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IHRM CHP 3

The document discusses how international growth places demands on management and human resource management. It examines factors that drive standardization and localization of HRM practices. It also describes different organizational structures companies use to respond to international growth, including how these responses affect HRM approaches and activities.

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kamaruljamil4
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14 views32 pages

IHRM CHP 3

The document discusses how international growth places demands on management and human resource management. It examines factors that drive standardization and localization of HRM practices. It also describes different organizational structures companies use to respond to international growth, including how these responses affect HRM approaches and activities.

Uploaded by

kamaruljamil4
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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TOPIC: THE ORGANIZATIONAL CONTEXT

• CHAPTER OBJECTIVES:
• EXAMINE HOW INTERNATIONAL GROWTH PLACES DEMANDS ON MANAGEMENT AND HRM
• STANDARDIZATION AND LOCALIZATION OF HRM PRACTICES
• FACTORS DRIVING STANDARDIZATION
• FACTORS DRIVING LOCALIZATION
• THE PATH TO GLOBAL STATUS
• STRUCTURAL RESPONSES TO INTERNATIONAL GROWTH
• EFFECT OF RESPONSES ON HRM APPROACHES AND ACTIVITIES
• CONTROL AND COORDINATION MECHANISM, INCLUDING CULTURAL CONTROL
THE GLOBAL MINDSET AND LOCAL
RESPONSIVENESS
• THE AIM OF GLOBAL STANDARDIZATION • THE AIM OF LOCALIZATION
• CONSISTENCY • RESPECT FOR LOCAL CULTURE AND TRADITIONS
• TRANSPARENCY • ADAPTATION TO LOCAL INSTITUTIONAL
• EASE OF ADMINISTRATION REQUIREMENTS SUCH AS LEGISLATIONS AND
GOVERNMENT POLICIES
• EFFICIENCY AND EFFECTIVENESS
• SENSE OF EQUITY • EDUCATION SYSTEM AND HR PRACTICES
• WORKPLACE PRACTICES AND EMPLOYEE
EXPECTATIONS
FACTORS DRIVING STANDARDIZATION

• LARGE MULTINATIONALS WITH LONG INTERNATIONAL HISTORY AND EXTENSIVE CROSS-BORDER


OPERATIONS
➢PURSUE MULTINATIONAL OR TRANSNATIONAL CORPORATE STRATEGIES
➢SUPPORTED BY CORRESPONDING ORGANIZATIONAL STRUCTURES
➢REINFORCED BY A SHARED WORLDWIDE CORPORATE CULTURE
FACTORS DRIVING LOCALIZATION
• THE HOST-COUNTRY CONTEXT
• THE CULTURAL ENVIRONMENT
• THE INSTITUTIONAL ENVIRONMENT
• MODE OF OPERATION ABROAD
• OWNERSHIP AND CONTROL
• SUBSIDIARY ROLE
• GREENFIELD VS. IJV
• M&A
• IMPLEMENTER, INNOVATOR, INTEGRATOR
SUBSIDIARY ROLE

• SPECIFIES THE POSITION OF A PARTICULAR UNIT IN RELATION TO THE REST OF THE ORGANIZATION AND
DEFINES WHAT IS EXPECTED OF IT IN TERMS OF CONTRIBUTION TO THE EFFICIENCY OF THE WHOLE MNE.
• SUBSIDIARIES CAN DIFFER RELATED TO SUBSIDIARY FUNCTION, POWER, AND RESOURCE
RELATIONSHIPS, INITIATIVE-TAKING, HOST-COUNTRY ENVIRONMENT, THE PREDISPOSITION OF TOP
MANAGEMENT AND THE ACTIVE CHAMPIONING OF SUBSIDIARY MANAGERS
SUBSIDIARY CHARACTERISTICS
• Provide significant knowledge for other units and have gained importance as MNEs move towards the

Global innovator transnational model.


• Reflected in an IHRM orientation in which the parent firm develops HRM policies and practices which
are transferred to its overseas affiliates.

Integrated player
• Creates knowledge but at the same time is recipient of knowledge flows.
• Represent an important knowledge node in the MNE network.
• The HRM practices and policies between HQ and subsidiaries are very similar.

• Rely heavily on knowledge from the parent or peer subsidiaries and create a relatively small amount of

Implementer knowledge themselves.


• If the HRM system is exported-oriented, e.g. global HRM decisions are mainly made in the parent
company, then the local subsidiaries are responsible for the implementation process at the local level.
SUBSIDIARY CHARACTERISTIC

• Engage in the creation of relevant

Local country/region-specific knowledge in all key


functional areas

innovator
• They have complete local responsibility.
• The HRM systems in such polycentric firms
only have weak ties with the HQ
THE PATH TO GLOBAL STATUS
• AS THE NATURE AND SIZE OF INTERNATIONAL ACTIVITIES CHANGE, ORGANIZATIONAL STRUCTURES
RESPONSE, DUE TO:
• THE STRAIN IMPOSED BY GROWTH AND GEOGRAPHICAL SPREAD
• THE NEED FOR IMPROVED COORDINATION AND CONTROL ACROSS BUSINESS UNITS
• THE CONSTRAINTS IMPOSED BY HOST-GOVERNMENT REGULATIONS ON OWNERSHIP AND EQUITY
• THE EVOLUTION PATH IS COMMON BUT THE STEPS ARE NOT NORMATIVE
EXPORT
SIMPLE EXPORTING MAY BE DIFFICULT FOR SERVICE
COMPANIES (E.G. LEGAL FIRMS) SO THAT THEY MAY BE
FORCED TO MAKE AN EARLY STEP INTO FDI OPERATIONS
(VIA BRANCH OFFICE OR JOINT VENTURE)

EXPORTING TENDS TO BE HANDLED BY AN


INTERMEDIARY (E.G. A FOREIGN AGENT OR
DISTRIBUTOR) AS LOCAL MARKET KNOWLEDGE IS
DEEMED CRITICAL.
SALE SUBSIDIARY
AS THE FIRM DEVELOPS EXPERTISE IN
FOREIGN MARKETS, AGENTS AND
DISTRIBUTORS ARE OFTEN REPLACED BY
DIRECT SALES WITH THE ESTABLISHMENT OF
SALES SUBSIDIARIES OR BRANCH OFFICES IN
THE FOREIGN MARKET COUNTRIES.
INTERNATIONAL DIVISION
ASSIGNS GROUP OF EACH TYPE OF FUNCTION TO A SINGLE DEPENDENT DIVISION, USED BY FIRMS TO STRUCTURE LEADERSHIP
ACCORDING TO DIFFERENT PRODUCT OR PROJECT, THUS ALLOWING MORE AUTONOMY
GLOBAL PRODUCT/AREA DIVISION

• STRAIN OF SHEER SIZE MAY PROMPT STRUCTURAL CHANGE TO EITHER OF THESE GLOBAL APPROACHES
• CHOICE TYPICALLY INFLUENCED BY:
• THE EXTENT TO WHICH KEY DECISIONS ARE TO BE MADE AT THE PARENT COUNTRY HQ OR AT THE SUBSIDIARY
UNITS (CENTRALIZATION VS. DECENTRALIZATION)
• TYPE OR FORM OF CONTROL EXERTED BY THE PARENT OVER THE SUBSIDIARY UNIT
GLOBAL PRODUCT/AREA DIVISION
GLOBAL PRODUCT/AREA DIVISION
GLOBAL MATRIX STRUCTURE

• A COMPANY STRUCTURE WHERE TEAMS REPORT TO MULTIPLE LEADERS.


• THE MATRIX DESIGN KEEPS OPEN COMMUNICATION BETWEEN TEAMS AND CAN HELP COMPANIES CREATE
MORE INNOVATIVE PRODUCTS AND SERVICES.
• USING THIS STRUCTURE PREVENTS TEAMS FROM NEEDING TO REALIGN EVERY TIME A NEW PROJECT
BEGINS
GLOBAL MATRIX STRUCTURE
PROBLEMS WITH THE MATRIX
• DUAL REPORTING • TEND TO LEAD TO CONFLICT AND CONFUSION
• PROLIFERATION OF COMMUNICATION CHANNELS • CREATES INFORMATIONAL LOGJAMS
• OVERLAPPING RESPONSIBILITIES • PRODUCE TURF BATTLES AND LOSS OF
• BARRIERS OF DISTANCE, LANGUAGE, TIME, AND ACCOUNTABILITY
CULTURE • MAKE IT VERY DIFFICULT TO RESOLVE CONFLICTS
AND CLARIFY CONFUSION
HRM ISSUES IN MATRIX
• MANAGEMENT SKILLS AND ABILITIES
• KNOW THE BUSINESS IN GENERAL
• HAVE GOOD INTERNATIONAL SKILLS
• CAN DEAL WITH AMBIGUITIES OF RESPONSIBILITY AND AUTHORITY INHERENT IN THE MATRIX SYSTEM
• ANALYTICAL AND PRESENTING SKILLS FOR SHARING IDEAS, JOIN AUTHORITY AND DECISION-MAKING IN
GROUPS

• MANAGEMENT DEVELOPMENT AND HR PLANNING ARE MORE CRITICAL IN MATRIX MNES THAN IN
TRADITIONAL ORGANIZATIONS
BEYOND THE MATRIX
• THE HETERARCHY
• MNES HAVE DIFFERENT KINDS OF CENTRES APART FROM HEADQUARTERS
• THE TRANSNATIONAL
• RESOURCES AND RESPONSIBILITIES ARE INTERDEPENDENT ACROSS NATIONAL BOUNDARIES
• THE NETWORK
• SUBSIDIARIES ARE NODES, LOOSELY COUPLED POLITICAL SYSTEMS
• AT THIS STAGE, THERE IS LESS HIERARCHY AND NO STRUCTURE IS CONSIDERED INHERENTLY SUPERIOR
FIVE DIMENSIONS OF A LESS HIERARCHICAL
STRUCTURE OR NETWORKED MNES
• DELEGATION OF DECISION MAKING AUTHORITY TO APPROPRIATE UNITS AND LEVELS
• GEOGRAPHICAL DISPERSAL OF KEY FUNCTIONS ACROSS UNITS IN DIFFERENT COUNTRIES
• DE-LAYERING OF ORGANIZATIONAL LEVELS
• DE-BUREAUCRATIZATION OF FORMAL PROCEDURES
• DIFFERENTIATION OF WORK, RESPONSIBILITY AND AUTHORITY ACROSS THE NETWORKED SUBSIDIARIES
THE PLACE OF HR IN RESPONSE TO
STRUCTURAL CHANGES
• Characterized by large, well-resourced HR departments
Centralized HR Firms • Responsible for a wide range of functions, typically within product-based or
matrix structures

Decentralized HR • Characterized by devolving HR responsibilities to a small group


• Mostly for senior management at corporate HQ; mostly within product-or
Firms regional-based structures

• Characterized by medium-sized corporate HR with small staff at HQ;


Transition HR Firms • Decentralized, operate mostly in product-based structure
THANK YOU

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