April 8, 2023 1

INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Ethical Issues & Policies

April 8, 2023 2

Impotant Issues in IHRM

There are several important issues in IHRM which organizations which are operating at the international level must face. These include, for example:

– Attitudes of Employees and Work Ethics– Recruitment & Selection Policy– Compensation Policy– Training and Development Policy– Ethical Issues (e.g. bribery and corruption) & Corporate Social

Responsibility– Dealing with the host country‘s Bureaucracy and Government– Host country‘s Legal Framework (relating to Labour etc.)

April 8, 2023 3

Attitudes of Employees and Work Ethics

Employee attitudes to work – and the level of motivation displayed – vary, depending on country, culture and industry

In some places and industries, employee motivation and loyalty to the organization can be comparatively quite high (and job turnover low), in other places and industries, motivation to perform work tasks may be comparatively lower (and job turnover correspondingly higher)

In developing countries, organizations which operate at the international level are often faced with the situation that local executives and managers lack decision-making skills or are hesistant to make independant decisions or take the initiative (cultural reasons)

April 8, 2023 4

Recruitment & Selection PolicyCompensation Policy

Organizations will try to recruit and select the best possible employees for their available staff positions

Salary is a very important factor in attracting high quality employees; other factors such as the work environment and job activities, training and development programmes and measures, and career prospects in the organization are other important considerations

In situations where there is a shortage of highly-qualified skilled labour and a growing demand for it (e.g. China, India), the compensation policy will have to be modified accordingly and possibly frequently in order to attract and/or retain employees

April 8, 2023 5

Training & Development Policy Training and Development of employees is a very important tool of

human resource management and a means of realizing the organization‘s objectives, goals and mission

Many organizations are reluctant to invest considerably in training and development programmes because they apprehend a „poaching“ of personnel by other organizations which would reap the benefits for free (observed in developing countries where FDI is flowing to and copmpetition for skilled and qualified human resources is increasing)

Training skills are especially important in relation to international joint ventures because here the potential for conflict is greater due to the larger number of organizations involved

April 8, 2023 6

Dealing with Bureaucracy in Host Countries• Dealing with bureaucracy can be a very tricky issue for organizations

which are operating internationally

• Interaction between organizations and local bureaucracies opens the way for unethical practices such as payment of bribes in order to get „things moving in the right direction“ for the organization, e.g. granting of permits and licenses, and other requisite formalities

• The Berlin-based NGO Transparency International (www.transparency.org) publishes a yearly Corruption Perception Index for bureaucracies across the globe (Pakistan 2005: 144 out of 158)

• To deal with the scourge of corruption in host countries, the services of local employees who „know how to get things done“ are frequently availed. Often, organizations first enter into joint ventures before forming subsidiary units to reduce their risks in the face of rampant corruption

April 8, 2023 7

Ethical Issues & Corporate Social Responsibility (1)

Ethics and corporate social responsibility are differently interpretated, complex and controversial subjects in the context of organizations which are operating internationally in diverse social, economic, political, cultural and legal environments

Ethical issues and considerations arise in particular when the business practices in the host country differ markedly from those in the home country

Three types of „ethical responses“ have been identified: ethical relativism (the ethical standards in the host country should be followed), ethical absolutism (the ethical standards of the home country should be followed), and ethical universalism (this presumes that there is a universal ethical standard of right and wrong which transcend cultural boundaries and that these must be followed by the organization (distinction between morally wrong and culturally different)

April 8, 2023 8

Ethical Issues & Corporate Social Responsibilty (2)

Corporate Social Responsibility is basically about an organization promoting non-economic objectives, i.e., instead of just focussing on maximizing value for shareholders, organization (specifically business corporations) attempt to play the role of „good citizens“, balancing the interests of shareholders with those of society at large

Corporate Social Responsibility can be a complex issue at the domestic level, but at the international level it takes on a much larger significance

Areas where organizations operating internationally can demonstrate their social responsibility include, for example, observance of basic human rights, adoption of adequate workplace working conditions and health and hygiene standards, payment of adequate wages and salaries, equal employment opportunities, avoidance of child labour, adequate education and training, allowing unionization and protection of the environment

April 8, 2023 9

Ethical Issues & Corporate Social Responsibility (3)

Ethical issues and corporate social responsibility are closely related to the human resource function in organizations which are operating internationally and in diverse contexts:

Minimize the exposure of employees to corrupt conduct by assisting in the development, publication, and implementation of appropriate codes of conduct

Ensure training programmes cover areas which are of ethical concern (e.g. bribery, human rights, justice, and the common good)

Align performance appraisal and compensation systems so that they support the ethical stance taken

Be conversant with the type of requests that may be made of staff operating internationally, and provide them the necessary training so that they have the requisite negotiating skills to handle possible problem situations

Ensure that employees understand the difference between corrupt bribery payments, gifts and permissable facilitation payments