global and transnational business: strategy and management 2 nd edition © john wiley & sons...

Global and Transnational Business: Strategy and Management 2nd Edition© John Wiley & Sons Ltd.

Global Leadership and Strategic Human Resource

Management

Chapter 9


Strategic human resource management

• Human resources have a central role in the success of global and transnational strategy

• Human resources are of singular importance because:– they play a unique part in organisational learning

and competence building;– their management poses particular questions in a

global context;– they are crucial in converting strategies into action.


Leadership and management in transnationals

• Management is concerned with– Planning– Organizing– Directing– Budgeting– Controlling etc.

• Leadership is concerned with– Vision and strategic intent– Organisational transformation– Creating shared values– Motivation– People development


Nature of leadership• Qualities or traits theories – traits of leaders • Functional or group theories – functions that leaders carry

out• Behavioural theories – behaviours of leaders• Style theories – nature of the approach adopted by leaders

to their role• Situational approach and contingency models –

organizational and environmental context in which leadership takes place

• Transitional or transformational theories – examine the impact of leadership on the development of the organisation


Modern approaches to leadership

• Leadership is required at all levels of the organization

• Leadership is concerned with– Mentoring– Motivation– Sharing of knowledge– Organizational development– Personal development


Leadership involves• Developing an innovative and distinctive vision • Capability to learn and develop new knowledge-based

competences• Risk taking based upon knowledge-based judgement • Ability to develop, empower and motivate others by

communicating the vision to them • Capacity to combine task orientation with people

orientation • Development of a culture and shared values which support

the leader’s vision and encourage trust and sharing, risk taking, and team working


Leaders in learning organisations

Leaders in learning organizations must be:

• Designers– Vision, strategies, policies, and structures

• Teachers– Facilitating learning

• Stewards– Developing people


Leadership and cultural issues

• Leadership must take account of and adapt to cultural differences (see chapter 2)

• Leadership uses cultural diversity to improve organizational performance


Managing cultural diversity• Tayeb (2001) & Perlmutter (1969) identify 4 alternative

approaches to managing cultural differences:– An Ethnocentric Policy - imposing the culture and practices of

the home country & parent organisation on overseas subsidiaries ignoring local cultural differences

– A Polycentric Policy - following the culture and practices of each host country - multinational approach

– A Global Policy - a global company wide policy to shape global organisational culture combining different cultural approaches

– A Transnational or Hybrid Policy - this incorporates both global integration of culture, to produce world-wide norms to guide activity towards a common set of goals and differentiation of culture to allow it to be adapted to local differences


Shaping culture in transnational organizations (I)

• Successful cultural change involves the learning of new values, attitudes, and behaviours within the organisation which will entail:– determining the desired values, attitudes, norms and

behaviours which are to form the new organisational culture

– unfreezing the existing culture to make members of the organisation receptive to change

– building the new culture– refreezing the new culture once the desired change has

been achieved


Shaping culture in transnational organizations (II)

• Leaders can seek to promote desired cultural change through:– A vision which is communicated throughout the

organisation– Education and training to foster organisational learning– New organisational and power structures which support

devolved decision-making– New reward systems which promote the behaviours

desired within the organisation– Creating new stories, myths and symbols which

emphasise desired values and actions


Implementation of HR strategy• Complex due to variations in culture,

language environment & industrial relations • Global business must resolve 4 key issues:

– human resource strategy - its determination & integration with transnational strategy;

– staffing policies - use home, host or third country nationals as managers;

– expatriate policies - to ensure smooth exchange of managers between the parent company &subsidiaries;

– global management development - to ensure adequate supply of globally experienced managers at all levels.


Strategic human resource management

• HR are important determinant of the success of global strategy

• HRM "involves all management decisions and actions that affect the nature of the relationship between the organisation and its employees - its human resources."

• People crucial in devising & implementing strategy, in strategic decision making and in making strategy successful.


A Strategic Approach to HR• The case for this approach is based on the fact

that it: – defines opportunities & barriers for achieving business objectives;– prompts new thinking about issues & orientates &educates

participants and provides a wider perspective;– tests management commitment for actions; creates a process for

allocating resources to specific programmes and activities;– develops a sense of urgency and commitment to action;– establishes selected long-term courses of action considered high

priority over the next 2 to 3 years;

– provides a strategic focus for managing the business and

developing management talents.


Features of HR strategy

• Recognition of the impact of the external environment;• Recognition of the impact of competition and the

dynamics of the labour market• Long-range focus - three to five years• Choice and decision-making focus• Consideration of all personnel• Integration with corporate strategy and functional

strategies


HR strategy, core competences and organisational learning

• Organisational learning and knowledge building are based upon individual knowledge and learning

• Strategic human resource management has a pivotal role to play in knowledge management and development, and in competence building.


A competence-based approach to strategic HRM I

• Job design - technical knowledge required, rotation of roles, project teams

• Staffing issues - internal transfers, relationships with educational institutions, potential of individuals must be assessed

• Training and development - increased investment, increasingly decentralised, away from traditional skills, performance review to assess the contribution of employees rather than to determine pay


A competence-based approach to strategic HRM II

• Rewards systems - will be based upon group or organisational outcomes, banding of jobs, job evaluation will shift from a quantitative to a qualitative focus, compensation systems will become flexible.


HR and Generic Strategy• HR strategy will be integrated with generic

strategy through appropriate– Selection and training– Level of supervision– Level of cost control– Level of reporting– Emphasis on training– Emphasis on improved productivity– Reward systems– Organisational structure


Problems of integrating HR strategy and Transnational strategy

• Different approaches to HR might be needed for different markets

• Changes in business strategy changes require changed HR strategy - difficult because of need for structural & cultural change

• Qualitative nature of HRM - difficult to prove importance to success of global strategy

• HRM need to be long-term and large-scale but can easily be subverted to short termism


Criticisms of the concept of Strategic HRM

• an American concept• lacks clarity and precision• too prescriptive and normative• lacks supporting empirical evidence;• difficult to distinguish from personnel management• HRM strategy is seen as driven by corporate

strategy, rather than contributing to it• is overly prescriptive with regard to industrial

relations history and practice in Europe (& in other continents)


European and American approaches to HRM

• Two common elements of American models of HRM are the ideas of:

• organisational independence and autonomy

• the integration of HRM and business strategy.


Differences between Europe and USA

• Organisational autonomy is more restricted in Europe because of:

• Culture and legislation - USA individualistic, Europe more state regulation

• Patterns of ownership - Europe has more SMEs and public ownership

• Europe is more heavily unionised• Labour market more regulated in Europe


HRM and business strategy

• Brewster and Hegewisch (1994):

• little evidence of the integration of HRM and business strategy in the USA

• higher degree of integration of HRM at the top levels of organisations in Europe.


Transnational model of HRM strategy

Sector

Organisation: size, structure, culture

CorporateStrategy

HR Strategy HRM Practice

Global Business Environment

• Culture• Legislation• Ownership patterns• Trade Union representation• Employee involvement• Communication• Bargaining arrangements• Labour markets• Education and training• Working practices


Global staffing policies• Three main alternatives:

– employment of home country nationals (ethnocentric), – host country nationals (polycentric)– a combination of home, host and third country nationals

(geocentric or global). – only third is consistent with a global and transnational

approach, – each of the alternatives has its own advantages and

disadvantages


Staffing policies and strategy• Policies adopted by global business organisations

are influenced by:– characteristics of parent and subsidiary – characteristics of the host country– relative costs of the alternatives – availability of local management talent– government restrictions on employment of expatriates – differences in salary levels– expatriate transfer costs and failure costs


HR and transnational strategy• HR Strategy requiring high degree of co-ordination will

require:• employment of home country nationals at subsidiary level• significant cross-national exchange of personnel• effective expatriate policies to ensure smooth staff exchange • a pool of internationally experienced executives• extensive global management development programme• control of labour problems at each location • standardisation of employee benefits between subsidiaries • significant transfer of parent country industrial relations practices

to subsidiaries


HR and transnational strategy II

• HR strategy requiring local responsiveness: – predominance of host country nationals in key

management positions in subsidiaries– limited cross-national transfers of personnel– few expatriate or international management development

policies– decentralised subsidiary level industrial relations decision-

making– industrial relations practices will be based on host country

customs and practices

global and transnational business: strategy and management 2 nd edition © john wiley & sons...

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