hrm in the local context: knowing when and how to adapt

Chapter

11HRM in the Local Context: Knowing When and How to Adapt

Learning Objectives

• Understanding how the national context affects HRM practices

• Identify how recruitment and selection practices differ in various national contexts

• Identify possible host adaptations in recruitment and selection practices

Learning Objectives

• Identify how training and development techniques are used in different countries

• Identify sources of high-quality workers in different nations

• Understand how training must be adapted to host country workers

• Identify how performance evaluation and compensation practices differ in various national contexts

Learning Objectives

• Identify possible host country adaptations in performance evaluation and compensation practices for a multinational company

• Understand how labor costs vary • Have an appreciation of how the national context and

historical conditions affect the relationship of management and labor

Why Do Nations Differ in HRM?

• Because of the national context • National culture and social institutions influence how

managers make decisions regarding strategies • Countries vary widely with regards to social institutions

and national culture• Multinationals must select and implement practices

that meet national context

Exhibit 11.1: How the National Context Leads to National Differences in Local HRM Practices

• Resource pool: all the human and physical resources available in a country • Both from natural and induced factor conditions• Include quality of labor, availability of scientific

laboratories

Key Factors that Influence the Resource Pool

• The quality, quantity, and accessibility of raw material• The quantity, quality, and cost of personnel available• The scientific, technical, and market-related knowledge

available to firms

Resource Pool

• The cost and amount of capital available to firms for operations and expansion

• The type, quality, and costs of supporting institutions such as the systems of communication, education, and transportation

• Natural factor conditions: national resources that occur naturally• E.g., abundant water supply

• Induced-factor conditions: national resources created by a nation• E.g., superior educational system

Characteristics of the National Context That Affect HRM

• Education and training of the labor pool• Laws and cultural expectations for selection practices• Types of jobs favored by applicants• Laws and cultural expectations regarding fair wages

and promotion criteria• Laws and traditions regarding labor practices

Recruitment Strategies

• Walk-ins or unsolicited applications• Newspaper or Internet advertisement • Company Web site job posting• Internal job postings• Public and private personnel agencies• Placement services of educational institutions• Current employee recommendations

Exhibit 11.2: Steps in the Recruiting Process

Recruitment in the U.S.

• U.S. managers tend to see newspapers as one of the most effective recruitment methods.

• Fear that recruitment by personal contacts may result in bias against some groups.

• U.S. value open and public advertisements as a reflection of individualistic culture.

Exhibit 11.3: Most Effective Recruiting Sources for U.S. Companies

Recruitment in Korea

• Backdoor recruitment: prospective employees are friends or relatives of those already employed

• Managers are recruited from prestigious universities

Recruitment Around the World

• Individuals around the world have preferred way to find jobs

• International Social Survey Program data was analyzed

• Looking for jobs through public vs. private agencies• Individuals in former communist and socialist

societies were more likely to rely on public agencies

Recruitment Around the World (cont.)

• Advertising in newspapers and responding to newspaper ads• Both very public forms of recruitment• Individualistic societies have higher preference for

such forms• Apply directly versus asking friends/relatives for job

• Individualistic and high femininity societies more likely to favor direct application

• Socialist societies rely on asking friends/relatives

Exhibit 11.4: Preferred Ways to Look for a New Job—Public vs. Private Agency

Exhibit 11.5: Preferred Ways to Look for a New Job

Exhibit 11.6: Preferred Ways to Look for a New Job

Selection in the U.S.

• Job qualifications• Match skills and job requirements• Individual achievements• Prohibitions against nepotism—the hiring of relatives• Forbidding managers to supervise family members

Exhibit 11.7: Typical Steps in U.S. Personnel Selection

Selection in Collectivist Cultures

• Based on the in-group• Preference for family• Value potential trustworthiness, reliability, and loyalty

over performance-related background• High school and university ties substitute for family

membership

Implications for the Multinational: Recruitment and Selection

• Managers must follow local norms to get best workers• Often a tradeoff between home practices and costs of

following local traditions

Training and Development

• Need for training and development varies by country• Differences in training and development due to

• Differences in educational systems• Values regarding educational credentials• Cultural values regarding other personnel practices

Exhibit 11.8: Training Systems around the World

Exhibit 11.9: Key Specific Training and Development Characteristics of Selected Countries

Training and Development in the U.S.

• Companies with over 100 employees invest more than $60 billion in training costs.

• Management development and computer skills are the most popular.

• There is growing pressure for training as the U.S. shifts to the service sectors.

Exhibit 11.10: Skills Taught by U.S. Organization

Training and Development in Germany

• Two major forms of vocational education• General and specialized vocational schools and

professional and technical colleges• Dual system: combination of in-house apprenticeship

training with part-time vocational-school training, and leads to a skilled certificate• Meister: a master technician

German Dual System

• Stems from collaboration among employers, unions, and the state

• Costs shared between companies and state• Employers have obligation to release employees for

training

Exhibit 11.11: Skilled Worker Training in Germany

Exhibit 11.12: Germany’s Apprenticeship Program under Pressure

Training and Development in the U.S.

• Senior level managers often identify managerial potential

• Appraisals of managerial readiness based on• Assessment centers• Mentoring• “Fast track” careers

• Remains the responsibility of the individual

Training and Development in Japan

• Permanent employment• Recruitment directly from universities• Join the company as a group• Selected on personal qualities that fit the corporate

culture• Similar pay and promotion for first ten years—age

seniority• Informal recognition of those high performing

managers

Training and Development in Japan

• Shifting 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: Training and Development

• Examine feasibility of exporting training• IHRM orientation affects training needs of local

managers• Locations advantages

Exhibit 11.13: Workers of the Future: Student Math and Science Scores from Selected Countries

Performance Appraisal

• Identifying people to reward, promote, demote, develop and improve, retain, or fire

• Not everyone can climb the corporate ladder• Need to assess how employees perform

U.S. Performance Appraisal

• U.S. legal requirements regulate performance evaluation practices to ensure their fairness

• Performance evaluations must relate clearly to the job and performance

• Performance standards must be provided in writing• Supervisors must be able to measure the behaviors

they rate

U.S. Performance Appraisal(cont.)

• Supervisors must be trained to use evaluation measures

• Supervisors and subordinates must discuss appraisals openly

• Appeals procedures must be in place

Performance Appraisal in Collectivist Cultures

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

Exhibit 11.14: Cross-National Differences in Purposes of Performance Appraisals

Compensation

• Wages and salaries, incentives such as bonuses, and benefits such as retirement contributions

• Wide variations on how to compensate workers

Compensation in the U.S.

• Wages and salaries differ based on two major factors• External: include local and national wage rates,

government legislation, and collective bargaining• Internal: include the importance of the job to the

organization, its ability to pay, and the employee’s relative worth to the business

Compensation: Japan

• Traditional approach• Base salaries on positions• Skill and educational requirements • Age• Marital status and family size may count• Bonus system: employees often receive up to 30%

of their base salary during traditional gift-giving seasons

New Merit (Japanese style)

• Can affect pay raises to a greater degree than traditional position/seniority system

• Nenpo system: based on yearly performance evaluations that emphasize goals • Although goals are not always the same as in

Western companies• Stresses attitudes as much as performance

Exhibit 11.15: The Japanese Pay Raise Formula: Changing the Balance

Implications for the Multinational: Performance Evaluation and Compensation

• Match HRM orientation• Seek location advantages in wages

Exhibit 11.17: Labor Costs and Hours Worked Per Week in Selected Countries

A Comparative View of Labor Relations

• Patterns of labor relations depend on:• Historical factors• Ideology reasons• Management views of unions

Union-Membership Density

• Proportion of workers in a country who belong to unions• Germany: estimated 40% belonged to trade unions• U.S.: 14.2% of nonagricultural workforce • Denmark: over 80% unionized• Great Britain: approximate 50% unionized

Exhibit 11.18: Union Density in Selected Countries

Historical and Institutional Differences: Germany

• Germany• Formalized, legalistic, and low-conflict bargaining

between unions and large corporations• French

• Militant/strong ideologies• U.S.

• “Bread and butter” issues: wages, benefits, and working conditions

Union Structures

• Enterprise union: represents all people in one organization, regardless of occupation or location

• Craft union: represents people from one occupational group, such as plumbers

• Industrial union: represents all people in a particular industry, regardless of occupational type

Union Structures (cont.)

• Local union: represents one occupational group in one company

• Ideological union: represents all types of workers based on some particular ideology or religious orientation

• White collar or professional union: represents particular occupational group, similar to craft union

Exhibit 11.19: Popular Form of Unions in Selected Countries

Implications for the Multinational: The Search for Harmony

• Must deal with local labor practices• A factor in location choice

Exhibit 11.21: Who Gets Along?

hrm in the local context: knowing when and how to adapt

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