chapter 2 - ihrm
DESCRIPTION
International human resources managementTRANSCRIPT
Chapter 2
The Organizational Context
Demands on Management by International Growth
The Path to Global Status
As the nature and size of international activities change, organizational structures response, due to: The strain imposed by growth and geographical
spread The need for improved coordination and control
across business units The constraints imposed by host-government
regulations on ownership and equity The evolution path is common but the steps
are not normative
Stages of Internationalization
Born Global
Stages of Internationalization:
Exporting Typically the initial stage of international
operations Usually handled by an intermediary
(foreign agent or distributor) Role of the HR department is unclear at
this stage
Exporting Typically the initial stage of international
operations Usually handled by an intermediary
(foreign agent or distributor) Role of the HR department is unclear at
this stage
Export Department
Sales Subsidiary
Replacing foreign agents/distributors with own sales subsidiaries or branch offices in the market countries
May be prompted by: Problems with foreign agents More confidence in international activities Desire for greater control Give greater support to exporting activities
PCNs may be selected, leading to some HR involvement
Replacing foreign agents/distributors with own sales subsidiaries or branch offices in the market countries
May be prompted by: Problems with foreign agents More confidence in international activities Desire for greater control Give greater support to exporting activities
PCNs may be selected, leading to some HR involvement
Sales Subsidiary
International Division
Creation of a separate division in which all international activities are grouped
Resembles ‘miniature replica’ of domestic organization
Subsidiary managers report to head of international division
Objectives regarding foreign activities may determine approaches to staffing of key positions Expatriate management role of corporate HR
Creation of a separate division in which all international activities are grouped
Resembles ‘miniature replica’ of domestic organization
Subsidiary managers report to head of international division
Objectives regarding foreign activities may determine approaches to staffing of key positions Expatriate management role of corporate HR
International Division
Global Product/Area Division
Strain of sheer size may prompt structural change to either of these global approaches
Choice typically influenced by: The extent to which key decisions are to be
made at the parent country headquarters or at the subsidiary units (centralization versus decentralization)
Type or form of control exerted by parent over subsidiary
Strain of sheer size may prompt structural change to either of these global approaches
Choice typically influenced by: The extent to which key decisions are to be
made at the parent country headquarters or at the subsidiary units (centralization versus decentralization)
Type or form of control exerted by parent over subsidiary
Global Product Division
Global Area Division
The Matrix
An attempt to integrate operations across more than one dimension
Violates Fayol’s principle of unity of command
Considered to bring into the management system a philosophy of matching the structure to the decision-making process
An attempt to integrate operations across more than one dimension
Violates Fayol’s principle of unity of command
Considered to bring into the management system a philosophy of matching the structure to the decision-making process
The Matrix
Problems with the Matrix
Dual reporting Proliferation of
communication channels
Overlapping responsibilities
Barriers of distance, language, time and culture
Dual reporting Proliferation of
communication channels
Overlapping responsibilities
Barriers of distance, language, time and culture
Tend to lead to conflict and confusion
Creates informational logjams
Produce turf battles and loss of accountability
Make it virtually impossible to resolve conflicts and clarify confusion
Tend to lead to conflict and confusion
Creates informational logjams
Produce turf battles and loss of accountability
Make it virtually impossible to resolve conflicts and clarify confusion
Beyond the Matrix
Less hierarchical structural forms: Heterarchy Transnational (interdependence of responsibilities
and resources) Multinational as a network Networked firms
Delegation of decision-making authority Geographical dispersal of key functions Delayering organizational levels De-bureaucratization of formal procedure Differentiation of work, responsibility and authority
across subsidiaries
Less hierarchical structural forms: Heterarchy Transnational (interdependence of responsibilities
and resources) Multinational as a network Networked firms
Delegation of decision-making authority Geographical dispersal of key functions Delayering organizational levels De-bureaucratization of formal procedure Differentiation of work, responsibility and authority
across subsidiaries
The Networked Organization (N- Form)
Catalyst, knowledge protectorSatellite
OrganSatellite Organ
Different countries take different paths
US, European and Japanese Structural Changes
Control Mechanisms
“Globalization brings considerable challenges which are often under-estimated….
Every morning when I wake I think about the challenges of coordinating our operations in many different countries”
Quote by Accor CEO
“Globalization brings considerable challenges which are often under-estimated….
Every morning when I wake I think about the challenges of coordinating our operations in many different countries”
Quote by Accor CEO
Control Mechanisms
Mode of Operation and HRM
Not just subsidiary operations Firms may also adopt contractual modes
Licensing Franchising Management contracts Projects
And cooperative modes (such as joint ventures)
Linking Operation Mode and HRM
Interfirm Linkages
Alliances (strategic alliance, cooperative venture, collaborative venture or corporate linkage)
A form of business relationship that: Involves some measure on interfirm
integration Stops short of a full merger or acquisition
HR Factors
HR issues and activities that affect the successful functioning of international joint ventures include: Assigning mangers to the joint venture Evaluating their performance Handling aspects pertaining to career path Compensation and benefits
Implications to IHRM
Stages of international development, organizational forms and mode of operation should not be taken as normative.
Research does suggest a pattern and a process of internationalization but firms do vary in how they adapt to international operations – we use nationality of the parent firm to demonstrate this.
Cont.
Stages of international development, organizational forms and mode of operation should not be taken as normative.
Research does suggest a pattern and a process of internationalization but firms do vary in how they adapt to international operations – we use nationality of the parent firm to demonstrate this.
Cont.
Implications to IHRM (cont.)
Through the approach taken in this chapter, we have been able to demonstrate that there is an interconnection between IHRM approaches and activities and the organizational context and that HR managers have a crucial role to play.
In order to perform this role better, it is important that HR managers understand the various international structural options – along with the control and coordination demands imposed by international growth.
Through the approach taken in this chapter, we have been able to demonstrate that there is an interconnection between IHRM approaches and activities and the organizational context and that HR managers have a crucial role to play.
In order to perform this role better, it is important that HR managers understand the various international structural options – along with the control and coordination demands imposed by international growth.