Advantages of having a global HR approach

Technology is thrusting global HR to the forefront, because it seamlessly

integrates HR systems by taking advantage of advance servers and databases that

facilitate the presence of a comprehensive HRIS. Payroll and benefits data is accessible

across markets as a result of these technological advancements: in effect, making

information readily available to HR professionals in a multinational corporation (MNC)

across the globe. Busbin (1996) provides a case example of this process where Allied

Signal’s operation in Paris has implemented an IBM HRIS which has information for

12,000 employees across 8 different countries. In the event of global mobility, such

access is vital in ensuring a seamless transition for relocating staff. This assists further

with proactive workforce planning, provision of company wide training classes [online]

and international recruiting processes for different markets.

Learning organization: For example, it is not uncommon for Visa or American Express

to have its customer service operations outsourced to a call center in Bangalore. Cross-

collaboration has also been made possible because of the virtualization of IT functions

across the globe. The use of video technology also enables virtual teams to communicate

“face to face”, although separated by land and ocean. To support this theory further,

Busbin (1996), observes “if you aren’t working for a global company, you probably will

be soon”. Such cross-collaboration enables an organization to capture tacit and explicit

knowledge and employ it into a knowledge management system which can be used

across its businesses.

Cost of labor: The cost of labor in new markets enables corporations to maximize access

to international knowledge workers at minimal cost. The Inquirer

(http://www.theinquirer.net) in 2003 reported computer programmers in India earned

$10,000 in comparison to their US counterparts who earned over $60,000. Additionally, a

global salary comparison chart provided by worldsalaries.org shows that the purchasing

power parity (PPP) of computer programmers in the US is $4141 compared to $1075 for

their Chinese counterparts. As a result, the cost imperatives for US businesses to take

advantage of well-qualified overseas talent are very strong.

New markets: When organizations decide to expand their global strategy through mergers

and acquisitions or direct investment, HR is needed to implement the people strategy of

such an investment. Having a global HR strategy enables firms to create an environment

and strategy that can absorb cultural obstacles through creating a proactive HR

management framework. Previous experience with a global HR strategy positions an

organization positively, so that it can take advantage of new market opportunities based

supported by an experienced and tested global HR process.

Diversity: Knudson (nd), quoted an IBM executive responsible for diversity as saying

that the company has a culture that is inclusive and has an environment where other

cultures are not viewed as inferior. In fact, this interview was before the executive

boarded a plane for IBM in India, where he had plans to participate in Diwali [a Hindu
festival] celebrations. IBM is a truly global firm with a presence in over 170 countries

worldwide

Challenges

An article published in the Mckinsey Quarterly (2008), indicates a wide gap

between the perception and reality of having a truly global workforce. McKinsey

separately interviewed executives of US corporations and senior managers of 22 global

organizations to uncover trends in regards to managing global talent. The core findings of

the project came up with the following challenges:

Achieving greater cultural diversity- A multinational corporation operating

internationally contends with cultural nuances which are not always overcome by having

a standardized corporate culture across different markets. The article states a clear

difference between having a multinational manager or professional who speaks the right

languages in contrast to one who maintains a true open-mind, while working within the

international framework.

Overcoming barriers to international mobility- Mckinsey found out that managers had

trepidations about working overseas because of “...the expectation that employees will be

demoted, after repatriation to their home location”. Some of the managers interviewed

also had concerns about international employees not meeting standards set by home
employees. For example, a manager of an IT team in Silicon Valley could have concerns

about bringing on an expatriate trained in India, because of concerns that the Indian

professional may not be up to par. Additionally, when the leadership team in an

organization did not actively promote internationally mobility,

Establishing consistent HR practices in different geographical units- Because of the

obvious geographical, cultural, legal and linguistic differences, there are inherent

challenges in setting up a standardized HR approach across borders. For example in most

of Europe, specifically in the UK, job advertisements can clearly have age and sex

requirements. Also most job seekers are comfortable adding details about their families

and may add a professional photo of themselves to their resumes. In the USA, these

examples present clear equal employment opportunity challenges because basic

qualifications of a job description cannot include sex and age requirements unless it is a

bona fide occupational requirement. Also putting a picture on a resume plus details of

ones family life can present concerns about employment discrimination, if a particular

job seeker is not hired by company A. Spicer (2008), notes that HR is seen as a separate

function in the UK, however in France it is a sub-set of the finance department and a sub-

set of the legal department in Germany. This reflects a clear difference in orientation

based on the aforementioned observation. A further observation is made in Russia, where

expatriates there do not have a clear understanding of their total rewards and tax

obligations, because of the informal manner in which such matters are handled.
Technology- Also since there is a segmentation of HR processes based on domestic

market needs, there is not always synergy between the Human Resource Information

Systems (HRIS).

Risk exposure-Cascio (2006, pg 638), mentions risk exposure as a clear problem with

global HR involvement. With the state of global geopolitics, some countries such as

Colombia and Iraq provide security concerns for firms that do business in those countries.

Colombia has a record of expatriate kidnappings and the violence in Iraq should be of

clear concern for organizations engaged in these countries.

Why go Global?-Mitigating Challenges to Global HR

Mendenhall et al (2007) provide a framework through which organizations can

transcend HR challenges in the global environment. The presence of mission integration

is central to having a truly global organization. Specifically, global HR issues must be at

the forefront of all issues, managers contend with in their strategic business operations.

The mission of the organization must reflect this reality for it to be an organic part of the

corporate culture. Furthermore, an “...indicator of pure integration between global HR

and global mission is the diminished distinction between domestic and international HR”.

This is particularly important if the organization is focused on a “one-firm” approach to

its business regardless of the geographic location. A common example is the standardized
approach McDonald’s uses in its operations globally, making it one of the most distinct

international brands regardless of the customizations made to accommodate specific local

culture.

Additionally, Mendenhall (2007) adds that senior management must be agents of change

as far as global HR practices are concerned. A true integration of global HR into the “…

strategic and policy crafting processes” is essentially to making this an “organic” part of

the HR planning process. It must permeate the organizational culture for it to become a

living process and an integral part of all HR business plans. Also as part of workforce

planning and leadership development, companies can create rotational global assignment

programs as part of a competency based leadership development program. Such an

initiative will encourage more international mobility and generate cross-cultural

perspectives necessary for doing business in the global environment.

Globalization- The need for a global HR strategy

As the world of business becomes increasingly integrated across the globe, a

macro-level HR strategy is an imperative for global corporations. According to Herod

(2007),” human resource managers often excluded from international merger and

acquisitions until the deal has been concluded and then left to try to resolve a myriad of

cultural, organizational, and policy issues after the event. However, once human

resource managers have been able to prove that their contribution to the international
business development process is equally valuable to those of finance and marketing

executives, their “place at the table” is generally assured”. It is important that HR

managers are involved in being transformational rather that transactional in interfacing

with the changing needs of the business. In meeting with client staff, HR must constantly

show value and an understanding of the business objectives of the firm. From this

perspective, HR is positioned to anticipate and forecast business needs and position

recruiting and selection activities to fulfill these needs.

As Herod (2007), HR is often viewed as an administrative component of the

business, or “order-takers” designed to fulfill business objectives and support the

strategic intent of the corporation. Clearly, this puts HR in an ineffective role, since there

is no first hand understanding of the business dynamics and challenges that come from

operating in the cross-cultural context. Payroll and other administrative functions are

outsourced to a domestic company and this frequently creates other tax and

administrative problems. In effect, HR is left with to contend with solving these

problems, instead of focusing full efforts on managing real global HR strategy issues

such as recruiting and capability planning.

Fallouts of Globalizing (HR perspective)

 Contractor and Mudambi (2008), contend …developed countries cannot

compete with emerging markets on cost…workers in advanced nations may be

paid a large multiple of the wages earned by comparable workers in developing

nations-but that rich nations workers are also supposed to be commensurately

more productive.

Such an issue presents problems related to internal salary compression, morale

and motivation problems and a possible negative perception of workers in the rich

nations towards their colleagues in emerging [foreign] markets. Having a global mobility

program in an organization can mitigate this problem, but clearly there bigger macro-

economic factors that control such market conditions e.g. Trade blocs, bilateral

agreements etc.Conversely, workers in developing nations who earn significantly less,

sans cost of living factors, could view their rich nation counterparts equally in a negative

light.

Tucker (2008), reports that according to data from the Bureau of Labor and

statistics, the US employment market is project to grow by 15.6 million jobs.

Nevertheless, there is a decline of 300,000 jobs in comparison to data from the preceding

decade. This as a result of a 3 million decline in manufacturing jobs for the previous

decade and further projected declines for the same sector during the current period.
 Tucker (2008), attributes this to … a far more diverse workforce in terms of age,

ethnicity, race, religion, [and also] in terms of skilled and unskilled, and exempt

and nonexempt.” This workforce diversity could be seen as symptomatic of the

continued transition from a manufacturing economy—where people were called

upon to perform routine industrial tasks mostly in factories.

Although white workers are projected to maintain almost 80 percent of jobs in the

future, the net growth by 2016 is only 5 percent in comparison to 12-16 percent for black

and Latino workers by 2016 (Tucker, 2008). The key question is will there be reverse

discrimination and if so what are the socio-cultural imperatives? Also, how will this be

relevant to EEO policies in the corporate context? Also, if workers from emerging

economies think they can maximize income potential by immigrating to rich nations, they

will increasingly view this as an opportunity for self-betterment. This creates problems

for managers when it comes to dealing with H-B visa requirements and resources spent in

added relocation, plus ballooning salaries beyond the 50th percentile based on market

salary adjustments and competition for such workers.

The presence of unions by workers who band together for their collective interest

also presents a real issue for global HR managers. Collective bargaining and other

demands by labor union workers will have to be contended with in international markets.

Lack of knowledge of the legal environment of international markets in reference to labor

unions can be costly to the MNC in terms of real cost and human capital concerns. The
presence of IMF policies and trade liberalization policies which support free market

economics in Less Developed Countries (LDC) has altered the socio-economic power

base (Martin & Brady, 2007). The notion is that MNCs have taken on an “exploitative

role” in these markets, since they have the advantage of IMF support and stakeholder

interests above support the local economy[ although they do provide jobs and income for

local workers].

Structural adjustment programs embarked on by LDCs as part of macro-

agreements with the IMF led to massive job cuts and general economic inequality, with

majority of the populations on the lower end of such policies, and severely affected

unionization in countries like Peru and Argentina (Martin & Brady, 2007). Conversely,

liberalization in Brazil and South Africa expanded unions based on an expanding base of

skilled workers and a class-based society. “..The elimination of trade barriers contributed

to deindustrialization and the collapse of large state-owned or subsidized industrial

enterprises…. And the weakening of both marketplace and workplace bargaining power”

(Martin & Brady, 2007). MNCs have shown the propensity to relocate to markets with

more “favorable” conditions. Clearly, this is not s sustainable long-term international

strategy by the MNC, although it represents real world challenges for global HR

professionals.

Cultural Imperatives for Global HR management

 Geert Hofstede (http://www.geert-hofstede.com/) has identified key cultural

dimensions and factors that impact the way business is conducted in the global

environment. His key findings are segmented into the following areas and we explore

how these affect HR in the global context. It is important for a manager with global HR

responsibilities to understand these factors and rankings and how it impacts employee

attitudes and motivations in different parts of the world. The dimensions are as follows:

Power Distance Index (PDI): This focuses on cultural attitudes to authority and

subordinate/ superior relationships. For a global manager, it is important to understand

such attitudes as it informs the way employees and subordinates interact. Knowledge of

the index and how a specific culture ranks in comparison to the home office culture is

very critical in employee development and the development of morale in the work place.

India has a higher PDI score than the United States, which means culturally, managers

are viewed with authoritative power and there is a strong sense of formal hierarchy within

organization. Conversely, the subordinates typically refer to their superiors by their first

name and there is much more of a flat organization, although managers retain authority

over the collaborative decision making process in the United States.

Individualism: The United States ranks high on individualism, which means workers are

motivated by singular extrinsic and intrinsic rewards such as recognition and career

advancement. There is enlightened self-interest even when individuals collaborate on

teams and projects. India has a more collectivist cultural approach although rapid
industrialization and globalization is changing such attitudes amongst younger workers.

Evidence of such developments can be seen in Bangalore and other industrialized parts of

India which leads the charge towards the “flat world”.

Masculinity: This reflects attitudes in reference to gender relations and a culture

dominated by males. With the advent of the feminist movement and civil rights

advancements, women are on equal footing with men in both professional and social

frameworks in America. Conversely an international manager would need to be aware of

such practices in a male-dominated society such as Saudi Arabia. It is important to

understand such realities when operating in a society with a high masculinity index

Uncertainty Avoidance Index: This measures the risk averseness or risk tolerance of a

specific culture. This is important in examining openness or resistance to global mobility

within a specific organization. It also helps a manager determine how to help current

employees develop Knowledge skills and abilities (KSAs) to compete and operate within

the global context.

Long-term orientation: This measures the virtues of respect for tradition and

perseverance and is important in measuring the attitudes and motivations of employees in

a foreign culture. Key questions are will employees be entrepreneurial or just operate

within the status quo? What kind of incentives will motivate employees to drive the

business to new heights? What kind of recruitment strategy should be implemented in a

specific market?
 These factors are important as they provide an important yardstick for HR

professionals to link strategic objectives to customized local HR initiatives. HR cannot

operate within a global context by ignoring these imperatives since it is a recipe for

disaster. A lack of cultural intelligence will sabotage successful implementation of

corporate processes in an international context. This is not to suggest that corporations

should ignore Home office core values and mission statements in favor of prevailing

local customs, but to find linkages and common ground between the home and host

cultures for success. A core value of integrity or fairness specific to a US based firm can

be translated to the Indian culture since we can assume the universality of such a concept.

Nonetheless, it is important to understand what quality of work life (QWL) means in

America versus India. Will Indian workers be motivated by telecommuting or having

time off to celebrate Diwali [recognized by the US firm as an important holiday]?

It is important that implementation of global diversity must not only represent a

check list nut represent true open-mindedness for maximum efficiency. This creates an

inclusive environment which truly engages stakeholders across the organization. When

workers a truly engaged, they perform at optimum levels, which enable the organization

to effectively harness total work performance related to maximum output for the

corporation.
 Summary

Globalization is here to stay and companies in a mature state of growth in home

markets are constantly looking for new growth opportunities in new markets. Innovation

and technology are making it increasingly necessary for corporations to expand

internationally if they are to survive in today’s economy. The recent credit crunch is a

very good example of how integrated global markets have become. This because the

financial disasters suffered by companies such as Lehman Brothers and AIG affected

markets in Europe and other parts of the world. The success of the Nikkei in Japan is

closely tied to the performance of Wall Street. As a result Lehman Brothers’ problems in

America affected jobs in the UK and other markets. HR managers need to be strategically

placed to anticipate how to deal with job losses, changing macro economic trends and

shifts in operational strategies and business objectives.

Training programs that enable workers to develop and adapt to changing KSAs

must be instituted by the learning and development team within a global context. Also,

ongoing conversations with labor unions will enable corporations to avoid negative

public relations exposure should the economic depression worsen. Technology should be

used to foster cooperative competition internally, so that organizations are more agile in

anticipating market demands and new market opportunities. Conversely, technology

could be the undoing of collaboration since it could foster internal competition and

“turfism”, if workers perceive their jobs will be outsourced to cheaper labor in overseas
markets. Global HR should communicate such initiatives to forestall any rumors in this

regard.

The recent US presidential election is a clear indicator of global changes. The

president elect is a clear case for diversity of ideas and change of the prevailing order.

This is most poignant because a cross-section of US society, irrespective of race and

national origin unanimously voted for a minority to represent our interests across the

globe. The US president oversees the world’s most powerful and largest economy [hence

he is the CEO of the largest corporation in the world]. This is because liberal democracy

is representative of free market policies which dictate the operations of MNCs across the

globe. Weisman (2008) reports “Mr. Obama must cement support in Red States he

flipped and Blue States he struggled in, placate liberal activists and minority groups

whose electoral boost was crucial, and form a government that” . Obama has met with

Hilary Clinton [who represents progress for women in the work place], in reference to a

possible role in his cabinet. He has also repeatedly made a case for multilateralism in

dealing with global governments. If this does not make a case for Global HR, I am not

sure what does.

Introduction
The premise for discussion in this course – and for our discussion of the textbook (Mead
and Andrews, 2009) on which the course is based – is that a systematic and critical
understanding of 'culture' is important for international managers. You will study the
importance of culture in management and develop skills that will help you to analyse
when national culture is, and is not, an influence on decision-making.

In studying this course you should enhance your current performance as a student and/or
as a practitioner of international management. In addition, you should enhance your
career prospects as a manager working in contexts where an understanding of cross-
cultural issues is an important ingredient for success.

Aims & Objectives

When you have completed your study of this course you will be able to:

• identify some of the factors that influence how decisions are made in cross-
cultural management contexts
• identify, describe and explain key models used for comparing cultures, critically
assessing the practical value of these in the context of cross-cultural management
decision-making
• critically assess some of the ethical issues inherent in cross-cultural and
international management decision-making against a background of
‘globalisation’ and ‘culture shift’
• identify, describe and explain significant aspects of overlap between national and
organisational cultures, critically assessing the impact of culture-specific
expectations defining these on international HRM decision-making
• identify and analyse the role of effective communication in contexts for
international and cross-cultural management generally, and specifically in the
field of international marketing
• critically discuss the role that managers play in response to stakeholder
perceptions of wants and needs and in the design and administration of systems
for managing incentives and rewards
• identify and analyse how disputes and conflicts arise, and how they might be
resolved in cross-cultural management contexts
• demonstrate skills relevant to analysing and managing staffing decisions in
headquarters and subsidiaries of international organisations, taking into account
issues of diversity, such as gender.
11.1 The strategic role of international HRM
In Chapter 7 we discussed strategy; Chapter 9 dealt with structure and one of that topic's
sub-topics was control systems. These three components - strategy, structure and control
systems - were brought together in Table 13.2 from page 468 of your textbook (Hill,
2005). We begin this chapter by again reproducing that table as Table 11.1.

Table 11.1 Strategy, structure and control systems (Source: Hill 2005, p. 468)

International strategy
Structure and Multidomestic International Global Transnational
controls
Vertical Decentralised Core Some Mixed
differentiation competency centralised centralised and
centralised, the decentralised
rest
decentralised
Horizontal Worldwide areaWorldwide Worldwide Informal mix
differentiation structure product product
division division
Need for Low Moderate High Very high
coordination
Integrating None Few Many Very many
mechanisms
Performance Low Moderate High Very high
ambiguity
Need for Low Moderate High Very high
cultural
controls

A successful international company needs an appropriate structure and controls to put its
strategy into effect. Since their introduction in Chapter 7 we have referred frequently to
the four international strategies - multidomestic, international, global and transnational.
Take another look at Table 11.1 to remind yourself of six aspects of control which vary
accordingly to the strategy chosen.

The word congruent is used to indicate the degree of matching of strategy, structure and
controls. So, the aim of the HRM policies of a firm is to match people with the firm's
strategy, structure and controls. We may find, for example, that the CEO and staff
required to effectively manage a multi-domestic company are quite different from the
team required to effectively manage a transnational company. In the following sections
we will discuss the role of various HRM activities in matching people to strategy,
structure and control systems.
The management process is often described as consisting of planning, organising,
staffing, directing (or leading) and controlling. In the context of HRM, our concern is
with staffing and that is the focus of the next section.

Turn now to Hill (2005) for an introduction to IHRM and the reading by Rance (2003)
for discussion on current IHRM issues. Note how the reading comments that in some
cases IHRM is changing from managing expatriates on three-year assignments to
managing shorter overseas duties that are 'an add-on to their domestic work' (Rance 2003,
p. 36). With this in mind, also work through the article by Cherrington (2004) that
highlights the necessity of having good travel management policies and/or substituting
travel with technology.

Essay paper on Global Human Resource Management

Human resource management (HRM) is the strategic and reasoned move toward the
management of any stable organization that values resources and people, even if they are
working individually or together to add to the achievement and productively of the
objectives of the business. The expression “Human Resource Management” and “Human
Resources” (HR) have mainly take their root from the expression “personnel
management” that was used in the past to give description to the processes concerned
with managing people in the organizations.

The human resource management is developing quickly in the last several years. Thus,
human resource management has been considered as an academic theory and a business
practice that refers to the theoretical and practical technique of how the workforce can be
managed. Moreover, the HRM term includes the following activities: identifying the
firm’s human resource strategy, staffing, performance evaluation, management
development, compensation, and labor relations. On the other hand, the main strategic
role of the human resource management is to obtain success in the international business
that requires HRM policies be matching with the firm’s strategy.

Staffing Policy and Types

According to Legge, staffing policy is concerned with how to select the employees who
obtain the skills requisite to perform an exact job. Moreover, the staffing policy includes
main three types: ethnocentric, polycentric, and geocentric. The ethnocentric mind-set is
defined as the principle that the values, practices, and manners of the home country are
essentially greater than those in other nations with different culture and civilization. The
advantages of the ethnocentric mind-set include that it aids the company in transferring
its exclusive competitive skills abroad. In addition to that, the personality guided by an
ethnocentric mind-set frequently endures less tension in making sense of unfamiliar
situations, because they do not lead a person to question before held values. The
advantage of international business is contact to diverse, possibly better, ways of doing
things. Unwillingness to consider this possibility can deadly ruin the competitive border
of an individual or firm.

The second type in the staffing policy is the polycentric mind-set. A polycentric
viewpoint accepts the significance of getting used to difference, weather it is real or
imaginary, among the home country and host country. Moreover, the polycentric
manager champions the methods of foreign markets, just as progressive as the practices
of the mother company in the home nation. The advantages of polycentrism presume that
polycentrism is often characterized by the use of local managers instead of expatriates.
This can aid in terms of both reducing costs and capitalizing on local expertise. On the
contrary, disadvantages of polycentrism include that the temptation to champion the ways
of a foreign nation can lead managers to abandoning their home-country mind-set in
favor of the host country. Thus, it can be difficult to implement skills in competencies in
foreign affiliates from the home office. This could reduce the company’s competitive
advantage.

Managing international assignments

Managing international assignments can be a complex process. And it can be both costly
and time consuming, especially if something goes wrong. So you need a strategic partner,
one who understands and is supportive of your company values and goals. Not just now,
but as your business changes and grows.

At Sterling, we believe that excellence comes with being more than just a service
provider. And we know that to provide a truly superior service, we need become an
extension of your HR team. We make it our business to know our clients’ challenges and
ambitions, just as well as we know our own. We ask what matters most to them, and
make sure that these are the areas where we excel.

What does this mean for you?

Improved service delivery: an account team that works in partnership with your HR
team, reducing your administrative burden and relieving your stress;

Reduced overheads: our focus on process efficiency and problem-solving means you get
impeccable quality, at attractive prices;
Decreased ‘noise’: our account handlers are the best in the business, and satisfied
assignees means fewer headaches for you;

Rapid project start-up: a thorough implementation process need not mean lengthy start-
up times, our stringent project planning means we really hit the ground running;

Reduced risk: we’re a stable partner for turbulent times: with steady growth and low
levels of corporate debt, you can count on us.