is in higher age categories
o Implications: retirement, job design, re-training, benefits, work
schedules, etc.
More part-time and contingent workers
o Accounts for about 15% of all employment
o Implications: more flexibility for organizations but raises issues of pay
inequity, reduced employee loyalty
Cultural (Values) Challenges for IHRM
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11. Attitudes toward work
o Different expectations re: work and leisure
o People want more flexibility, holiday time, etc.
Ethnic diversity
o Immigration from numerous countries
o Potential for conflicts of values, etc. but also opportunity to learn,
expand
Attitudes toward government
o Negative attitudes toward those in power – effects employment
relationships
Legal Challenges
o Numerous laws influence organizational (and HR) activities
o Employment equity
o Human rights laws
o Charter of rights and freedoms
o Safety legislation
Managing Diversity
o Diversity
o The differences among people
o Protected-Group Concerns
o Perceived hostile organizational cultures
o Stereotyping
Age Issues and Diversity Management
o Job Opportunities for Older Workers
o Discrimination against “overqualified” older employees in hiring
o Instances of age discrimination in the workforce reduction when layoffs
impact largely older workers
o Older Workers Benefit Protection Act (OWBPA-USA) of 1990 and
equal treatment of older workers
o Attracting, retaining, and managing older workers
Sex Discrimination in Jobs and Careers
o Nepotism -The practice of allowing relatives to work for the same
employer.
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12. o Job Assignments and “Nontraditional” Jobs -Women are increasingly
entering jobs traditionally occupied only by men.
o The “Glass Ceiling” -Discriminatory practices that have prevented women
and other protected-class members from advancing to executive-level jobs.
o “Glass Walls” and “Glass Elevator”
The tendency for women to advance only in a limited number of functional
fields within an organization.
What should be done for Breaking the Glass
o Establishing mentoring programs
o Providing career rotation
o Increasing top management and boardroom diversity
o Establishing goals for diversity
o Allowing for alternative work arrangements
o Diversity training-Against stereotyping
Sexual Harassment and Workplace Relationships
o Types of sexual harassment
o Quid pro quo means Linking employment outcomes to the harassed
individual’s granting of sexual favors.
o Hostile environment means Allowing intimidating or offensive working
conditions to unreasonably affect an individual’s performance or
psychological well-being.
o Legal Standards on Sexual Harassment
o Tangible employment actions (e.g., termination) that result from sexual
harassment create a liability for the employer.
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13. o Affirmative defense for employers in dealing with sexual harassment
incidents includes:
o Establishing a sexual harassment policy
o Communicating the policy regularly
o Training employees to avoid sexual harassment
o Investigating and taking actions when complaints arise
International Labour Relations & Trade Unions
Definition of Trade union
One of the first and earliest definition on trade unions was that of Sidney and
Beatrice Webb who described trade unions as:
“..A continuous association of wage earners for the purpose of maintaining or
improving their working lives.”
Why do Workers Join Trade Unions?
Economic needs:
o Strengthen bargaining power over wages
o Improve working conditions
o Job security:
o Protect jobs from dismissal/retrenchments
o Protection from unilateral action by management (change terms and
conditions)
Social Needs:
o Comradeship and sense of community
Social Welfare:
o Accident, death and pension benefits
o Unions represented on pension funds
o Promote the development of communities
o Use investments to benefit members
o Self-fulfilment and Development:
o Train and develop members
o Provide literacy skills to members
Political Reasons:
o Put pressure on repressive governments
o Influence labour legislation
o Influence government policy on wealth distribution and poverty
alleviation
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14. Objectives of Trade Unions
Goals include:
o Equitable wage benefits
o Ensure a healthy and safe environment
o Promote job security and freedom from arbitrary dismissal
o Provide legal and other support to members
o Provide political influence and lobby government
Methods Used by Trade Unions to Obtain Goals
o Collective Bargaining: An ongoing process with employers, does not end
with wages
o Representation: Election of shop steward, who are full time employees,
and represent the interests of union members
Collective Action:
o Workers go on strike
o Consumer Boycott:
o link with community to boycott products of the company
Political Power:
o Influence the vote at elections
o Lobby government and other state structures
o International support:
o Getting the support of international trade unions and community
organisations
Legal action:
o Using the protection provided by labour legislation
o Media channels:
o Promote the view of unions
Types of Trade Unions
3 Forms or type of trade unions:
Craft Unions:
o Earliest forms of trade unions
o Promote the skilled status of members
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15. o Recruit within a particular craft
o Membership thru apprenticeship system
o Power in skill and ability to control entry into the profession, i.e. control
supply of skill
General Unions:
o Organises all workers regardless of skill or industry
o Normally politically motivate and anti-capital
o Ideal of one union for the whole country
o More success with unskilled and blue collar workers
o Weakness not sectorally based
Industrial Unions:
o Presently most common form of union
o Organises all workers in a particular industry
o Promotes sectoral based collective bargaining
o Strength is in no. of members per sector
o Stronger unions due to 1 industry focus
International Federations
o Autonomous international trade unions linking national unions from
different countries:
Examples:
Educational international
International Metal Workers Federation
International Transport Workers Federation
o Focus: Education, development, solidarity, strategic thinking
Other relevant issues in International labour relations
Stress
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16. Work Life Balance
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