WHY TO NATIONS DIFFER IN HRM?

National Context

KEY BUSINESS PRACTICESAND INDUCED FACTOR

CONDITIONS

INSTITUTIONS

NATIONAL &BUSINESSCULTURE

NATIONAL DIFFERENCES IN HRM POLICIESRecruitment

SelectionTraining and Development

Performance AppraisalCompensation

Labor Relations

Exhibit 12.1

The National Context and HRM

SOCIAL INSTITUTIONSSOCIAL INSTITUTIONS

Include the family, educational, economic, and the political and legal systems

Closely linked with national and business culture

THREE TYPES OF THREE TYPES OF ISOMORPHISMISOMORPHISM

Coercive Mimetic Normative

THE NATIONAL CONTEXT THE NATIONAL CONTEXT AND KEY BUSINESS AND KEY BUSINESS

PRACTICESPRACTICES

Education and training of labor pool

Laws and cultural expectations for selection practices

Types of jobs favored

The national context and The national context and key business practices, key business practices,

continuedcontinued

Laws and cultural expectations of fair wage and promotion criteria

Laws and traditions regarding labor relations

RESOURCE POOLRESOURCE POOL

The resource pool represents all the human and physical resources available in a country - both from natural and induced factor conditions

RECRUITMENTRECRUITMENT

Attract qualified applicants

US RECRUITMENT US RECRUITMENT STRATEGIESSTRATEGIES

Open and public See Exhibit 12.3

0 10 20 30 40 50

Newspapers

Walk-ins

Employee Referrals

Promotion from Within

Universities

State Employment Service

Private Employment Service

Percent Recruited

Office/Clerical Production/Service Professional/Technical Sales

KOREAN RECRUITMENT: A KOREAN RECRUITMENT: A COLLECTIVIST APPROACHCOLLECTIVIST APPROACH

Backdoor School contacts

SELECTIONSELECTION

THE US APPROACH TO THE US APPROACH TO SELECTIONSELECTION

Match skills and job requirements

Universalistic criteria See Exhibit 12.4

APPLICATION

INITIAL INTERVIEWS

EMPLOYMENT TESTS

REFERENCES CHECKS

PRELIMINARY SELECT ORREJECT

FINAL INTERVIEWS

HIRING DECISION

SELECTION IN COLLECTIVIST SELECTION IN COLLECTIVIST CULTURESCULTURES

The in-group Preference for family Value personal

characteristics High school and university

ties substitute for family membership

IMPLICATIONS FOR THE IMPLICATIONS FOR THE MULTINATIONALMULTINATIONAL

Managers must follow local norms to get best workers

Often a tradeoff with benefits of home country practices

TRAINING AND DEVELOPMENTTRAINING AND DEVELOPMENT

DIFFERENCES IN TRAINING DIFFERENCES IN TRAINING AND DEVELOPMENTAND DEVELOPMENT

Result from:–differences in educational systems

–values regarding educational credentials

–cultural values regarding other personnel practices

Exhibit 12.5 shows Exhibit 12.5 shows training systems used in training systems used in

different countriesdifferent countries

Type Example Countries Features and Sources of Institutional PressuresCooperative Austria, Germany,

Switzerland, and some LatinAmerican Countries

Legal and historical precedents for cooperationamong companies, unions, and the government.

Company-BasedVoluntarism/highlabor mobility

USA and the UK Lack of institutional pressures to providetraining. Companies provide training based onown cost-benefits.

Voluntarism/lowlabor mobility

Japan Low labor turnover encourages investment intraining without institutional pressure

State-DrivenIncentive Provider Hong Kong, Korea,

Singapore, Taiwan, ChinaGovernment identifies needs for skills and usesincentives to encourage companies to train inchosen areas.

Supplier Developing countries in Asiaand Africa, transitioneconomies

No institutional pressures for companies totrain. Government provides formal trainingorganizations.

Exhibit 12.5 shows skills Exhibit 12.5 shows skills taught by U.S. taught by U.S. organizationsorganizations

0% 20% 40% 60% 80% 100%

Management

Computer

Technical

Procedures

Clerical

Sales

Remedial/Basic

VOCATIONAL EDUCATION IN VOCATIONAL EDUCATION IN GERMANYGERMANY

Standardized national system = a well trained labor force

Affects over 65% of 15 to 16 year olds

Collaboration of employers, unions, and state

See Exhibit 12.6 - Dual system

DUAL SYSTEMPart-time Lower Vocational School

+In-Plant Training

SKILLED WORKERCERTIFICATE

EMPLOYMENTEXPERIENCE

COLLEGE LEVEL Vocational Training

Employment asMEISTER

MANAGEMENT MANAGEMENT DEVELOPMENT: U.S.A.DEVELOPMENT: U.S.A.

Senior level managers often identify managerial potential

Appraisals of managerial readiness

Assessment centers Mentoring "Fast track" careers

MANAGEMENT DEVELOPMENT: MANAGEMENT DEVELOPMENT: TRADITIONAL JAPANESE STYLETRADITIONAL JAPANESE STYLE

Recruits directly from universities Join the company as a group Selected on personal qualities

and fit with the corporate culture Mutual commitment of permanent

employment

Similar pay and promotion for first ten years - age seniority

Informal recognition of those high performance managers

Management development: Management development: traditional Japanese style, traditional Japanese style,

continuedcontinued

SHIFITING SOCIAL SHIFITING SOCIAL INSTITUTIONS: PRESSURES INSTITUTIONS: PRESSURES

FOR CHANGEFOR CHANGE Asahi ties promotions to

evaluations Matsushita uses merit pay

for managers Honda is phasing out

seniority

IMPLICATIONS FOR THE IMPLICATIONS FOR THE MULTINATIONALMULTINATIONAL

Examine feasibility of exporting training

IHRM orientation affects training needs of local managers

Locations advantages - see Exhibit 12.9

0 500 1000 1500

Singapore

Japan

Czech Republic

Britian

U.S.

Germany

Colombia

Math

Science

PERFORMANCE APPRAISALPERFORMANCE APPRAISAL

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

U.S. PERFORMANCE U.S. PERFORMANCE APPRAISAL SYSTEMAPPRAISAL SYSTEM

Performance standards Performance measures Performance feedback Human resources decisions Must meet legal

requirements

PERFORMANCE APPRIASAL IN PERFORMANCE APPRIASAL IN COLLECTIVIST CULTUESCOLLECTIVIST CULTUES

Managers work indirectly to sanction poor performance

Often avoid direct performance appraisal feedback

COMPENSATIONCOMPENSATION

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

COMPENSATION IN THE U.S.COMPENSATION IN THE U.S.

Wages and salaries differ based on two major factors –external– internal

COMPENSATION IN JAPAN: COMPENSATION IN JAPAN: TRADITIONAL APPROACHTRADITIONAL APPROACH

Base salaries for positions Skill and educational

requirements Age Marital status and family

size may count Bonuses

NEW MERIT (Japanese style) NEW MERIT (Japanese style) Can affect pay raises to a

greater degree the traditional position/seniority system

Does not match the Western view - Nenpo

Stresses attitudes as much as performance

EX 12.10 THE JAPANESE PAY EX 12.10 THE JAPANESE PAY RAISE FORMULARAISE FORMULA

INDIVIDUAL'SBASE SALARY

RAISE

XX X =PERCENT

RAISE FOREACH

POSITION

INDIVIDUAL'SMERIT RAISE

PERCENT

SENIORITYPERCENT

EVALUATION/COMPENSTATION: EVALUATION/COMPENSTATION: Implications for the MultinationalImplications for the Multinational

Match HRM orientation Seek location advantages

in wages See Exhibit 12.12 next

Country

AverageCost of

Labor PerHour in U.S.

AverageHours

Worked PerWeek

USA 19.20 38Korea 6.71 47Sri Lanka 0.47 43Denmark 22.96 32Germany 26.18 33Greece 8.91 36Japan 20.89 36

A COMPARATIVE VIEW OF A COMPARATIVE VIEW OF LABOR RELATIONSLABOR RELATIONS

PATTERNS OF LABOR PATTERNS OF LABOR RELATIONS DEPEND ON: RELATIONS DEPEND ON:

Historical factors Ideology reasons Management views of

unions

UNION MEMBERSHIP DENSITY UNION MEMBERSHIP DENSITY

Germany: estimated 40% belonged to trade unions

U.S.A.: 14.2% nonagricultural workforce--down from a high of over 35% in the early 1940s

Denmark: over 80% unionized Great Britain: approximate 50%

unionized

SOME HISTORICAL UNION SOME HISTORICAL UNION DIFFERENCESDIFFERENCES

German–formalized, legalistic–bargaining centralized between large unions and large corporations

–works council

French--militant/strong ideologies

U.S.--"bread and butter" issues--wages, benefits, and working conditions

UNION STRUCTURESUNION STRUCTURES

Enterprise Craft Industrial Local Ideological White collar/professional

IMPLICATIONS FOR THE IMPLICATIONS FOR THE MULTINATIONALMULTINATIONAL

Must deal with local labor practices

A factor in location choice - see Exhibit 12.16

EXHIBIT 12.16 WHO GETS EXHIBIT 12.16 WHO GETS ALONG?ALONG?

0 2 4 6 8 10

Ratings of Productive Industrial Relations

Norway

Singapore

U.S.

Mexico

France

Russia

CONCLUSIONSCONCLUSIONS National context and HRM

–contrasts between individualist U.S. v. collectivist

Recruitment and selection Training and development Performance evaluation and

compensation

Unionization Implications for location

decisions