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LECTURE INTERNATIONAL HRM & Culture

Ruchika Faculty, DIAS

A definition and description of culture

Culture is the characteristic way of behaving and believing that a group of people have developed over time

Development of cross-cultural competences

What is IHRM?

Process of acquiring, developing, allocating and utilizing human resources in a global corporation to achieve organizational objectives irrespective of geographical boundaries.
IHRM is the process of procuring, allocating, and effectively utilizing human resources in a multinational corporation.

In global firms, human resource managers must achieve two somewhat conflicting strategic objectives:

Problem of integration: Integration refers to control and coordination from Headquarters. The mangers need to integrate human resource policies and practices across a number of subsidiaries in different countries so that overall corporate objectives can be achieved. Problem of Differentiation: Differentiation refers to flexibility in policies and practices at the local subsidiary level. Approaches to HRM must be sufficiently flexible to allow for significant differences in the type of HR policies and practices that are most effective in different business and

How IHRM is different from HRM?


1.

Encompass more functionsrequires a much broader perspective on even the most common HR activities.

2.

Have more heterogeneous functions


International

taxation: Expatriates are subject to international taxation, and have both domestic (i.e., home-country) and host-country tax liabilities. Therefore tax equalization policies must be designed to ensure that there is no tax incentive

How IHRM is different from HRM?


International

relocation and orientation: involve arranging for pre-departure training, providing immigration and travel details, providing housing, shopping, medical care, recreation, and schooling information etc. Various administrative services for Expatriates: is a time-consuming and complex activity because policies and procedures are not always clear cut and may conflict with local conditions. Selecting, training, appraising local and international employees and managing hostgovernment relations in a number of countries

How IHRM is different from HRM?


3.

Involves constantly changing perspectives


In U.S, family meansspouse and children In India, Family meansspouse, parents and children In certain countries where polygamy is practices, family meansmultiple spouses and children

4.

Requires more involvement in employees personnel lives

Many multinationals have an International HR Services section that coordinates administration of various programmes and provides services for PCNs and TCNs such as handling their banking, investments, home rental while on assignment, coordinating home visits, and final

How IHRM is different from HRM?


5.

Influenced by more external sources

HR mangers working in an international environment face the problem of designing and administering programmes for more than one national group of employeesmanage expatriates from firms home country (PCNs), host-country nationals (HCNs), and third-country nationals (TCNs)

6.

Involves a greater level of riskexpatriate failure, direct costs (salary, trg cost, travel and relocation expenses), indirect cost (loss of mkt share and damage )

Involves a greater level of risk


If

HR policies antagonize host-country unions or important political group, the MNC may be asked to leave the country. Terrorism is another aspect of risk exposure relevant to IHRMHR department may need to devise emergency evacuation procedures for highly volatile assignment locations.

Approaches to IHRM
Four approaches given by Ken Kamoche are: Ethnocentric:
The

MNC simply exports HR practices and policies used in the home country to subsidiaries in foreign locations. The foreign subsidiaries do not have much autonomy and the strategic decisions are made only at the headquarters. The key positions are managed by personnel from the headquarters. In short, the subsidiaries are managed by expatriates from the home country.

Polycentric:
Subsidiaries

are independent from headquarters. HR policies are adapted to meet the circumstances in each foreign country. Local managers in the foreign country are hired to manage HRM activities. The MNC treats each subsidiary as a distinct entity with some autonomy. The subsidiary is managed by local nations.

Regiocentric
Represents

a regional grouping of subsidiaries. HR policies are coordinated within the region to as great extent as possible. Subsidiaries may be staffed by managers from any of the countries within the region. Coordination and communication within the region are high, but they are quite limited between the region and the MNCs headquarters. It utilizes a wider pool of managers but in a limited way. Personnel may move outside their countries but only within the particular geographic region.

Geocentric:
HR

policies are developed to meet the global network of home-country locations and foreign subsidiaries.
take a worldwide approach to their operations, recognizing that each part makes a unique contribution with its unique competence.

MNCs

Cultural Models
Geert Hofstede: Four Cultural Dimensions:
1. 2. 3. 4. 5.

Individualism and Collectivism High and Low Power Distance High and Low Uncertainty Avoidance Masculine and Feminine Values Short term and long term orientation

Edward T. Hall: Two Cultural Dimensions:


1. 2.

High and Low Context Monochronic and Polychronic Time

Individualism-Collectivism

Individualism:
Emphasizes

the independence and individual achievement United States, Australia, Canada

Collectivism:
Emphasizes

the needs and goals of the group, rather than the individual Asian and Latin American countries

Power Distance

High power distance:


Accepts

differences in power as normal Assumes all people are not created equal Mexico, India, Singapore

Low power distance:


Power

distinctions are minimized New Zealand, Denmark, Israel

Uncertainty Avoidance

High uncertainty avoidance:

Uncomfortable in unstructured and unpredictable situations What is different is dangerous. Prefer rules, plans, routines Japan, Belgium, Greece
Comfortable with ambiguity and unpredictability What is different is interesting. Can work independently without supervision Jamaica, Hong Kong

Low uncertainty avoidance:


Masculine-Feminine Values

Masculine Value Societies:


Men are assertive, tough, and ambitious Women are modest, tender, and focused on the quality of life Japan, Venezuela, Italy Gender roles overlap Men and women value tenderness and care about the quality of life Sweden, Norway, Denmark

Feminine Value Societies:


High context-Low context

High-context Culture:

Meaning is communicated through nonverbal behavior and the nature of interpersonal relationships Messages are implied and context sensitive Japan, China, Greece, Mexico Meaning is expressed primarily through language Messages are direct, factual, and objective England, United States, Germany

Low-context Culture:

Monochronic Time and Polychronic Time

Monochronic time:

Events are scheduled as separate items, one thing at a time Time is valuable; schedule and deadlines are important North America, Northern Europe

Polychronic time:

Schedules are not very important, deadlines are missed, interruptions are tolerated

Americans are monochronic people. Generally Japanese are polychronic people.

Cross cultural sensitivity

One-on-One Cultural Sensitivity Cultural sensitivity can play an important role on the personal level. Companies courting employees or executives from countries with other social norms or beliefs would do well to respect those beliefs. A failure to do so can lead to everything from personal offense taken to certain cultural insensitive moves (such as not taking into account a person's cultural dietary restrictions during a business lunch) to the failure to do business entirely if a company consistently offends the culture of a potential

Cultural Sensitivity and Language When businesses need to sell products or produce advertisements in foreign countries, often these use the host country's own language. Being insensitive to the nuances of a foreign language can create real cultural relations problems for companies

Cultural Sensitivity and Employees As globalization has companies frequently outsourcing work or recruiting global professionals from a range of countries, many firms have instituted cultural sensitivity training and expanded the range of languages into which their sales aids and brochures are translated. A failure to appreciate cultural differences like language and traditions can alienate foreign employees and, in the case of materials not translated into their language,

Other benefits

Higher productivity Effective team work Empowerment and participation Higher moral Overall development Cultural awareness Respect for other cultures Better performance and employee relations

LECTURE
IHRM trends and Future Challenges

MAJOR TRENDS IN THE GLOBAL LABOR MARKET

The global economy makes it easier for people to move from one country to another, seeking a better job and a higher standard of living. At the same time, it has led to ethnic and cultural tension and conflict within a country where immigrants are not viewed positively as new labor force entrants contributing to economic growth and widespread prosperity.

Issues of concern raised by GLOBALIZATION

Globalization has destroyed manufacturing jobs in wealthy and developed countries. In U.S.many manufacturing jobs have packed up and left, in search of lower wages and decreased problems with labor unions.
The

wage levels of unskilled workers in these affected nations has declined, as unskilled workers loose their higher-paying manufacturing jobs and cannot transfer what they know into other positions of employment, they are forced to take lower-paying unskilled jobs elsewhere to survive.

Issues of concern raised by GLOBALIZATION

Globalization has also created the propensity for companies to move to countries with fewer labor and environmental regulations. (Because stringent labor laws and environmental restrictions can increase the costs of goods and services, resulting in reduced profits and competitiveness ).

In doing so, many MNCs are allegedly taking advantage of unskilled and unprotected workers in developing countries.

The primary challenge for the global economy has become to ensure that international economic integration does not contribute to domestic social disintegration.

Issues of concern raised by TECHNOLOGICAL ADVANCEMENTS

Advances in technology have not only improved the worldwide communications network but also increased the rate of creative destruction.
Creative

destruction is the continuous scrapping of old technologies to make way for the new. The displaced workers due to creative destruction become enraged at MNCs that value only the efficiencies of the marketplace and demand protection for their jobs from politicians who promise to defend their rights.

Issues of concern raised by TECHNOLOGICAL ADVANCEMENTS

The continued premium of MNCs on greater efficiency and cost reduction is increasing number of workers in developed countries such as U.S., Germany, and Japan to blame domestic job loss on outsourcing to India, China, and other low-wage countries.

Issues of concern raised by LABOR FORCE DEMOGRAPHICS AND MIGRATION

There are significant changes in worldwide external labor market and internal workforce demographics.
Many

of these changes towards greater diversity have been due to changes in migration patterns with increased transportation opportunities and more open national borders to support word trade. If more young people move to developed countries from developing countries, this condition might pose direct economic implications because the latter will fall further behind the rest

Issues of concern raised by LABOR FORCE DEMOGRAPHICS AND MIGRATION

Countries such as Japan and Switzerland, is facing the challenge of overemployment where the domestic labor supply is insufficient to fill the needs of the domestic work demand, have periodically relaxed their work visa and immigration requirements to allow the entrance and temporary legal work status of workers from less developed countries. Five major countries which officially welcome international migrants as permanent residents

Arguments in favor of immigrant workers:


Immigrant

workers are usually cheaper to employ than native workers in developed countries employers prefer to hire them to remain cost competitive. Immigrants are willing to do jobs that natives spurn.
In

South Korea, local laborers would not want to perform the so-called 3D jobs: Dirty, dangerous, and difficult

Immigrants

the

also increase the tax income base for government which further helps the

Arguments against immigrant workers:


Immigrants

might not be welcomed if large parts of a countries native population feel threatened not only because the immigrants take away jobs from local people but also because they become a source of social unrest and ethnic strife.
In

U.S.despite the benefits immigrants bring to the economy, they are increasingly seen as liabilities, not assets.

Security

rather than economic issues are forming an anti-immigrant national consciousness.

The ease with which terrorists can cross borders raises the question to many Americans

The U.S. government put a moratorium on student visas after it was discovered that a large number of the 9/11 terrorists entered the country by those means.

In contrast to the U.S., Europes immigrants come in large groups from a few countries.

This trend makes assimilation difficult with other naturalized Europeans because the immigrant communities are large enough for newcomers to

The more the developed countries attract skilled migrants, the more they are stripping developing countries of the people they need most to achieve economic development, a condition often referred to as brain drain.

Domestic migration
People

move not only across borders but also within a country, greatly affecting local labor conditions and characteristics that MNCs consider for their global business planning. Despite the restrictions and economic penalties associated with migration, more young people in rural China are moving to cities.

Issues of concern raised by EMERGENCE OF CONTINGENT WORKFORCE

Another important trend in the global labor market is the continued increase in the contingent workforcethe workers whose jobs are dependent or contingent upon present work demand. 90% of workers. U.S. employers use temporary

Cultural convergence and divergence

Cultural Divergence: The result of the restriction of a culture from the outside cultural influences;Cultural divergence is the tendency for cultures to become increasingly dissimilar with time (as opposed to cultural convergence, which is the tendency for cultures to become increasingly similar with time). Cultural convergence

Cultural convergence where different cultures become similar or even come together.

Cultural Divergence

Can happen when members of a culture move away from the core values of their culture
Usually

because they have been exposed to new

ideas.

Physical barriers
Mountains

might separate people living in different parts of a cultural region. This may cause each group to develop differently.

Example of divergence

India
Aryan

India was unified by a common Hindu culture but the arrival of Islamic influences led India to become divided into Hindu and Muslim areas.

Example of convergence

Is the creation of a common global culture. This is occurring due to air travel, newspapers, television, telecommunications, and the Internet. English language
There

is a increasing trend to use English as an international second language. Almost half a billion people speak English as their primary language.