Post on 02-Nov-2015
transcript
3/6/2014
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17-18. Strategic Issuesin
Global HRM
Debi S. Saini, Ph.D.Professor & ChairpersonHRM Area
Management Development InstituteMehrauli Road, Gurgaon-122001
Objectives of this Presentation are to Know: Globalization, new eco. Scene & IHRM issues
Bartlett & Ghoshals stages of Internationalization
Internl. HR strategies: Perlmutters staffing & GI v. LR
Expatriation: Success, failure & tools for adaptation
Global mindset & global leadership
Culture: Work of G. HofstedeF. Trompenaar
Exercise on Cross-cultural adaptation
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Globalization & Changed Pattern of Intl. Business
Changing economic dynamics: Top 500 global cos.--North America-based cos. reduced from 215 in 2001 to 144 in 2011--Asia-based cos. increased from 116 in 2001 to 188 in 2012 --European-based cos. increased from 158 to 160 in this period
Low trade barriers: GATT & WTO (working since 1995)
Reduced protectionism: higher efficiency
Emerging economies talk of the town
Globalization has led toMore Companies Building
Global Strategy:More MNCs
moving to emerging economies
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Conflicting Stakeholder Demands of MNEsConflicting Stakeholder Demands of MNEs
Consumer activists
Regulatory bodies
Political constituents
Investors
Global suppliers
Environmentalgroups
Employee unions
Community organizers
Emerging markets
Find Out Which Nationals are Employees as Parent, Host & ThirdCountry Nationals in the 3 companies & 5 Locations in the Figure below
Coca-Cola (Atlanta, Georgia)ExpatriatesPoliciesCultureStyleMultinational HQs
e.g Lenovo(Cleveland)Foreign-owned
subsidiary
ZodiStores Inc
(Chicago)
US DomesticFirm
HCNs
Coca-ColaSubsidiary
Lenovo(Beijing)
ExpatriatesPoliciesCultureStyle
PCNs
Inpatriates
TCNs(any other country
e.g. Mexico)
CitizensNative-bornForeign-born
Firm "Z"
Firm "Y1"
Country A (parent country e.g USA)
Country "B
e.g China
Country C
Poland (Warsaw)
Immigrants
Imm
igra
nts PCNs
Inpatriates
Find OutExpatriatesInpatriatesTCNsHCNsCitizens
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Various Nationals in International Operations
Parent-Country (or Home-) Nationals (PCNs)Citizens of the country where MNC has its HQ
Host-Country Nationals (HCNs)Citizens of the host country
Third-Country Nationals (TCN) Citizen of a 3rd country working in an MNC subsidiary
Comparing Domestic & Global HRM1. Taxation; Language, Expatriation, Repatriation
2. Different types of employees; countries of operation
3. Programs for different national group of employees
4. Consequences of failure more severe in GHRM
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Comparing Domestic & Global HRM contd
5. Terrorism is often a risk in global HRM
6. External factors impact HRM practices: Type of government
State of economy
Social & political factors
Types of Companiesthat Operate
Outside the Home Country
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Internationalization Strategy: Stages DOMESTIC
INTERNATIONAL
MULTINATIONAL
GLOBAL
Bartlett & Ghoshal, 1992
Focus on home market (Local mentality)
Focus on export (Domestic with foreign appendage)
Focus: standardization for world market (low cost/price)Focus: both local responsiveness & global integrn.TRANSNATIONAL
Born Global Company
Focus on coordination & adaptation as per local needs
Global Score of a Company%age of international sales
%age of employees outside the HQ country
No. of countries in which the co. operates
50 points for global mission statement
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International HR StrategiesH. Perlmutters (1995)
Approaches toManaging & Staffing
Subsidiaries
International HR Strategies Ethnocentric
Centralized HR Managed by Parent Country Nationals (PCNs) Pay linked: local market for employees; home country for PCNs
Polycentric Decentralized HR Managed by Home Country Nationals (HCNs) Pay based on local market
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International HR Strategies contd Geocentric
Global workforce deployed throughout the world Positions filled globally as per merit: HCNs, PCNs, TCNs, Compensation based on value-added
Regiocentric Choice of Ethnocentric or Polycentric within Region Regional coordination, communication & decision-making
Eth nocentric Attitude Polycentric A ttitude
Regiocentric A ttitude Geocen tric A ttitude
H Qs Orientation towa rd subsidiaries (source : adapta tion libre de He ena n D.A ., Per lmutter H.W. , Multinational Organiza tionD evelopment , Addison Wesley Publish ing , 1979)
Orientation
Towards
Subsidiaries
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Global Integrationand
Local Responsiveness?
This Dilemma is the Keyfocus issue in Company Products
as well as Global HRM
The Countervailing Pressures on MNCs
Why G. Integration?1. Operational Integrality2. Strategic Co-ordination3. Global Customers
Why L. Responsiveness?1. Market Demands 2. Legislative Demands3. Political Demands
Global Integration: Maintain standard of quality internationally, & economies of scale
Local Responsiveness (Differentiation) Be sensitive & adapt to local cultural environment
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Global Corporate Strategies
Need for National Responsiveness HighLow
Low
HighTransnatl. Strategy
Balances GE & LR
Combines standardization & customization for
product/advertising strategies
Globalization Strategy
Treats world as a single market Standardizes global
products/advertising strategiese.g.(Gillette razors)
Multi-domestic Strategy (MNC)
Handles markets independentlyfor each country
Adapts product/advertising tolocal tastes/needs (HLL)
Nee
d fo
r G
loba
l Int
egra
tion
Export StrategyDomestically focused
Exports a few domestically produced products to
selected countries
Global HRand
HR Strategy
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Key Strategic HR Concernsof Global Companies
Management of Global Strategic HR roles Facilitating Expatriation processes
Developing Global mindset & leadership capabilities Developing Global HR competencies
The HRM systems, policies, practices & issuesthat facilitate strategic business activities of MNEs in pursuit of their international concerns & goals (my own definition)
Early work focused on functions (transactional HR for expatriates)
Later work moves to strategic view[HQ-Subsidiary relations, global co. culture, global KM, global leadership]
Focus: Think Global, Act Local
Strategic International HRM?
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Management ofExpatriates:
A Key Function of IHRM
Expat preparation Why preparation? Why often no pre-departure training?Expatriates need the following kinds of training:
Understanding attitude formation & its context
Impact of cultural differences
Factual knowledge about target country
Language, adaptability & relations-bldg. skills
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Staffing Internationally
Five factors determine expatriate success
1. Job factors
2. Relational dimensions
3. Motivational state
4. Family situation
5. Language skills14-25
Why Do International Managers Fail?
Culture Shock
Cultural arrogance (Parochialism)
Cultural Insensitivity
The Key success factor: Cultural adaptability
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Expatriate Managers Main reasons for expatriate failure for U.S. MNEs are
the inability of the spouse to adapt to a foreign culture
the inability of the employee to adjust
other family-related reasons
the managers personal or emotional maturity
the inability to cope with larger overseas responsibilities
Expatriate Managers
For European firms, only one reason was found the inability of the managers spouse to adjust
For Japanese firms, the reasons for failure were:
the inability to cope with larger overseas responsibility difficulties with the new environment personal or emotional problems a lack of technical competence the inability of spouse to adjust
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Tools for Adaptation Cultural Awareness Programs
Management & Technical Trng.
Language Courses
Look-and-see trips
Practical assistance
Communication with returned or current expats
Organization of social events
Job for spouse
Global Mindset&
Global Leadership
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Saliency of Global Mindset for Doing Business
Global mindset envisages that people have a global as opposed to simply domesticperspectiveofmarkets, people & resources
Such cos. acclimatize well with other cultures
What is a Global Mindset?What is a Global Mindset?Open to Diversity
across cultures and Markets?
Knowledgeable about Diversityacross Cultures and Markets?
Able to Integrate Diversityacross Cultures & Markets
Global Mindset
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Guidelines for Developing a Global Mindset (Lisbeth, 2000)
1. Understand your own culture
2. Recruit staff with cross-cultural & language skills
3. Understand legal & social frameworks
4. Give opportunity for cross-cultural & language learning
Guidelines for Developing a Global Mindset (Lisbeth, 2000)
5. Identify differences within cultures
6. Promote cross-border mentoring
7. Emphasize long-term relationship building (CISCO study on competencies in 2020)
8. Develop cultural sensitivity; respect/love all culture: trng.
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What is Global LeadershipWhat is Global Leadership
Global leadership is the process of influencing individuals, groups, & organizations inside & outside the boundaries of the global org., representing diverse cultural/political/institutional systems
to contribute towards the achievement ofthe organizations goals.
Jack Welch on Future GEs CEOJack Welch on Future GEs CEO
The Jack Welch of the future cannot be me.I spent my entire career in the United States.The next head of General Electric will besomebody who spent time in Bombay, inHong Kong, in Buenos Aires. We have tosend our best and brightest overseas andmake sure they have the training that willallow them to be the global leaders who willmake GE flourish in the future.
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Leadership Capabilities for Global Business Success
Total Set Of
Global Leadership
CompetenciesGlobal LeadershipCapabilities 2/3
Business-SpecificLeadership
Capabilities 1/3
Why is global leadership important?
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Integrated world & globalizing markets
Business & institutions are going global
People & capital are globally mobile
Ideas & innovations are now globalized
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Slide 39
Who Who produces high quality global managersproduces high quality global managers??Prof. Prof. Moore at McGill Moore at McGill University, University, has identified 10 nations has identified 10 nations asasgenerating abovegenerating above--average cluster of superior global leaders:average cluster of superior global leaders:
Canada Sweden Switzerland Holland Belgium Denmark Singapore Australia Norway Finland
But most organizations are one-dimensional
and who have clear values andthe courage to do the right thing.
Companies appear to have the greatest supply of leaders who arestrategic, analytical, purposeful.
In shortest supply are leaders who have emotional intelligence and can develop talent,
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Slide 41
Expatriate Assignments: Key Tool to Global LeadershipExpatriate Assignments: Key Tool to Global LeadershipExpatriate Assignments: Key Tool to Global LeadershipExpatriate Assignments: Key Tool to Global Leadership
There are powerfulrewards for an internationalmanager on transfer overseas who chooses to get involvedin the local community. When such people approach thenew country with an open mind, learn the local language,and make friends with colleagues and neighbors, theygain access to a wealth of a new cultureUnfortunatelymy experience in Mexico indicates that many expatriatemanagers live in golden ghettos of ease with little genuinecontact with locals other than servants The lesson forglobal companies is to give each international manager alocal Mentor who will open doors to the community.Ultimately however, it is the responsibility of individualmanagers to open their mind, plunge into their localcommunities, and try to make them their own.
Gurcharan Das former head of Procter and Gamble India.
The Building Blocks of Global CompetencyThe Building Blocks of Global Competency
Global Knowledge
Attitudes & Orientations
Cognitive Complexity
Global Mindset
Interpersonal SkillsCreate &Build Trust
Threshold TraitsHardinessIntegrity Humility Inquisitiveness
Cosmopolitanism
System Skills
Build Community
MindfulCommunication
SpanBoundaries
Make EthicalDecisions
Teaming
Leading
Change &creativity
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Global HR Competencies Source: Lisbeth Claus, 1998.1. Knowledge of basic & strategic HR (Help develop HPWS)
2. Business savvy & serving the line
3. Cross-cultural awareness
4. Communication skills
5. Global leadership skills (including relationship-bldg skills)
6. Clarity about frame of reference
7. Personal attributes
Culture Seen Variously
Commonly held set of beliefs & values
as to how one is expected to behave
in a particular society (Anthropologist & Ethnographers)They also examine values/norms in society that lead to mores, codes, laws
[Norm: something customary, usual; More: moral attitude of a group]
Culture is the way people solve problems
Its also referred to as The Software of the Mind
Schein
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Nature of Culture Cultures impact is far reaching: Richly researched
Shapes behaviour of: Countriespeopleorganizations
Key Factors for implementing strategy in global business:Culturealignment of personal valuesglobal mindset
Importance of both: National & Corporate culture
The Iceberg Metaphor for Culture
Language
Attitudes
Values
BeliefsNorms
FoodCommunication Styles
Dress
Emic
Implicit
Etic
Explicit
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Cultural Environment Language
Communication styles Nonverbal
Direct vs. Indirect
Greeting: physical and verbal
Space Structural & interpersonal
Time orientation Punctuality
Monochronic vs. Polychronic
Religion
Respect/formality
Consensus seeking
Major Works onCulture:
Geert Hofstede: (4 +1 dimensions)Fons Trompenaars: (7 dimensions)
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Geert Hofstede on Culture
Hofsetede: Em. Professor at Maastricht University, Netherlands
Research: IBM WM: 1967 78 (12 yrs.) 100K+ Qnaaires in 50 + countries
Purpose: Understand cultural differences across nations
Asian countries: high power distance
Asia: Low on uncertainty avoidance (except Japan)
5 Cultural Dimensions of G. HofstedePower Distance Uncertainty
Avoidance
Individualism
Confucian Dynamism
Masculinity
The degree to which powerdifferences are accepted
Degree to which a society makes efforts to mitigate ambiguity of
situations & provides rules, procedures
M. values: toughness, achievement, performance, materialism, quantity, F. values: soft, yielding, intuitive, emotional
Long-term orientation: Respect for relationships, thrift, sense of shame (China, India/other Asian countries) West is short-term oriented (quick results, reputation, stability)
Loose ties, Self-interest, Initiative
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Can We See Their Impact on Mgt Practices?
1.Power distance: how is authority exercised?
2.Individualism: what type of reward/PA system?
3.Uncertainty avoidance: Supervision of what type?
4.Masculinity: what working relations are expected?
5.Confucianism (long-term orientation): Reward systemnegotn. style
Fons Trompenaars Research
His research conducted among Shell workers
Study conducted in late 1980s
Took 10 years: 50K mgrs. contacted50+ countries
Book: Riding the Waves of Culture: 7 value dimensions
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Trompenaars Value Dimensions
Individualism/Collectivism
Achievement/ascription
Sequential time/ Synchronous time
Universalism/ Particularism
Specific/Diffuse
Neutral/Affective
Inner direction/Outer direction
Seven Value Dimensions: What They Mean? Universalism-Particularism: U. focuses on rules/contracts--one right way;
P. Embraces many right ways, relationships & trust (based on situation)
Individualism-Collectivism: Individualism values personal freedom/rights Collectivism values: cooperation, harmonious relationships & social respons.
Neutral-Affective: N. Cultures are value neutralAffective cultures are responsive/passionate/ showing emotion at work
Specific-diffuse: Specific: Life is compartmentalized;Diffuse: Fuzzy rolesdistinctions that can overlape. g. painting boss house
Achievement-ascription: Ach. Status is based on merit & personal record; As.: Depends on who you are/connections
Sequential vs. Synchronous Time:Seq.: Doing one thing at a time: Such people strongly go as per plans Synch.: Such people do many things at a time; plans easily changed
Inner-Outer Directed: locus of control/influences located inside the person [Thinking & intuitive approaches seen as best way]Or it is located outside in the environment [Look for our info. & decisions in outside world]
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The Takeaway from this Session? Global org. undergo stages of internationalization (Bartlet & Ghoshals)
MNEs. adopt 4 major strategic approaches in staffing subsidiaries (Perlmutter)
SGHRM deals with: expatriation, staffing subsidiaries, GI v. LR &HR strategies, and developing global mindset & global leadership
Expatriation failure is a major issue in GHRM
Criticality of cultural understanding in global business
Hofstedes & Trompenaars value dimensions help adopt app. strategies
Critical to develop global mindsets & global leadership