lecture 9 - international hrm - post

© 2008 Robert H. Smith School of BusinessUniversity of Maryland

BMGT 463:Cross-Cultural Challenges

in Business


International Human Resource Management

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.


Learning Objectives

1. Understand the major functions of HRM

2. Understand how High Performance Work Systems affect employee and organizational performance

3. Understand the strategic options for MNCs’ international HRM and which option to use


The Enterprise is the people

• Organizations: why do they exist and how do they work?

• Can you imagine an organization without people?


What is HRM?

• HRM involves all management decisions and practices that directly affect or influence the people, or human resources, who work for the organization.


What does HR do?• Human resources planning

– Forecasting demand for labor– Job analysis

• Acquiring human resources– Equal employment opportunity– Recruiting and job search– Assessing job candidates: tools for selection

• Training and development– Needs assessment– Designing training procedures– Evaluating results


What does HR do? (Continued)• Performance Management &Rewarding employees

– A formal, structured process used to measure, evaluate, and influence employees’ job-related attitudes, behaviors, and performance results.

– Evaluating market wages/salary surveys– Performance appraisal– Performance feedback for individuals and teams– Incentive compensation and benefits

• Labor relations and collective bargaining– Treat employees as an asset that requires investment instead of an

expense to be minimized– Resolve grievance and complaints

• Organizational safety and health– Design of work (work enrichment, etc.)– Maintain safe pleasant work environment


High Performance Work Systems (HPWS)

• Strategic HRM: A System Approach– Aligned with organizational strategy

– Internally coherent work practices

– Control oriented Commitment, involvement, performance-oriented Systems

– High Performance Work System (HPWS)

• “Including comprehensive recruitment and selection procedures, incentive compensation and performance management systems, extensive employee involvement and training” (Huselid, 1995; p. 635)

• Aims to improve employee competencies, motivation, and performance


HPWS and Organizational Performance

• Lower employee turnover rates (e.g., Huselid, 1995)

• Higher labor productivity (e.g., Datta, Guthrie, & Wright, 2005)

• Lower injury rates (e.g., Zacharatos, Barling, & Iverson, 2005)

• Better company financial performance (e.g., Huselid, 1995)

• Better customer service and customer satisfaction (e.g., Liao, Toya, Lepak, & Hong, 2009)


The Golden Triangle for MNCs’ HRM:

• Standardization towards Headquarters Practices?

• Standardization towards Global Best Practices?

• Localization?


Study by Pudelko & Harzing (Organizational Dynamics, 2008)

• Surveyed the HR VPs of 849 Multi-National Companies regarding their HR practices – HQs in the USA, Japan, & Germany– Subsidiaries of Japanese and German MNCs in

the USA– Subsidiaries of American and German MNCs in

Japan– Subsidiaries of American and Japanese MNCs

in Germany


Results (1)

• HRM at Headquarters: Expected outcome – Clear Country Differences– 20 statements about HR practices– For 16 statements, USA and Japan at the

opposites, Germany in the middle– For 13 statements, the differences were

statistically significant


Results (2)• HRM at Subsidiary Level: Surprising Outcome –

Standardization Towards American HRM Practices– Expected subsidiary practices to be positioned in

between parent and host country. But this was not always the case.

– E.g., German subsidiaries in Japan did not adopt either their own German model or the Japanese model, but followed more American style practices. Similarly, Japanese subsidiaries in Germany adapted more of the HRM practices of the USA

– E.g., American subsidiaries in Germany were adapting to a sig. extent to German practices, while American subsidiaries in Japan were half way “in between” those of American and Japanese HQ practices.


The Bottom-Line: Standardization Towards Global Best Practices

• American HRM practices were perceived as global best practices by the study participants

• There seems to be a trend that some HRM practices, particularly recruitment, training, assessment, promotion and incentives, become increasingly standardized towards global best practices.

• Always consider contingency!


Practical Implications for MNCs:When to Implement Which Strategy?

• Consider two factors– Internal core competencies– External environment

• If the practice involves core competence of, then standardization towards the HQ practices

• If the practice does not involve core competence and the subsidiary has to adapt to specific local cultural and/or institutional circumstances in order to be successful in the environment they are operating in, than use localization strategy

• For most cases, standardization towards global best practices, which in principle could derive from any country model


Team 7 & Team 8 Presentations:Four Seasons Goes to Paris

• Everyone (not just Teams 7 & 8) needs to read the case before the class, think about the questions, and attend the presentation:

– What is it like to stay at a Four Seasons hotel?– What has made Four Seasons successful over the last 30 years?– Does corporate culture play a role in Four Seasons’ success? If so,

how and why?– Do human resource strategies play a role in Four Seasons’

success? If so, how and why?– What is Four Season’s approach to international growth?– How do you feel about the way Four Seasons entered the

Paris/French market? What was good and / or bad about the entry strategy? Why?

– Comparing Four Seasons’ and Disney’s experiences in Paris. Why is Four Seasons successful but Disney is not?

– Do the lessons from this case study apply to firms entering markets other than France? If not, why? If so, how, and to what types of markets?

lecture 9 - international hrm - post

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