CHAPTER 12 NATIONAL DIFFERENCES IN HRM:

KNOWING WHEN AND HOW TO ADAPT

WHY TO NATIONS DIFFER IN HRM?

National Context

Exhibit 12.1

INSTITUTIONS

NATIONAL & BUSINESS CULTURE

The National Context and HRM

KEY BUSINESS PRACTICES AND INDUCED FACTOR CONDITIONS

NATIONAL DIFFERENCES IN HRM POLICIES

Recruitment Selection Training and Development Performance Appraisal Compensation Labor Relations

SOCIAL INSTITUTIONS
Include the family, educational,

economic, and the political and legal systems Closely linked with national and business culture

THREE TYPES OF ISOMORPHISM

Coercive Mimetic Normative

THE NATIONAL CONTEXT AND KEY BUSINESS PRACTICES

Education and training of labor pool Laws and cultural expectations for selection practices Types of jobs favored

The national context and key business practices, continued

Laws and cultural expectations of fair wage and promotion criteria Laws and traditions regarding labor relations

RESOURCE POOL
The resource pool represents all

the human and physical resources available in a country - both from natural and induced factor conditions

RECRUITMENT
Attract qualified applicants

US RECRUITMENT STRATEGIES
Open and public See Exhibit 12.3

Private Employment Service State Employment Service Universities Promotion from Within Employee Referrals Walk-ins Newspapers

10

20

30

40

50

Percent Recruited

Office/Clerical

Production/Service

Professional/Technical

Sales

KOREAN RECRUITMENT: A COLLECTIVIST APPROACH

Backdoor School contacts

SELECTION

THE US APPROACH TO SELECTION

Match skills and job requirements Universalistic criteria See Exhibit 12.4

APPLICATION

INITIAL INTERVIEWS

EMPLOYMENT TESTS

REFERENCES CHECKS PRELIMINARY SELECT OR REJECT FINAL INTERVIEWS

HIRING DECISION

SELECTION IN COLLECTIVIST CULTURES

The in-group Preference for family Value personal characteristics High school and university ties substitute for family membership

IMPLICATIONS FOR THE MULTINATIONAL

Managers must follow local norms to get best workers Often a tradeoff with benefits of home country practices

TRAINING AND DEVELOPMENT

DIFFERENCES IN TRAINING AND DEVELOPMENT

Result from: differences in educational systems values regarding educational credentials cultural values regarding other personnel practices

Exhibit 12.5 shows training systems used in different countries

Type Cooperative

Example Countries Features and Sources of Institutional Pressures Austria, Germany, Legal and historical precedents for cooperation Switzerland, and some Latin among companies, unions, and the government. American Countries USA and the UK Lack of institutional pressures to provide training. Companies provide training based on own cost-benefits. Low labor turnover encourages investment in training without institutional pressure Government identifies needs for skills and uses incentives to encourage companies to train in chosen areas. No institutional pressures for companies to train. Government provides formal training organizations.

Company-Based Voluntarism/high labor mobility Voluntarism/low labor mobility State-Driven Incentive Provider

Japan

Hong Kong, Korea, Singapore, Taiwan, China Developing countries in Asia and Africa, transition economies

Supplier

Exhibit 12.5 shows skills taught by U.S. organizations

Remedial/Basic

Sales Clerical Procedures Technical Computer Management

0% 20% 40% 60% 80% 100%

 Standardized national system = a well trained labor force Affects over 65% of 15 to 16 year olds Collaboration of employers, unions, and state See Exhibit 12.6 - Dual system

VOCATIONAL EDUCATION IN GERMANY

DUAL SYSTEM
Part-time Lower Vocational School + In-Plant Training

SKILLED WORKER CERTIFICATE EMPLOYMENT EXPERIENCE COLLEGE LEVEL Vocational Training Employment as MEISTER

MANAGEMENT DEVELOPMENT: U.S.A.

Senior level managers often identify managerial potential Appraisals of managerial readiness Assessment centers Mentoring "Fast track" careers

MANAGEMENT DEVELOPMENT: TRADITIONAL JAPANESE STYLE

Recruits directly from universities Join the company as a group Selected on personal qualities and fit with the corporate culture Mutual commitment of permanent employment

Management development: traditional Japanese style, continued

Similar pay and promotion for first ten years - age seniority Informal recognition of those high performance managers

SHIFITING SOCIAL INSTITUTIONS: PRESSURES FOR CHANGE

Asahi ties promotions to evaluations Matsushita uses merit pay for managers Honda is phasing out seniority

IMPLICATIONS FOR THE MULTINATIONAL

Examine feasibility of exporting training IHRM orientation affects training needs of local managers Locations advantages - see Exhibit 12.9

Colombia Germany U.S. Britian Czech Republic Japan Singapore 0 500 1000 1500 Math Science

PERFORMANCE APPRAISAL
Identifying people to reward,

promote, demote, develop and improve, retain, or fire

U.S. PERFORMANCE APPRAISAL SYSTEM

Performance standards Performance measures Performance feedback Human resources decisions Must meet legal requirements

PERFORMANCE APPRIASAL IN COLLECTIVIST CULTUES

Managers work indirectly to sanction poor performance Often avoid direct performance appraisal feedback

COMPENSATION
Wages and salaries, incentives

such as bonuses, and benefits such as retirement contributions

COMPENSATION IN THE U.S.

Wages and salaries differ based on two major factors external internal

 Base salaries for positions Skill and educational requirements Age Marital status and family size may count Bonuses

COMPENSATION IN JAPAN: TRADITIONAL APPROACH

NEW MERIT (Japanese style)

Can affect pay raises to a greater degree the traditional position/seniority system Does not match the Western view - Nenpo Stresses attitudes as much as performance

EX 12.10 THE JAPANESE PAY RAISE FORMULA

INDIVIDUAL'S BASE SALARY

PERCENT RAISE FOR EACH POSITION

INDIVIDUAL'S MERIT RAISE PERCENT

RAISE

SENIORITY PERCENT

EVALUATION/COMPENSTATION: Implications for the Multinational

Match HRM orientation Seek location advantages in wages See Exhibit 12.12 next

Country USA Korea Sri Lanka Denmark Germany Greece Japan

Average Average Cost of Hours Labor Per Worked Per Hour in U.S. Week 19.20 38 6.71 47 0.47 43 22.96 32 26.18 33 8.91 36 20.89 36

A COMPARATIVE VIEW OF LABOR RELATIONS

PATTERNS OF LABOR RELATIONS DEPEND ON:

Historical factors Ideology reasons Management views of unions

UNION MEMBERSHIP DENSITY

Germany: estimated 40% belonged to trade unions U.S.A.: 14.2% nonagricultural workforce--down from a high of over 35% in the early 1940s Denmark: over 80% unionized Great Britain: approximate 50% unionized

SOME HISTORICAL UNION DIFFERENCES

German formalized, legalistic bargaining centralized between large unions and large corporations works council

 French--militant/strong ideologies U.S.--"bread and butter" issues--wages, benefits, and working conditions

UNION STRUCTURES
Enterprise Craft Industrial Local Ideological White collar/professional

IMPLICATIONS FOR THE MULTINATIONAL

Must deal with local labor practices A factor in location choice see Exhibit 12.16

EXHIBIT 12.16 WHO GETS ALONG?

Russia France Mexico U.S. Singapore Norway
0 2 4 6 8 10

Ratings of Productive Industrial Relations

CONCLUSIONS
National context and HRM contrasts between individualist U.S. v. collectivist Recruitment and selection Training and development Performance evaluation and compensation

 Unionization Implications for location decisions