QUESTION 1

INTRODUCTION

In the age of global economy, dealing with different sets of workforce from different

nationalities and cultural background would be more prevalent nowadays. Globalization is

forcing existing managers to abandon their erstwhile rather parochial outlooks for broader

horizons, and pockets of good practice in intercultural training are beginning to establish

themselves[ CITATION Ran00 \l 1033 ].

In the case of Medical Precision System (“MPS”), different HR nationalities arising from their

expansion to overseas region specifically Europe certainly poses HR challenges for MPS to

overcome. There are after all a number of critical differences between the North American and

the European context[ CITATION Chr04 \l 1033 ].

AMERICAN VS EUROPEAN MODELS OF HUMAN

RESOURCES MANAGEMENT (“HRM”)

(Question 1 (a))

In comparing the American (“United States of America or USA”) and European HRM models,

we can review based on the following perspectives:-

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Table A

Perspectives/Dimensions American European

1 State regulations Low Trade Union Strong Trade Union

2 Individualism vs Collectivism Individualistic Collectivism

State regulations

Under the institutional perspectives, a major difference between HRM in the USA and Europe is

the degree to which HRM is influenced and determined by state regulations [ CITATION Chr04 \l

1033 ]. Generally speaking, legislation affording employees consultation and negotiation rights is

stronger in Europe than in USA [ CITATION Ton06 \l 1033 ].

HRM in Europe differs from American in the context of the degree of employment protection,

the legislative requirements on pay and hours of work and legislation on forms of employment

contract[ CITATION Chr04 \l 1033 ][ CITATION Tay05 \l 1033 ]. The EU’s preferred “social market”

approach, characterized by comparatively high levels of labor regulation and strong trade unions,

contrast to the US “free market” approach which—apparently—affords employers greater

autonomy[ CITATION Mor04 \l 1033 ].

Europe is the region of the world with the largest percentages of employees in membership of

independent trade unions. In this context, the USA where membership is probably less than one-

tenth of the working population, is consider weaker [ CITATION Chr04 \l 1033 ] . Management

consults the unions in Europe; about economic goals to try to achieve a harmony of interests. In

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most European countries, there is legislation requiring employers over a certain size to recognize

unions for consultative purposes[ CITATION Chr04 \l 1033 ].

Thus, in MPS we can see strong union presence in the United Kingdom (“UK”) and Sweden

operations. In UK, Joe Mendes didn’t understand this perspective when he started negotiation

with the unions to the extent suggesting that one union representing the rest in the negotiation

process. Whilst in Sweden, the lack of understanding of this dimension leads to rejection of the

Swedish workforce of targets set under performance management scheme.

Individualism vs Collectivism

US culture is significantly more individualistic, achievement oriented than most other

countries[ CITATION Chr04 \l 1033 ][ CITATION Bal00 \l 1033 ]. And more short term

orientated[ CITATION Hof09 \t \l 1033 ] . One manner in which this can be clearly seen is on the

rewards and remunerations policy.

The predominant conventional wisdom is that USA is the true home of pay for performance, and

most particularly individual performance-related pay. It is quite common in the USA; the

adjustment to individual salaries is aimed at motivating and rewarding individual

performance[ CITATION Ton06 \l 1033 ][ CITATION Wal \l 1033 ] [ CITATION Law95 \l 1033 ].

Compared to Germany, a social market economy with over half of the private sector which

themselves comprise more than three-quarters of all employment, offer some form of payment

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by results. This applies similarly to Sweden with over 60% of manual employees goes with

payment by results, often on a team basis [ CITATION Ton06 \l 1033 ] . Germany society culture

places more responsibilities towards society[ CITATION Hof09 \t \l 1033 ].

In more communitarian cultures like France and Germany, it may not be so successful for an

American version of pay-for-performance to be implemented. Employees may not accept that

individual members of the group should excel in a way that reveals the shortcomings of other

members[ CITATION Tro97 \l 1033 ].

Thus, as seen in the Sweden operation, collectivism can be shown with many interesting ideas

and innovations emerged from the cellular manufacturing process. Whilst in the French plant,

with the French being a high power distance culture, the workforce preferred to have an

authoritative line manager to direct them towards their work tasks.

EUROPEAN MODEL OF MANAGING HUMAN RESOURCES

(Question 1 (b))

With the advent of the European Union (“EU”) created in 1992, there is convergence of the

nations into a single institution. However, we need to bear in mind, these nations in the EU have

a different history, language and geography as compared to USA where a single institution

evolved[ CITATION Chr04 \l 1033 ].

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Maurice and Sorge have identified considerable national variations in how the firms in the same

industry and using similar technologies structured and work processes[ CITATION Ton06 \l 1033 ].

The French approach to management development is strongly shaped by the education system

and the resulting conception of the role of senior manager. In the UK, in contrast the managerial

class is much more difficult to define and is much more diffuse[ CITATION Ton06 \l 1033 ].

In France most able students are selected for the Grandes Exoles, the most elite institutions

within higher education. It is from here that people can achieve the position of cadres – this is

similar to management in the UK [ CITATION Osb97 \l 1033 ]. In developing managers of high

potentials, a serious culture clash between French and British will result. This revolved around

the differing attitudes towards measuring potentials; while the British saw it as very important in

distinguishing between individuals, in France it is something that is taken for granted. The

French was and still a class society similar to the Indian caste system. There is 3 different levels

the cadres (managers and professional), maitrise (1st line supervisors) and non cadres (the levels

below) with their system is more hierarchical[ CITATION Hof \t \l 1033 ].

In Hirst and Thompson analysis, evidence shows multinational corporate activity is heavily

concentrated in home countries but this same evidence points also to the extent to which

European MNCs are regional in the scope of their activities. MNCs headquartered in France,

Germany, Netherlands and UK shows significant regional concentration on assets and sales.

However, French- and German-based MNCs are more home and less European focused than

their Dutch and British counterparts[ CITATION Har04 \l 1033 ].

Economic and market integration led to the creation of new European-scale companies through

joint ventures and, more tentatively, strategic alliances which may foster the emergence of a

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‘super-league’ of European MNCs. This will stimulated the deepening of international forms of

management coordination and organization within international companies, on an expressly

European dimension, more evident in some sectors than others[ CITATION Har04 \l 1033 ].

Developments at the level of the EU affect all organizations in Europe. In a historically unique

experiment, EU countries have agreed to subordinate national legislative decision making to

European-level legislation. These developments have indirect effects upon the way people are

managed and direct effects through the EU’s adoption of a distinct social sphere of

activity[ CITATION Chr04 \l 1033 ].

The domestic market and scale of production have become now regional; Europe is the new

domestic context. In the same context, managing HR via a European model will be duly created

in time to come as the nations in the EU. Mendez’s (1994) studies show progressive deepening

of Groupe Danone management structures at European level. In addition, development of a

European regional dimension to management organization of European operations of MNCs

headquartered outside Europe is also evident in North America[ CITATION Har04 \l 1033 ].

The ever expanding reach of MNCs in an increasingly competitive and uncertain global market

place undoubtedly raises a host of questions about the critical role of managing human resources

across borders[ CITATION Box07 \l 1033 ].

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CONCLUSION

The process of constructing a European economy is driving industrial sectors towards European-

level production and/marketing strategies at varying speed.

The convergence view has doubtless contributed to shaping similar forms of organization across

countries, as well as similar curricula in business education. Most of these views centre around

convergence towards a US model—the model of the richest country in the world, a view that

convergence may be towards regional models.

Another is that, because of the increasing economic and political integration of EU countries,

there is convergence towards a distinctly European practice is under way [ CITATION Chr04 \l

1033 ].

And there is, of course, a third theoretical possibility, that European firms are so locked into their

respective national institutional settings that no common model is likely to emerge for the

foreseeable future. Managers in each country operate within a national institutional context and

share a set of cultural assumptions. Neither institutions nor cultures change quickly and rarely in

ways that are the same as other countries. It follows that managers within one country behave in

a way that is noticeably different from managers in other countries. A view generally held under

Hofstede’s culturalist perspective[ CITATION Chr04 \l 1033 ].

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QUESTION 2

Part (a)

INTRODUCTION

Generally, in examining cross-national differences in managing organizations, there are 2

theoretical approaches to be adopted; either a cultural or an institutionalist approach.

Cultural theories investigate the role played by culture in management practices. They generally

adopt a definition of national culture inspired by the everyday language: culture is the way of life

of a group of people. There are obvious differences (such as in dress, behavior and interpersonal

interactions) and implicit differences (such as in values, assumptions about how things should

be)[ CITATION Har04 \l 1033 ].

Institutional theories focused on the institutional environment [ CITATION Har04 \l 1033 ]. Key

institutions are the state, legal system, financial system and family. Together, the forms they take

and their economic role are seen to shape different ‘national business systems’ [ CITATION

Ton06 \l 1033 ].

The institutional perspective sees the institutions of a society (usually) as being the

environmental structures that keep them distinctive. It tends to emphasize the distinctiveness of

the social arrangements in a nation and examines some of the institutions likely to shape the

social construction of an organization and postulates that the structure of organizations in a

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country reflects the country’s particular institutional arrangements—the societal effects

[ CITATION Chr04 \l 1033 ].

One of the advantages of the societal approach is that it identifies clear elements of culture that

arguably have an effect on organizational structure. However, a country’s culture does not grow

exclusively from its institutions. History, language and geographical location alone can shape

culture to a great extent[ CITATION Chr04 \l 1033 ]

CULTURALIST APPROACH

These theories rest on the hypothesis that implicit differences in national cultural values or

assumptions are related to diverging managerial beliefs and actions. Focusing on cultural

dimensions provides the means for evaluating the shared experiences of people who belong to

that society. From here, they have acquired values and assumptions regarding for example, how

a manager should behave [ CITATION Har04 \l 1033 ]

National culture is said to impact organizations by selecting and framing the particular sets of

organizational values and norms that managers perceive as being consistent with the basic

assumptions that are developed within their countries.

Under the cultural perspectives, differences in national culture are important in terms of IHRM

because of their potential impact on organizational culture [ CITATION Ton06 \l 1033 ]. Per

Hofstede, it can be seen that European society by itself, has wide ranging cultural differences

amongst its nations. In terms of power distances versus individualism (Refer Appendix A), UK

share similarities with USA of low power distances and high individualism compare to France

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where they are more high power distance and lower individualism compared to

American[ CITATION Lau10 \l 1033 ]. Whilst the Swedish have similar low power distance but

lower individualism compared to American [ CITATION Hof \t \l 1033 ] . (Reference to Appendix A

for Hofstede’s cultural clusters: on power distance versus individualism)

Studies by Hofstede which presents values as the core of culture and Trompenaars which argues

that meanings are the essentials part of culture would make significant understanding of what

cultural theories represent [ CITATION Har04 \l 1033 ] [ CITATION Hof \t \l 1033 ].

Using Hofstede theories, we can understand why the French workforce in Lyons preferred to

have a line manager with an authoritative air. The French generally values high power distance

whereby the less powerful workforce accept the unequal power distribution in the organizations [

CITATION Ton06 \l 1033 ]. Among the 53 countries around the world for which Hofstede was able

to compute a Power Distance Index, France ranked 16th from the top, which is well above

average, and the USA and Netherlands 38th and 40th, respectively, both below average. These

positions confirm the inequality in the French system and the relative greater equality in the 2

other countries[ CITATION Hof \t \l 1033 ] . Subordinates are often told what to do and do not feel

entitled to discuss their superiors’ decisions. In addition, French is strongly shaped by their

education system whereby the management development goes through elite institutions to

achieve the position of cadres. These cadres’ position leads to organization being highly

hierarchical; importances of boundaries between different levels remain sharply distinct, with

cadres typically adopting an authoritarian management style[ CITATION Ton06 \l 1033 ].

Looking at the Swedish workforce, they are low power distance compared to the French but just

as individualistic. Belonging to a social market economy, the Swedish workforce operates with

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little direct supervision. They are readily ‘bypass the hierarchy with no constrained by formal

authority relationship. The Swedish are democratic in their decision making as they have the

tradition of seeking agreement through compromise and negotiation[ CITATION Har04 \l 1033 ]

Thus, considerable enthusiasm for feedback mechanisms in the cellular manufacturing processes

and many interesting ideas and innovations emerged as a result of this cultural background. Why

they baulked at the performance management scheme (“PMS”) had mainly to do with being

culturally consensus-driven society with payments by results seems of more significance to the

workforce with generally 60% of manual employees in the highly unionized metal and

engineering sector subject to, often on a team basis, in 1994 study by Kjellberg [ CITATION

Ton06 \l 1033 ].

Part (b)

These perspectives could assist HR managers to explain the cultural diversity in an international

HRM context and such differences in national culture are important in terms of HRM because of

their potential impact on organizational culture, an important element as it forms a source of

competitive advantage. Thus, the role of HRM practices becomes important in creating and

maintaining this culture[ CITATION Ton06 \l 1033 ].

Understanding this perspective assist in dealing with all the main areas of HRM from recruitment

& selection, training & development, rewards & compensation, repatriation, managing

multicultural teams and diversity and managing performance.

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In the case of MPS, understanding the cultural perspectives can assist in formulating IHRM

strategy in the following aspects:-

 Deploy a recruitment policy of taking cultural perspectives of various countries MPS

operate in whereby in the case of the France operations, recruiting a manager who is

technically proficient and authoritative for the Lyons operations in line with the cultural

values of the French workforce due to their culture values of high Power

Distance[ CITATION Hof \t \l 1033 ].

 Imposed a performance management system that measure team success for the Swedish

workforce in Uppsala. Firms may need to address group-oriented information, such as

reward systems based on group performance instead of individual performance, and

structures based on teamwork[ CITATION MaR09 \l 1033 ]. Pay-for-performance, for

example, can work out well in the cultures like the USA, the Netherlands and the UK,

which are more individualistic culturally as compared to the Swedish which places values

in collectivism[ CITATION Har04 \l 1033 ].

Whilst there are emphasis on individual-based pay systems in the U.S., which reflects a

highly individualistic cultural orientation there is a growing interest in industry to

recognize team achievements with pay. There is a need for both remuneration

practitioners to understand the types of situations most favorable for the use of team-

based pay[ CITATION Bal00 \l 1033 ].

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  Training and development with more emphasis on a team building for the Swedish

workforce. Training with emphasis on high individualistic and ‘gung ho’ culture of an

American culture which exists in MPS be replaced with training that emphasizes on team

building and team performance. As evidenced in the Swedish workforce, ideas and

innovations emerges from the cellular manufacturing process. This is mainly due to

Swedish workforce of collectivism.

Thus, if managers recognize both the cultural diversity and its potentially positive impacts, as in

the case of the synergistic organization, the human resource policy will be to create a truly

international workforce and to use the similarities and differences among the nationalities to

create new forms of management and organization.

CONCLUSION

The culturalist approach is very popular in International HRM research. National culture is used

as a way of explaining why Multi National Corporations (“MNCs”) of various national origins

adopt different HRM practices and the way in which MNCs adapt to host country cultures.

By using culturalist theories such as Hofstede's Cultural Dimensions as a starting point, an MNC

can evaluate the approach, decisions, and actions based on a general sense of how the society

might think and react to when it decide to set up operations in a particular country [ CITATION

Hof10 \l 1033 ].

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It is through the understanding of the cultural perspectives of various work forces in the

countries MPS operate in, relevant and appropriate international HRM strategy can be

formulated by the Director of Human Resources for MPS.

Words count: 2,834

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