HRM in International Organisations

HRM Policies and Practice in International Organisations

1. Introduction
In our haste to encourage developing countries to make their HRM systems like ours, we have forgotten that there are some factors that differ and influence HRM in those countries (Klinger & Campos, 2002). Most of the research done on Human Resource Management (HRM) have come from communities of scholars focusing on their own particular countries or regions, be it the United States, the United Kingdom, countries elsewhere in Europe and a few in Asia. Cross-pollination across these groups has been minimal, presumably because each one considers the work of others to be marginally relevant to its particular context because of differences in institutional structures, regulatory environments and/or cultures (Wright, Snell & Dyer, 2005). Recently however, the boundaries became more porous. Organisations have become global organisations and HRM has become a strategic element of the organisations. Having a good HRM is likely to generate much loyalty, commitment or willingness to expend extra effort for the organisations objectives (Tessema, Mussie & Soeters, 2006). Profit, as well as non-profit organisations (INGOs), recognise the importance of good HRM and the relation between good HRM and performance has been proven. But, HRM is influenced by its environment. In other words, people have different preferences for HRM policies and practices. National culture, structure and other contingent factors all affect HRM. The ability for an organisation to reduce the misfit between employee preference and actual practice has a significant impact upon perceptions of need satisfaction among employees. The consequences of a major misfit may take any of a number of forms of organisational malaise, such as widespread alienation, high labour turnover, absenteeism, or damage to company property (Kiriazov, Sullivan & Tu, 2000). Minimisation of the gap between employee preferences and actual practice could lead to high levels of job satisfaction and organisational commitment. When developing HRM policies and practices in an international organisation, all these factors need to be considered. This document provides insights into the factors that influence HRM. We have highlighted the general factors that affect the performance of an organisation. Then we focus on cultural factors that influence HRM preferences by presenting results from international research. In the last chapter we discuss the consequences of the insights for developing and/or realigning HRM and we give some examples of HRM practices in international NGOs.

2. Factors that influence performance in (international) organisations

External and internal factors and actors affect the performance of an organisation and hence the performance of staff. In general we could say that there is a number of elements that are interrelated and mutually affecting an organisations performance. These elements are combined in a model that is called the Integrated Organisation Model. The IOM looks as follows:

ref:(MP00001499).DOC SC

Page 1 (12)

www.mdf.nl

MDF copyright 2011

HRM in International Organisations

Figure 1, The IOM

Factors: economic, technical, political, socio-cultural influences

Input

Structure

Mission

Systems

Strategy

Organisation
Management Style Culture Staff

Output

Actors: suppliers, financiers, competitors, partners, target groups

With help of the IOM, each organisation is able to analyse the specific influencing factors and actors (including input and output) and the strengths and weaknesses of the internal organisation (the six elements in the inner circle). Staff is one of the internal elements. This element covers all activities, rules and regulations related to staff motivation and utilisation and development of staff capacity, in other words HRM. It is obvious that the strategy of the organisation determines HRM policies and that the structure of the organisation, the way the work is divided into specific job responsibilities, has a relationship with HRM. But looking at the management of the organisation for example, the competence of line managers, as well as the competence of HR managers, influences the performance of the employee. Interestingly that research did not show a higher performance with a very competent management while it did show lower performance with incompetent management. An example of input that is affecting the performance of the organisation, is the availability, or lack of, qualified new applicants for jobs, which is important for planning of human resources. With regards to the external factors, almost all research shows the importance of the role of environmental factors (economic and political). Many developing countries are characterised by unexpected political changes, which create so much environmental uncertainty and complexity that managers consider almost any planning or strategic management responses impossible. Favouritism, nepotism and political loyalty have been affecting recruitment, selection and promotion practices in many developing countries. Research has shown that an organisations network (of suppliers, recipients, regulators and the like) influences organisations on their choices of HR strategies (Wright, Snell & Dyer, 2005). It states that, while the dominant paradigm assumes that HR actors possess considerable freedom in choosing their HR systems, this assumption ignores the realities of network relationships. In Kenya it was investigated that there were three contextual factors important in interpreting HRM patterns: a wide range of ethnic groups; high levels of population growth; and constrained economic development focused mainly in urban areas (Nyambegera, Sparrow & Daniels, 2000). In Eritrea it was found that employee

ref:(MP00001499).DOC SC

Page 2 (12)

www.mdf.nl

MDF copyright 2011

HRM in International Organisations

turnover has a high negative impact on the performance of the organisation since the loss of trained employees would mean a reduction in organisation performance. We have been considering the factors and actors that affect the performance of the organisation. There is a difference between HRM and performance. As indicated, there is a diverse set of influences that determine the performance level of the organisation. HRM is only one of the components, albeit an important one. And performance is the raison dtre of HRM. So lets focus on HRM and what influences HRM specifically. In the next chapter we elaborate on the specific cultural factors that influence HRM.

3. Cultural factors that influence performance in international organisations

The culture of an organisation is defined as the shared values and norms of people in the organisation. There is a growing support for the perception that country-based elements have a significant impact on international HRM. Such factors include economic, political, legal, and historical environments, employee demographics and labour-market characteristics, social-cultural characteristics of the workforce and society (Nyambegera, Sparrow & Daniels, 2000). Among these elements, culture has generated more interest in the field of comparative HRM because of the belief that culture is at the base of peoples behaviour. Some say that culture enters into those situations where interpersonal relationships are not constrained by technology or other contingent factors. Practices associated with (technical) product operation, such as recruitment, selection and training, are expected to be less influenced by social-cultural diversity than practices such as career development, performance appraisals and rewards, because the latter have more to do with interpersonal relationships (Verburg et al, 1999). We are of the opinion that all HRM policies and practices are influenced by cultural factors and need to be taken into account when developing effective HRM. In chapter 4 we discuss whether to adapt the systems to the existing culture or try to adapt the organisational culture to the preferred systems and policies. Since there is a linkage between cultural values and various organisational behaviours, such as norms of acceptable behaviour, types of conflict, and preferred leadership styles, it is important to gain some insights into these cultural differences in order to know how to realign HRM policy and practice to it. In this chapter we will give examples of how HRM preferences are influenced by cultural factors, obtained by case studies done by MDF and international researchers.. As far as possible, and when appropriate, the insights will be related to the cultural dimensions developed by Hofstede (1991) and Trompenaars (1998). These dimensions are briefly explained in box 1.

ref:(MP00001499).DOC SC

Page 3 (12)

www.mdf.nl

MDF copyright 2011

HRM in International Organisations

Box 1, Cultural dimensions according to Hofstede and Trompenaars (summarised/examples and free interpretation)

1. Individualistic versus collectivistic orientation People mainly take care of themselves and their primary group (nuclear family) in an individualistic culture. Work is important. In a collectivistic culture people take care of and are loyal to the group. Relationships are important. 2. Power distance Power distance is the amount in which the less powerful members of a society accept and expect that power is divided in an unequal way amongst the members of the group. 3. Masculinity versus femininity In a masculine society, the gender roles are clearly defined and the more masculine features (efficiency, status, rationality) are more appreciated. In a feminine society, men and women can fulfil the same roles and the more feminine characteristics (caring, modesty, relationships) are more appreciated. 4. Uncertainty avoidance Uncertainty avoidance is the extent to which the members of the society feel threatened by uncertainty or unknown situations. Societies with high uncertainty avoidance tend to avoid or prevent taking risks while societies with low uncertainty avoidance promote taking risks and challenges. 5. Long-term versus short-term orientation Societies with long-term orientation value adaptation of traditions to new contexts, while short-term oriented societies value traditions. Long-term oriented societies respect investments and savings more, while short-term oriented societies think more by the day and allow overspending. 6. Universalism versus particularism In a society with a universalistic orientation, rules are for everyone and everyone is equal. In a society with a particularistic orientation, the relationship is more important than the rule. 7. Neutral versus Emotional or affective This dimension has to do with the level of expression of emotions and feelings. In a neutral society, the bigger the grief, the lesser emotions are shown. In an emotional society the expression of feelings is immediately. 8. Diffuse/public versus Specific/private In a diffuse society the work diffuses in other aspects of the life (big public area) while in a more specific society, life is segmented; in different situations there are different rules. 9. Achievement versus Ascription Societies with an orientation on achievement, will value performance rather than belonging to a group, which is highly valued in an ascribe society. The cultural dimensions are applicable to both national and organisational cultures. HRM can help to inculcate culture through selection, socialisation, training, and various forms of employee involvement to win hearts and minds and ensure shared values and beliefs(Verburg et al, 1999). So it may be possible for organisations to achieve the desired organisational culture. This choice is a difficult one. What would be the desired

ref:(MP00001499).DOC SC

Page 4 (12)

www.mdf.nl

MDF copyright 2011

HRM in International Organisations

dominant cultural values? Those from head quarters or the predominating values in the respective country? Both options have advantages and disadvantages. Let us look at some examples. In some countries in Eastern Europe, Western organisations established new organisations and the Western HRM policies and practice followed these organisations. They executed 360-degrees feedback mechanisms, employee involvement programmes and self-managed work teams, under the assumption that these elements would increase the motivation and therefore the performance of staff. They found out that this did not work. Job commitment in Eastern Europe was low (in 2000), employees were not loyal and the old work ethics of doing as little as possible still pervaded in Eastern Europe in 2000. Individuals had little intention to work hard and pay was usually not linked to performance and bonuses were viewed as entitlements. Looking at the external factors, it made sense that money was the most important motivator. East Europeans were highly dependent on their base pay because of the proportionately higher percentage of income needed to support their basic needs and greater economic uncertainty of the region. East Europeans also place a high value on the social benefits traditionally offered by organisations because in the past these benefits were high. Women, for example, had company-paid maternity leave with a three-year guarantee to return to the same position. Western managers in Eastern Europe were advised to first build a trust base and focus on extrinsic rather than intrinsic rewards and to develop selection, performance, appraisal, promotion and compensation strategies that recognise the history of the individual countries, as well as the Eastern European evolution from a communistic to a market economy, before introducing western HRM policies (Business Horizon, 2000). Also in Kenya it was found that there is a preference for predictability of rewards (Wright, Snell & Dyer, 2005). Kenya has a kind of individualism whereby the employed individual is seen as the cream of a group or family and s/he could be the provider. This calls for improvement of the individual in order to meet such obligations. If one is looked upon as the sole provider, there is no doubt that one would prefer predictable rewards to group rewards. Some employees believe that some superiors are not honest, hence the quest for empowerment. Hierarchical relations are accepted but not totally appreciated. The main reason would be that many in authority have misused their positions, mostly by staffing the organisation with relatives, people from the same ethnic group or those who are politically expedient, to the extent that those who have not have such an opportunity tend to resent those in authority. Kenya is a collectivistic society with practices of favouritism on ethnic and kinship lines, indulged in as a way of discharging obligation to kith and kin. This is why some generations want to be empowered (Wright, Snell & Dyer, 2005). Employees prefer to participate in the evaluation process, as managers alone can use the exercise to intimidate some employees. Tall organisation structures are the least preferred because the higher the structure, the more likely the existence of evil managers who are able to pass blame onto others. Bad managers can use the tall structure to frustrate subordinates. Rewards taking into consideration qualifications and skills are more quantifiable, hence not so easily abused by evil-minded superiors. On the other side of the world, Chinese personnel and employment practices used to be characterised by the iron rice bowl policy. It was originally copied from the Soviet practice in the early 1950s. This model implied that companies took full care of their employees by providing them not only with wages, but also with housing, social and medical insurance, and employment security through lifetime employment systems. The growing and opening economy of the mid-1980s forced the need to change personnel and employment practices in order to allow for further development of the economy as well as improvement

ref:(MP00001499).DOC SC

Page 5 (12)

www.mdf.nl

MDF copyright 2011

HRM in International Organisations

in the living standards of the Chinese workforce. Since then, large and medium-sized firms in the mainstream of Chinese industry have slowly departed from the iron rice bowl model. Reforms in China are the development of a contractual labour system, including wage regulations replacing the lifetime employment policy, the introduction of a welfare system through introducing a social security fund, and the creation of a labour market in lieu of the earlier policy of the state assigning employees to companies. China is still more an ascribed than an achieved society (hierarchy). Chinese employees are guided by loyalty to their particular group and view relationships in a more global and diffuse manner. Compared to China, the Netherlands for example, score high on individualism and low on power distance (International Journal of Human Resource Management, 2006). In China, Dutch managers are often seen as overly democratic and as people who very readily distrust authority. Concepts such as participation, co-operation, people-based, social, mutual trust, group cohesion and individual growth characterise the climate or culture in Dutch industrial enterprises. In China, respect for authority, rationality of procedures and division of work is more dominant in the organisational culture.

4. Discussion
Research has shown that individualism encourages individual interests and competitiveness, while collectivism encourages collective interests and co-operative behaviours. An organisation can have a collectivistic culture that encourages cooperation, also with people from individualistic societies. If the collectivistic approach is applied in all aspects of the organisation, people adapt to it. The mission of your organisation could include words as we, the structure could be based on teams, the management style could stimulate collaboration and loyalty, etc. Different HRM practices (e.g. individual versus collective interests; individual appraisals versus group appraisal; individual-focused job design versus team-based job designs) promote and encourage individual versus collective interests, and co-operative versus competitive behaviour to different degrees. The question here is whether organisations should make wholesale changes to meet the preferences of employees or whether they should assume that their employees change their behaviour and preferences to the desired level of collectivism or individualism. It has been proven in some case studies that a misfit between an organisations HRM systems and the individuals orientation, could lead to lower employee morale, lower levels of motivation, lower job performance, and possibly a higher level of employee turnover. These developments have, in turn, consequences for the performance of the organisation. Organisations can modify some of their core HRM practices to reduce some negative consequences, but first and foremost organisations should attempt to measure the individualism/collectivism of employees and/or potential job applicants for job placements so that a greater congruence is achieved between the individual and the job (Ramamoorthy & Carroll, 1998). It is of course up to the organisation to determine the policies and practices of HRM. In the next chapter some considerations are given when designing HRM.

ref:(MP00001499).DOC SC

Page 6 (12)

www.mdf.nl

MDF copyright 2011

HRM in International Organisations

5. HRM in international organisations

5.1. Introduction Human Resource Management is designed following a certain process. This process is visualised in the following model:
Figure 2. HRM model

Rewarding

Planning

Recruitm ent & Selection

Socialisation

Perform ance

Monitoring

Appraisal

O utflow

Developm ent

In this chapter we discuss all elements of an international character1. For further reading about the various elements of the HRM process please refer to the respective syllabi. We do not have the ambition to be exhaustive but aspire to put international considerations on the agenda of every international organisation. 5.2 Planning Often, international staff fulfils management positions in the field. Some organisations recommend a core of national staff in a field team and some international staff in the team to deal with the donors, for example. Some national staff might be under local pressure. In recent years, more efforts have been made to recruit and train national staff to make them fully competent for any job in the organisation. In the planning stage, it is not recommendable to decide whether the posts should be filled by an international or a national staff member. However, in the planning process, the organisation could consider a gender balance (on all levels), a balance between managers from hosting countries vis-vis donor country, etc. Job descriptions, as a result of planning of human resources, are usually in line with the operational objectives of the organisation. In some cultures, the value of a person is not in their contribution to the organisational goals, but with their contribution to the team or group in which s/he belongs. Job descriptions could be too rigid, for example in a particularistic society, where relationships are more important than rules. Questions 1. How do you plan your Human Resources? 2. How have you included balances of different groups in your planning?
Every element is elaborately described in separate MDF-syllabi. A general description of the model and its elements is described in a separate MDF-syllabus.
1

ref:(MP00001499).DOC SC

Page 7 (12)

www.mdf.nl

MDF copyright 2011

HRM in International Organisations

5.3 Recruitment and Selection Some organisations complain that good national staff is hard to find. Considering the future and the social mission of the organisation, it can be decided to recruit people that have the potential or the competencies and to train them within the organisation. One idea for actively recruiting national staff is to work with local NGOs to create a standby or secondment model, linked to donor funding. But, recruitment on an open market is a commonly used approach. Matching competencies that are offered by the applicant with the required competencies might be the most logical approach. In some cultures however, this may cause some conflicts with the custom of nominating people from local communities. Although favouritism is usually not accepted, national staff might encounter conflicts with their local customs if they pass over local nominees. For an organisation, this might be one of the most difficult phenomena to deal with. Questions 1. How flexible is your recruitment and selection strategy? 2. What are the most common means for recruitment in the countries in which you work? Do these differ per country? 3. Are the selection methods you use applicable in all cultures? 4. How do you handle favouritism? 5.4 Socialisation Socialisation has a lot to do with adapting to the organisational culture of the organisation. International organisations debate a lot about which culture is dominant. One INGO states the national culture of the hosting country is dominant, so if there is a meeting in the Netherlands, people should behave according to the Dutch culture. If the meeting would be held in Tanzania, then that culture should prevail. Another INGO has determined codes of conduct for its entire worldwide staff; no matter in which country they live and work. National cultures or, for that matter, religious norms, are pretty much directive and do not allow everyone to behave according to international codes of conduct. Questions 1. How international are your codes of conduct? 2. Which cultural values prevail in your organisation? 3. What kind of socialisation programme does your organisation have? Is it about mutual or one-sided adjustments? 5.5 Performance It is important to know what motivates staff and hence stimulates them to perform well. In this syllabus some examples were given about misjudgements of motivation in other countries (job security in Eastern European countries and Kenya for example). Motivation is personal; every individual has her/his own specific motivation to work. But it is almost impossible to establish a personalised motivation system in an organisation. Some insights into motivation of staff (from different cultures) is necessary. Questions 1. Do you know what motivates your staff?

ref:(MP00001499).DOC SC

Page 8 (12)

www.mdf.nl

MDF copyright 2011

HRM in International Organisations

5.6 Monitoring With monitoring of staff another problem arises: how to monitor staff from a distance? International organisations have to design a monitoring system for staff that enables them to receive adequate information about the performance of staff, sometimes from a distance. Some organisations use auto-evaluation processes (MDF, 2005), others work with competency indicators, that gives more objective information about the performance. It could cause problems between expatriate and locally recruited staff when the monitoring system is not similar. Transparency is the key word here. Questions 1. Do you have a monitoring system for staff that is transparent? 2. How do you deal with practical restrictions, like for example distance? 3. Is there a difference between monitoring of international and monitoring of national staff? 4. Who does the monitoring? 5.7 Appraisal Performance appraisal is often designed along the Western line of thinking. Rewarding takes place on the basis of demonstrated competencies. In southern countries however, people might have difficulties to stand out in performance above their colleagues of the same team. In collectivistic societies it is offensive to appraise individuals above groups. In some cultures that are sensitive to shame it can be very offensive to give a staff member a personal appraisal which rates them as not proficient. In cultures with a high ascriptive nature the older employee will not accept the feedback from a younger manager. In some research it was investigated whether concepts like 360-degrees feedback would be accepted by everyone (MDF, 2005). This was not the case because of the reasons, amongst others, mentioned above. Questions 1. How culturally sensitive is your appraisal system? 5.8 Rewarding It is very common in international organisations to work with temporary contracts. For some people however, this is not acceptable. In China for example, people simply do not accept the job if it is not with a permanent contract. An alternative could be to offer a permanent contract with an additional amendment where reasons for termination of the contract are explicitly described (end of the project, change of project goals, etc. Some organisations give permanent contracts in order to compete with organisations that offer higher pay.

ref:(MP00001499).DOC SC

Page 9 (12)

www.mdf.nl

MDF copyright 2011

HRM in International Organisations

With regards to payments of international and national staff, there are some considerations: Questions 1. If an expatriate is already living in the country where s/he is recruited to work, should s/he be paid as a nationally recruited staff member? If not, why not? 2. Do you pay your international staff: the same as nationally recruited staff doing the same job? the same, plus cost of living allowance (related to the home country)? the same, plus a location allowance? none of the above? (In an informal survey, 86% of organisations said they do none of the above).

There is a realistic threat that national staff becomes dependent on high salaries if they move to international contracts. It seems fair to have the same conditions for national and international staff doing the same work. They should have the same size of office and no distinction in terms of access to a car or health insurance should be made. 5.9 Development Development is import for enhancing the capacity to perform, this not only means training, but also giving assignments, introducing new techniques and skills and giving more responsibilities to staff. It has shown that international staff is more exposed to development opportunities than locally recruited staff (MDF, 2006). This can have effect on the motivation and thus on performance. Some staff will not be assertive (enough) to search or ask for development opportunities; some say that they question motivation for development with everyone. Sometimes, you invest in people and get inadequate return, especially with short-term organisations like projects. Nevertheless, developing your own staff is still cheaper than recruiting new staff. Training can be seen as an incentive. It could be obligatory or voluntary. Questions 1. How do you see development in your organisation? As something logical, as a way of capacity building, or as something else? 2. Does national staff get the same development opportunities as international staff? And women? 3. Are your development methods effective and efficient? 5.10 Outflow
MDF copyright 2011 www.mdf.nl

People can leave the organisation; voluntary or forced, via retirement or promotion, etc. There is always reason to ask them about their experiences with the organisation. According to research (EPN, 2004) it is highly appreciated by national staff if attention is paid to the outflow, discussing the final three months of the contract or offering a bridging period until a new post is available or the employee has found a new job. In some cultures it is appreciated if the organisation takes care of some pension or extending health insurance. It is very Western to regard a job contract as something strictly business. Questions 1. Do you have outflow interviews?

ref:(MP00001499).DOC SC

Page 10 (12)

HRM in International Organisations

2. Do you have a bridging period for national and international staff?

6. Conclusions
There are numerous external developments that influence the performance of an organisation. National culture is one of the dominating factors that influence the organisation and therefore HRM. International organisations have the challenge to find a balance in addressing the cultural values of the countries they work in. This does not mean that they have to adapt to the national culture; neither should it be the other way around. What is evident is being aware of the restrictions and opportunities these cultures give. Just as we deal with gender issues, we also need to deal with cultural issues.

ref:(MP00001499).DOC SC

Page 11 (12)

www.mdf.nl

MDF copyright 2011

HRM in International Organisations

References
1. EPN (2004). Managing and Developing Nationally Recruited Staff. Sixth Emergency Personnel Network Seminar (EPN 6). Barcelona. 2. Hofstede, G., (1991). Cultures and Organisations: Software of the mind. McGraw-Hill, London. 3. Jackson, T.E., Sorgenfrei, M. (2003). Cross cultural Management and NGO Capacity building. Praxis Note No 3. INTRAC. 4. Kiriazov, D., Sullivan, S.E., Tu, H.S. (2000). Business Success in Eastern Europe: Understanding and Customising HRM. Business Horizons / January-February 2000: 39-42. 5. Klingner, Donald E., Pallavicini Campos, V. (2002). Building Public HRM Capacity in Latin America and the Caribbean: What works and what doesnt. Public Organization Review: A Global Journal 2: 349-364. 6. MDF Training & Consultancy BV (2004). The Integrated Organisation Model. 7. MDF Training & Consultancy BV (2005). A study into performance management of International NGOs. 8. MDF Training & Consultancy BV (2006). Human Resources Management a Model. 9. Nyambegera, S.M., Sparrow, P., Daniels, K. (2000). The impact of cultural value orientations on individual HRM preferences in developing countries: lessons from Kenyan organizations. International Journal of Human Resource Management 11:4 August 2000: 639-663. 10. Ramamoorthy, N., Carroll, S.J. (1998). Individualism/Collectivism orientations and reactions toward alternative Human Resource Management Practices. Human Relations, Vol. 51, No 5: 1998. 11. Tessema, Mussie T., Soeters, J.L (2006). Challenges and prospects of HRM in developing countries: testing the HRM-performance link in the Eritrean civil service (impact of eight HR practices on employee performance in a developing country: the Eritrean civil service organisations). International Journal of Human Resource Management 17:1 January 2006: 86-105. 12. Trompenaars, F., Wooliams, P. (2003). Business across Cultures. Capstone Publishing Ltd, West Sussex. 13. Verburg, R.M., Drenth, P.J.D., Koopman, P.L., Van Muijen, J.J., Wang, Z-M (1999). Managing Human resources across cultures: a comparative analysis of practices in industrial enterprises in China and The Netherlands International Journal of Human Resource Management 10:3 June 1999: 391-410. 14. Wright, P.M., Snell, S.A., Dyer, L. (2005). New models of strategic HRM in a global context. International Journal of Human Resource Management 16:6 June 2005: 875881.
MDF copyright 2011 ref:(MP00001499).DOC SC

Page 12 (12)

www.mdf.nl