International Human Resource Management (20MBAHR403)

Module-1 Introduction 7 hours

Meaning and Definition IHRM: Evolution, Challenges, Objectives, IHRM Versus Single
Nation-centric HRM IHRM: Approaches Emergence of Global HR Manager IHRM;Culture
and Cross-Cultural Management- Introduction, Studies on culture in management Positivist
views: ‘Culture and values’ Interpretive views: ‘Culture and meanings’ Critical views:
‘Culture and power”; Comparative Human Resource Management - Globalisation and
HRM, The importance of context, Differences in HRM practice; Approaches to
International Human Resource Management - Review of IHRM approaches, The concept of
HRM, Are IHRM models applicable to other contexts? What factors affect HRM
approaches internationally? What are the implications of change for IHRM approaches?

Meaning & Definition of IHRM

International Human Resource Management (IHRM)

International human resource management is the process of employing, training and
developing and compensating the employees in international and global organizations. An
international company is one which has subsidiaries outside the home-county which rely on
the business expertise or manufacturing capabilities of the parent company. Generally, an
MNC is considered to have a number of businesses in different countries but managed as a
whole from the headquarters, located in one country.
According to Pigors and Myers, “International or domestic human resource management is a
method of developing the potentialities of employees, so that they get maximum out of their
work and give best efforts to the business organization”.
In the words of Edwin B. Flippo, “International or domestic HRM involves the planning,
organizing, directing and controlling of the procurement, development, compensation,
integration and maintenance of people for the purpose of contributing to organizational,
individual and social goals.”
Another definition of IHRM is that “it is the systematic planning and co-ordination of the
fundamental organizational processes of job and work design, staffing, training and
development, appraising, rewarding, and protecting and -representing the human resources in
the foreign operations of an organization”.

Boxall, P. (1992) defined International Human Resource Management (IHRM) as ‘concerned

with the human resource problems of multinational firms in foreign subsidiaries (such as
expatriate management) or more broadly, with the unfolding HRM issues that are associated
with the various stages of the internationalisation process. (Boxhall, P. 1992).

Mark Mendenhall (2000) sought to be more specific by outlining a number of criteria

relevant to a definition of IHRM:

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1. IHRM is concerned with HRM issues that cross national boundaries or are conducted
in locations other than the home country headquarters.
2. IHRM is concerned with the relationships between the HRM activities of
organisations and the foreign environments in which the organisations operate.
3. IHRM includes comparative HRM studies; e.g. differences in how companies in
Japan, Thailand, Austria and Switzerland plan for upgrading of employee skills and so
on.

Evolution of IHRM

• For over 30 years the question has been asked: To what extent and in what ways are
MNCs and their managers becoming truly “international”?

• For over 20 years, much of the literature on IHRM has focused on the issue of
expatriation.

• Expatriates are sent out around the world like corporate missionaries to provide
technical and managerial expertise, to control operations, and to further develop these
managers as well as their companies.

• Problems of expatriation adjustment have also been the key concern. Now issues of
repatriation have taken the foreground.

• Indeed, the traditional career paths pursued by expatriates have evolved over time. In
its place, the concept of boundary-less careers has emerged.

• Research conducted in Europe, by Geert Hofstede in the 1960s and 1970s, challenged
the extent to which American theories could be applied abroad.

• Different models of HRM have been identified : the American model that tends to be
more transactional and the European model which is more social and more
constrained by the institutional context.

• The success of Japanese companies in the early 1980s shook up the complacency of
North American managers and researchers and spurred an interest in the “Japanese
model” of HRM practice (Hatvany & Puckik, 1982; Tung, 1984).

• The debate then centered upon issues of transferability of management practice and
particularly HRM practice.

• Could Japanese management practices, for example quality circles, work in the
U.S.A.? Why did practices developed by Deming (an American) work better in

Japan than in the U.S.? Was it because of some unique aspects of “Japanese” culture?

• Peters and Waterman (1984) entered the debate by arguing that “good management”
principles and practices are universal, and as such, these could also be found in
excellent U.S. companies.

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• The secret to success was apparently a strong corporate culture. This influences “best
practices.” Since then, the debate has focused on best practices versus cultural
contingencies.

• IHRM studies varies from understanding management of expatriates, importance of

the changing nature of expatriates, the role of HR function in managing expatriates,
reasons for few women managers in the international field, importance of retaining
expatriates and the problems associated with it.

Challenges of international human resource management

HR function structures for international businesses

Digital is disrupting the primary areas where HR plays a part domestically and globally.
Discover how this disruption is impacting people departments around the world. As a result,
many multinational companies have restructured their people departments. We included
results from a study by Mercer indicating the most common structure chosen by global
industries.

Encouraging feedback as an international HR manager

The cost of expat failure makes managing a mobile workforce a key deliverable for many
global HR departments. An essential part of expat success is clear and regular communication
with people departments so issues can be flagged early and resolved quickly. We look at
ways your people department can proactively communicate with the expats you manage to
help them achieve their assignment goals.

Solving communication problems between HR and expats

If you feel your HR department struggles with expat communication, we look at the reasons
why including the impact of cultural diversity and physical distance. Most importantly we
look at ways your business can solve these issues using tools like training and development,
active listening, and empathy to help your global workforce know their needs matter.

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Diversity in the workplace

Building a diverse workforce is key to international success. In this post we look at the many
benefits workplace diversity provides particularly for doing business abroad. Having a more
diverse workforce is likely to improve innovation and attract a wider range of talent, both
essential elements in the modern workplace. Discover more of the benefits of encouraging
diversity of all sorts in your business.

Dispel the gender ambition gap myth

Is closing the gender gap a goal for your business? Wondering if the ‘gender ambition gap’
may prove problematic for this? We look at this commonly held belief in more detail and the
research that shows it does not actually exist. Women are not unequally represented in the
workplace due to lack of ambition. Research shows there are a myriad of other reasons why
we are not as likely to see women at the boardroom table. We delve into this in more detail
and what businesses of all sizes can do to bridge the gender gap.

Objectives of IHRM

Within present business scenario, there are larger number of organisations conduct business
beyond national boundaries. The differences in organisational environment across nations
have encouraged to determine and develop international HR staffing and practices. At global
scenario, it is needful to study about HR hiring, staffing developing, compensating and
appraising HR for better utilisation of people.
International Human Resource Management is the process of managing people in
international ventures and involves activities in at least two nations.
It is fact that the success of business and trades are depends on the skills and quality of
human resources and how effectively these resources are managed and utilised at
international level.
1. It enhances to develop managerial skills, organisational knowledge and technical abilities
of HR managers and employees;
2. To develop more and better handle of global business operations;
3. To manage and secure the performance, compensation and career path of employees;
4. To manage and organise cross cultural counselling and language training programme;
5. To develop more feasible understanding of work practices at global levels;
6. To raise and develop better and new performance management of human resources;
7. To get more and more opportunities within global HR scenario;
8. To develop better and competitive HR strategies in global competitive scenario;
9. To reduce the cultural differences as amicable for cultural environment.

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IHRM Versus Single Nation-centric HRM

1. Profile of workforce.
2. Administrative overload.
3. Macro perspective.
4. HR framework.
5. External influence.
6. Geo perspective.
7. Risk factor.

There are two major factors therefore which differentiate domestic HRM from IHRM.
First, the complexities of operating in different countries (and therefore in different cultures)
and secondly, employing different national categories of workers. This suggests that
international HRM is concerned with identifying and understanding how MNCs manage their
geographically dispersed workforces in order to leverage their HR resources for both local
and global competitive advantage.

Globalization has brought new challenges and increased complexity such as the challenge of
managing newer forms of network organization. In recognition of such developments, new

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requirements of IHRM is to play a key role in achieving a balance between the need for
control and coordination of foreign subsidiaries, and the need to adapt to local environments.

International HRM differs from domestic HRM in a number of ways. One difference is that
IHRM has to manage the complexities of operating in, and employing people from, different
countries and cultures. A major reason for the failure of an international venture is the lack of
understanding of the differences between managing employees in the domestic environment
and in a foreign one. A management style successful in the domestic environment often fails
if applied to a foreign environment without the appropriate modifications.]

There are some commonalities in IHRM and domestic HRM practices, particularly in areas
like; HR planning and staffing, recruitment and selection, appraisal and development,
rewards, etc the main distinctions, however, lies in the fact that while domestic HRM is
involved with employees within only one national boundary, IHRM deals with three national
or country categories, i.e.,

the parent country where the firm is actually originated and headquartered;

the host country where the subsidiary is located;

and other countries from where the organization may source the labour, finance or research
and development. This is because there are three types of employees in an international
organization, i.e.

Parent country nationals (PCNs);

A parent-country national is a person working in a country other than their country of origin.
Such a person is also referred to as an expatriate. Long periods of assignment (perhaps 4 –5
years or more) may run the risk of “de facto” employee status in the host country, so that
labor laws or the host country apply.

A U.S. parent-country national residing abroad still owes U.S. taxes each year on his or her
worldwide income. The US has income tax treaties with over 35 other countries. The IRS and
the foreign taxing authorities can exchange information on their citizens living in the other
country. Qualifying U.S. citizens and residents working outside the United States are
permitted to elect to exclude a portion of their foreign earned income under the Internal
Revenue Code (IRC). This section provides a general exclusion limited to a specified
amount, another exclusion measured by foreign housing costs, and, for self-employed
persons, a foreign housing cost deduction.

To qualify for the foreign earned income and housing cost exclusions, the individual must
have foreign earned income, his or her tax home must be in a foreign country, and he or she
must meet either of two tests:

The bona fide residence test, which requires the taxpayer to be a bona fide resident of a
foreign country or countries for an uninterrupted period that includes a full tax year, or The

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physical presence test, which requires the individual to be present in a foreign country or
countries at least 330 full days during a period of 12 consecutive months. A U.S. citizen may
qualify under either the bona fide residence or physical presence test. A U.S. resident alien
working abroad can qualify under the physical presence test, and in certain limited cases, tax
treaty nondiscrimination rules may permit qualification under the bona fide residence rule.

Host country nationals (HCNs); and

They are those employees of an organization who are the citizens of the country in which the
foreign subsidiary is located.

Third country nationals (TCNs).

Third Country National (TCN) describes and individuals of other nationalities hired by a
government or government sanctioned contractor who represent neither the contracting
government nor the host country or area of operations. This is most often those performing on
government contracts in the role of a private military contractor.

Third Country Nationals

These are the citizens of a country other than the country where the organization is
headquartered and the country that is hosting the subsidiary.

The reasons that IHRM is more complex than domestic HRM are described below.

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1. International HRM addresses a broader range of activities than domestic HRM. These
include international taxation, coordinating foreign currencies and exchange rates,
international relocation, international orientation for the employee posted abroad, etc.

2. Human resource managers working in an international environment face the problem of

addressing HR issues of employees belonging to more than one nationality. Hence, these HR
managers need to set up different HRM systems for different locations. Human resource
managers in a domestic environment administer HR programmes to employees belonging to a
single nationality.

3. International HRM requires greater involvement in the personal life of employees. The HR
manager of an MNC must ensure that an executive posted to a foreign country understands
all aspects of the compensation package provided in the foreign assignment, such as cost of
living, taxes, etc. The HR manager needs to assess the readiness of the employee’s family to
relocate, support the family in adjusting to a foreign culture through cross-cultural training,
and to help in admitting the children in schools. The HR department may also need to take
responsibility for children left behind in boarding schools in the home country by the
employees on foreign postings. In the domestic environment, the involvement of the HR
manager or department with an employee’s family is limited to providing family insurance
programmes or providing transport facilities in case of a domestic transfer.

4. There is heightened exposure to risks in international assignments. These risks include the
health and safety of the employee and family. A major aspect of risk relevant to IHRM today
is possible terrorism. Several MNCs must now consider this factor when deciding on
international assignments for their employees. Moreover, human and financial consequences
of mistakes in IHRM are much more severe than in domestic business. For example, if an
executive posted abroad returns prematurely, it results in high direct costs as well as indirect
costs.

5. International HRM has to deal with more external factors than domestic HRM. For
example, government regulations about staffing practices in foreign locations, local codes of
conduct, influence of local religious groups, etc. If an American organization is sanctioned
license by the Indian government to set up its subsidiary in India, the American company is
under legal obligations to provide employment to local residents.

6. International HRM Addresses a broad range of HRM activities. Whereas domestic HRM
deals with issues related to employees belonging to single nationality.

7. Greater exposure to risks in international assignments; human and financial consequences

of mistakes in IHRM are very severe.

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Common activities between Domestic HRM and IHRM

Emergence of Global HR Manager IHRM

1. Global mindset.
2. Knowledge of International business.
3. Knowledge of labour markets.
4. Knowledge of labour regulations.
5. Knowledge of macro societal changes.
6. Cultural perspective.

CULTURE: AN INTRODUCTION

The English word ‘Culture’ is derived from the Latin term ‘cult or cultus’ meaning tilling, or
cultivating or refining and worship. In sum it means cultivating and refining a thing to such
an extent that its end product evokes our admiration and respect. This is practically the same
as ‘Sanskriti’ of the Sanskrit language. The term ‘Sanskriti’ has been derived from the root
‘Kri (to do) of Sanskrit language. Three words came from this root ‘Kri; prakriti’ (basic
matter or condition), ‘Sanskriti’ (refined matter or condition) and ‘vikriti’ (modified or
decayed matter or condition) when ‘prakriti’ or a raw material is refined it becomes
‘Sanskriti’ and when broken or damaged it becomes ‘vikriti’.

literature, architecture, sculpture, philosophy, religion and science can be seen as aspects of
culture. However, culture also includes the customs, traditions, festivals, ways of living and
one’s outlook on various issues of life. Culture thus refers to a human-made environment
which includes all the material and nonmaterial products of group life that are transmitted

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from one generation to the next. There is a general agreement among social scientists that
culture consists of explicit and implicit patterns of behaviour acquired by human beings.
These may be transmitted through symbols, constituting the distinctive achievements of
human groups, including their embodiment as artefacts. The essential core of culture thus lies
in those finer ideas which are transmitted within a group-both historically derived as well as
selected with their attached value. More recently, culture denotes historically transmitted
patterns of meanings embodied in symbols, by means of which people communicate,
perpetuate and develop their knowledge about and express their attitudes toward life. Culture
is the expression of our nature in our modes of living and thinking. It may be seen in our
literature, in religious practices, in recreation and enjoyment. Culture has two distinctive
components, namely, material and non-material. Material culture consists of objects that are
related to the material aspect of our life such as our dress, food, and household goods. Non-
material culture refers to ideas, ideals, thoughts and belief. Culture varies from place to place
and country to country. Its development is based on the historical process operating in a local,
regional or national context. For example, we differ in our ways of greeting others, our
clothing, food habits, social and religious customs and practices from the West. In other
words, the people of any country are characterised by their distinctive cultural traditions.

CONCEPT OF CULTURE

Culture is a way of life. The food you eat, the clothes you wear, the language you speak in
and the God you worship all are aspects of culture. In very simple terms, we can say that
culture is the embodiment of the way in which we think and do things. It is also the things
that we have inherited as members of society. All the achievements of human beings as
members of social groups can be called culture. Art, music,

Culture and Cross-Cultural Management

CULTURE: AN INTRODUCTION
The English word ‘Culture’ is derived from the Latin term ‘cult or cultus’ meaning tilling,
or cultivating or refining and worship. In sum it means cultivating and refining a thing to such an
extent that its end product evokes our admiration and respect. This is practically the same as
‘Sanskriti’ of the Sanskrit language. The term ‘Sanskriti’ has been derived from the root
‘Kri (to do) of Sanskrit language. Three words came from this root ‘Kri; prakriti’
(basic matter or condition), ‘Sanskriti’ (refined matter or condition) and ‘vikriti’
(modified or decayed matter or condition) when ‘prakriti’ or a raw material is refined it becomes
‘Sanskriti’ and when broken or damaged it becomes ‘vikriti’.

CONCEPT OF CULTURE
Culture is a way of life. The food you eat, the clothes you wear, the language you speak in and the God you w
we can say that culture is the embodiment of the way in which we think and do things. It is also the things
achievements of human beings as members of social groups can be called culture. Art, music,
literature, architecture, sculpture, philosophy, religion and science can be seen as aspects of culture.
However, culture also includes the customs, traditions, festivals, ways of living and one’s outlook on vario
environment which includes all the material and nonmaterial products of group life that are transmitted from

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generation to the next. There is a general agreement among social scientists that culture consists
of explicit and implicit patterns of behaviour acquired by human beings. These may be transmitted
through symbols, constituting the distinctive achievements of human groups, including their
embodiment as artefacts. The essential core of culture thus lies in those finer ideas which are
transmitted within a group-both historically derived as well as selected with their attached value.
More recently, culture denotes historically transmitted patterns of meanings embodied in
symbols, by means of which people communicate, perpetuate and develop their knowledge about
and express their attitudes toward life. Culture is the expression of our nature in our modes of
living and thinking. It may be seen in our literature, in religious practices, in recreation and
enjoyment. Culture has two distinctive components, namely, material and non-material. Material
culture consists of objects that are related to the material aspect of our life such as our dress,
food, and household goods. Non-material culture refers to ideas, ideals, thoughts and belief.
Culture varies from place to place and country to country. Its development is based on the
historical process operating in a local, regional or national context. For example, we differ in
our ways of greeting others, our clothing, food habits, social and religious customs and practices
from the West. In other words, the people of any country are characterised by their distinctive
cultural traditions.

What is the role of culture in international human resource management?

The former influence comes from the fact that national culture exerts a powerful influence on
the system of values, attitudes and behaviour of people in a particular country and, among the
other things, on the preferences for policies and procedures in the field of human resources
management.

What is cross cultural management in Ihrm?

Cross-cultural management describes organizational behavior within countries and cultures;

compares organizational behavior across countries and cultures; and seeks to understand how
to improve the interaction of co–workers, managers, executives, clients, suppliers, and
alliance partners from around the world.

How to Manage a Cross-Cultural Team?

1. Get to Know Each Team Member. ...

2. Adopt Flexibility. ...
3. Promote Open Communication. ...
4. Encourage Team Building Activities. ...
5. Listen Actively. ...
6. Create a Structure for Success. ...
7. Address Conflict Immediately. ...

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8. Create a Cross-Cultural Awareness Program.

What are the cross-cultural issues in HR?

Tasks are performed without any interest, dedication or pride. Worse, there is indiscipline,
nagging suspicion of fellow workers, basic mistrust of authority, and poor man-
management relationships. Thirdly, time dimension, which influences HRM, has its roots in
culture.

Cross Cultural Issues In HRM

Culture refers to the complex whole which includes knowledge, belief, art, morals, laws,
customs and other capabilities and habits acquired by an individual as a member of a society.

Firstly, culture creates the type of people who become members of an organization. Culture
trains people along particular lines, tending to put a personality stamp on them. It is also not
necessary that all people are alike in a particular culture. There are sub-cultures within a
culture. For, people have their own idiosyncracies and are influenced by heredity, cultural
experiences, sub-cultural experiences, family experiences and unique personal experiences.

When people with different cultural backgrounds promote, own and manage organizations,
they themselves tend to acquire distinct cultures. Thus, the culture of the Tata group of
companies is different from that of the enterprises owned and managed by the Birlas.

Secondly, the attitude of workers towards work is the result of their cultural background. Our
workers are known to have a deep-seated apathy towards work. Work is dissociated from
results in the belief that results are pre-ordained. Tasks are performed without any interest,
dedication or pride. Worse, there is indiscipline, nagging suspicion of fellow workers, basic
mistrust of authority, and poor man-management relationships.

Thirdly, time dimension, which influences HRM, has its roots in culture. Time orientation
refers to people’s orientation – past, present or future. In some societies, people are oriented
towards the past. In others, they tend to be more focussed on the present. HRM people in
societies that focus on the present, care more for employees on their rolls. Employees are
hired and maintained as long as they are useful to the organization and dispensed with once
they cease to be so. Japan is an example of a futuristic society. When Japanese firms hire
employees, they are retained for a long time, even for life. The firm will spend a great deal of
money to train them, and there is a strong, mutual commitment on both sides. Societies
oriented towards the past tend to preserve the acquired heritage. Concepts and actions of the
past continue to guide current plans & strategies.

Finally, work ethics, achievement needs and effort-reward expectations, which are significant
inputs determining individual behaviour, are the results of culture. The word ethics is
associated with moral principles. In the context of an organization, ethics implies hard work
and commitment to work. A strong work ethics ensures motivated employees whereas the

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opposite is true when work ethics is weak. Achievement needs, too, have a behavioural
implication. A person with a high need to achieve tends to seek a high degree of personal
responsibility, sets realistic goals, takes moderate risks and uses personal performance
feedback in satisfying his or her need to achieve.

In HRD, conflict arises because of the following dualities:

· Personal goals vs Organizational goals

· Personal ethics vs Organizational ethics

· Rights vs Duties

· Obedience vs Self-respect

· Discipline vs Autonomy

· Self-confidence vs Arrogance

· Authority vs Accountability

· Leadership vs Followership

· Delegation vs Abdication

· Participation vs Anarchy

· Feedback vs Abuse · Grooming vs Pampering

· Change vs Stability

· Short-term vs Long-term

These conflicts occur daily in organizations, HR departments are expected to develop and
enforce policies in these areas.

Communication

Miscommunication across cultural lines is usually the most important cause of cross-cultural
problems in multinational companies. Miscommunication can have several sources,
including:

Differences in body language or gestures. The same gesture can have different meanings in
different parts of the world. For example, Bulgarians shake their heads up and down to mean
no. In addition, the way people count on their fingers is not universal: The Chinese count
from one to ten on one hand, and eight is displayed by extending the thumb and the finger
next to it. The same gesture is interpreted as meaning two in France and as pointing a gun in
North America.

Different meanings for the same word. Like gestures, words can have different meanings or
connotations in different parts of the world. The French word "char" means Army tank in

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France and car in Quebec. The word "exciting" has different connotations in British English
and in North American English. While North American executives talk about "exciting
challenges" repeatedly, British executives use this word to describe only children’s activities
(children do exciting things in England, not executives).

Different assumptions made in the same situation. The same event can be interpreted many
different ways depending on where one comes from. For example, although the sight of a
black cat is considered a lucky event in Britain, it is considered unlucky in many other
countries. Dragons are viewed positively in China, but negatively in Europe and North
America.

These examples illustrate dissimilarities between cultures that are both large and simple in
the sense that they focus on a single cultural aspect that keeps the same meaning regardless of
context. As a result, such variations in communication will often be identified on the spot. By
contrast, subtle or complex differences are often identified much later in the communication
process, when corrective action requires considerable effort and money. Sometimes, this
realization takes place so late that there is not enough time to address it, resulting in a missed
deadline.

MANAGING CROSS CULTURAL ISSUES

1 Clarify: When in doubt, ask; if not, ask anyway. It’s important to ensure that your foreign
colleagues have understood everything you meant to say and nothing else. Ask them to feed
you back what you have told them in their own words. This will help you discover and
address any major misunderstandings.

2 Get into the details: Although it’s often tempting to agree on general principles and leave
details to further discussions for brevity’s sake, this can create major problems at later stages.
Indeed, an agreement on general principles may turn out to be empty, if it is not tested
through negotiation on the finer details.

3 Summarize: The time taken to summarize the decisions made during a meeting and to issue
minutes to all participants is often a good investment. It helps to prevent future challenges of
decisions reached at meetings and to ensure that action items agreed to at meetings are
actually implemented.

4 Simplify: Use simple words that are easily understood and be consistent. Using synonyms
can confuse your non-Canadian counterparts unnecessarily, particularly if they are not native
English speakers. For similar reasons, technical jargon should be avoided where possible and
explained clearly when it must be used.

5 Cross-cultural training organizations can also shorten the learning curve by delivering
training to companies in a timely and targeted fashion. The necessary cross-cultural
information should be shared with all employees involved in international ventures, rather
than being limited to those who have already had experience with them. Cross-cultural
training organizations are experts in the area of cross-cultural relationships and can provide
training on many topics.
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6 Other techniques

· Building a Shared Culture

· Consensus Agreement on Important Matters

· Building an Understanding Climate

· Identify / Use the Rich points of each culture

· Concentrate on the things you know

· Understanding various religious practices

· Understanding various food practices

· Understanding various dress practices

· Showing patience always

· Showing good manners always

· Showing a sense of humor always

· Showing tolerance always

· Showing respect always

CROSS-CULTURAL THEORY

The term “cross-cultural” emerged in the social sciences in the 1930s, largely as a result of
the Cross-cultural Survey. Cross-cultural may refer to -

K Beliefs

L Values Culture Behaviour

E Attitudes

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Influence of Cultural Factors on Formation of Culture

Cross-cultural studies which is essentially a comparative tendency in various fields of

cultural analysis

Any of various forms of interactivity between members of disparate cultural groups. This
refers to cross-cultural communication, interculturalism, etc.

The discourse concerning cultural interactivity. It is also referred to as cross- culturalism

and includes multiculturalism, cultural diversity etc.

The most important part of the cross-cultural studies is cross-cultural communication, as it

gives rise to another important process like cross-cultural.

Studies on culture in management Positivist views:

Studies on culture in management
Studies on culture and management are as prolific as diverse. It is a challenging task to gain a
clear overview since one needs to take multiple research streams into consideration. On the
basis of previous reviews in organisational culture studies (Alvesson, 2002a), comparative
management (Child, 2000; Redding, 1994), cross-cultural management (e.g., Kirkman et al.,
2006; Leung et al., 2005; Lowe et al., 2007; Søderberg and Holden, 2002; Tsui et al., 2007),
international management (e.g., Boyacigiller et al. 2004; Sackmann and Phillips, 2004) and
cross-cultural psychology of organisational behaviour (e.g., Gelfand et al., 2007), we may
identify contributions to the investigation of culture and management, and examine their
conceptualisation of culture. Studies on culture and management can be classified according
to how they address culture, either as a main effect or as a moderator (Kirkman et al., 2006;
Leung et al.,2005), and further whether culture is seen as a variable or a root metaphor
(Alvesson,2002a). Søderberg and Holden (2002) separate the studies according to views of
culture: a barrier or a resource, essentialist or relational. Redding (1994) organises them
along the themes they address such as leadership or motivation across countries. Others
classify culture by the methodology used in the investigation (Barley and Singh, 1995) or
debates raised (Adler et al., 1986). Often, reviews employ several kinds of classification,
providing a detailed if not complicated picture. In order to go beyond this very complex
depiction, I choose to move up to the higher level of scientific paradigms, or scientific views
of culture. The first two views of culture presented in this chapter, the 'positivist' and the
'interpretive' ones, have been established for a longer period of time; they are illustrated in the
distinction between culture and Kultur, itself echoing the distinction between etic and emic
studies.
The distinction between culture and Kultur
Probably the most striking distinction between studies of culture and management is whether
culture is viewed according to the concept of 'culture', or as 'Kultur For centuries, a well-
accepted explanation of the differences encountered between human populations was that
they were at distinct stages of social and cultural evolution (see Herodotus' four stages of

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evolution, already expressed in the civilisation of Ancient Greece). More recently, the
Enlightenment philosophers from the seventeenth century onwards claimed that there is a
common human psyche, and interpreted human diversity as a hindrance created by
environmental or societal conditions acting against the free unfolding of human reason'
(Jahoda and Krewer,1997:9). Humanity it was assumed is universal (e.g., all humans have
similar cognitive structures), and it is their culture that differentiates them. This concept of
culture is the one most commonly adopted in management studies.
The Universalist approach of the Enlightenment stands in contrast to other beliefs in the
uniqueness of peoples and their specific 'Kultur'. Herder's 'Volkgeist' proposes that history is
the result of interaction between culturally contrasting entities, each of them being composed
of a distinct community and people, often with their own language. Dumont (1991) explains
that in the nineteenth century, in the German-speaking area of Europe, the values of
'Gemeinschaft' (community) and 'Volk' (people and/or nation) are associated in a way that
makes a German feel German first of all and a human only through being German' (Gingrich,
1998: 568). Von Humboldt (1830) holds that people who share a language develop a similar
subjectivity ('Weltanschauung'), that is, a similar way of perceiving and understanding the
world. This foreshadows the 'Sapir Worf hypothesis'
The Sapir- Worf Work hypothesis seems intuitive enough and his enthused many researchers.
It posite that man perceive and understand the world principally Through language. A famous
example is the one of the Inuit too referred to as alimos who know approximately 20 words
for the semantic category that the Indo European languages represent by the single word sow
Do the Inuit perceived more varieties of snow than speakers of Indo European languages?
Similarly, do Hopi speakers (among Native American) have a very different perception of
time since they are said to have no word or grammatical constructions to refer to at present
future? Do differences in language lead to behavioural differences? Evidence supporting the
Sapir Worf hypothesis can be found, and although it is not extensive the debate continues
amongst researchers for a discussion, see, for example Berry et al., 1992).
This distinction between culture and Kultur' for Volkgeist) is central to understanding the
different conceptualisations of culture because it reflects a fundamental ontological
opposition and therefore a fundamental difference in the ways that researchers understand
reality. On the one hand culture is approached as something universal to humankind, and
therefore something that can be investigated with similar constructs across countries. This
view is the one most commonly adopted by positivist researchers. On the other hand, culture
is seen as local emergent, specific and even unique to a particular environment or language.
This view is adopted by interpretive researchers.
The fundamental ontological opposition between positivist and interpretive perspectives lies
at the core of the etic/emic debate which is discussed below. This dichotomy is useful for
understanding the distinct conceptualisations of culture expressed in the management
literature,
Etic and emic
Originally used in linguistics, the concepts etic and emic gradually reached anthropological
and organisation studies. It developed a slightly different meaning in each discipline (see
Headland et al. 1990 and Peterson and Pike, 2002 for a discussion). Etic and emic are used to

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distinguish primarily between the perceived nature of scientific) knowledge and consequently
the different epistemologies (the appropriate ways to reach this scientific knowledge).
From an etic position on reality, there is an external significance that is consistent and
meaningful across various contexts. The etic approach is viewed as general and it focuses
often on previously developed constructs or concepts that are then investigated, for example,
in a number of different countries. For instance, cultural dimension constructs such as
'Individualism Collectivism are argued to be etic and the concept is understood to be valid
and coherent across countries. This means that the influence of this dimension on IHRM
practices can be compared across countries.
From an emic position, meaning exists within the context of its experience. The emic
approach is seen as situated and focused on the particular meanings given by a specific group
of individuals, thus implying that there are implicit aspects to knowledge and understanding.
For example, the idea of statistical theory that was applied to product quality control in the
United States in the 1920s was further made sense of in a comprehensive way in post Second
World War Japan. Quality was not interpreted as the feature of a finalised product, but rather
as the outcome of a process. The focus expanded from quality of products to quality of
numerous other aspects of organisations, leading to what became later internationally known
as Total Quality Management. Similarly, the same IHRM tool can lead to distinct practices in
the various (cultural) environments where it is implemented, since the local interpretations
and the local views will vary. Emic studies are reflected in an interpretive approach to science
that emphasises the interpretations of individuals and the significance of the local context in
the developmentof these meanings.
The next three sections of this chapter briefly explain and discuss the positivist and then the
interpretive and critical viewpoints on culture and IHRM.
Positivist views
Positivist views on science and knowledge are the ones traditionally associated with the
natural sciences, they are dominant in management research and inspire the search for models
and general theories. A more thorough presentation of the views can be found in Burrell and
Morgan (1979) Chalmers (1990) Danakon Guba and Lincoln (2005). Management research
adopting a positivist view has built on the foundation of previous research on culture,
including psychological anthropology and functionalism. These approaches are succinctly
presented below and have influenced the current way positivist researchers think about and
investigate culture in IHRM

Psychological anthropology
In North American anthropology the concept of culture was developed something carried
around in people's heads Erickson 1998 Pschological anthepology leg. Benedict, 1934/1980
Mead. 1928:19901 internet the investigation of the relationship between culture and
individuals with its open Today this is expressed through the concept of a model personality
that apie a relative frequency of certain personality types within any country. The model
personality type is investigated mostly in cross-cultural psychology ( see Church 1998 for a
review)

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Functionalist anthropology (and sociology)

After the Second World War, Clyde Kluckhohn and Alfred Kroeber (both influential
anthropologists in North America) argued in favour of a mentalistic conception of culture
(Kuper, 1999). In their opinion and consistent with the work of leading sociologist Parsons
(e.g., 1951), values are claimed to be the core elements of culture and taken as the theoretical
focus of cultural investigations. Subsequent studies investigated the importance of value
orientations for making comparisons between different cultures, such as in empirical
interview research on five communities in the Southwest of the United States (two American
Indian, a Spanish American, a Mormon and a farming village community) by Florence
Kluckhohn and Fred Strodtbeck (1961).
They adopt a functionalist argument: cultures are fulfilling functions, they provide answers to
basic human needs. These basic human needs are the same across societies, and therefore can
be seen as human universals. Human universals offer a conceptual framework for the
comparison of cultures cultures can be compared for how they fulfil these universal needs.
The influence of the North American functionalist approach to the study of culture is the
most visible in cross-country comparative studies using cultural dimensions or similar etic
constructs. It presents culture as composed of universal constructs that can be measured
through, for example, individual values.
'Culture and values'
In the functionalist approach, culture is seen as providing answers to the basic needs that
human beings have to fulfil and this is the foundation for what are known as cultural
dimensions (Hofstede, 1980). The idea is that there are distinct ways in which culture can
fulfil these human needs, thus creating variations in the cultural dimen sions. These variations
are linked to different values. For instance, human societies are compelled to deal with their
environment (see Kluckhohn and Strodtbeck, 1961) and the different ways in which they can
do this are claimed to be variations (eg. harmony, mastery or subjugation) within the cultural
dimension Relation to broad environment' (see, for example, Maznevski et al., 2002,
Trompenaars, 1993) Each variation is embedded in a set of values, that people carry around
in their heads thus giving to positivist and functionalist researchers the possibility of
investigating culture through values.
The functionalist approach to culture is recognisable in research on cross national
management such as the seminal contributions by Hofstede (see Hofstede, 2001 and by
Schwartz (see below), the works by Maznevski et al. (2002), as well as by the GLOBE
(Global Leadership and Organisational Behaviour Effectiveness) project (House et al., 2004).
Likewise the legitimacy of searching for social axioms (bellen endorsed and used by people
to guide their behaviour in different work situations is also based on the functionalist
argument they are important for human survival and functioning (see Leung et al. 2002 288).
It is a similar foundation that supports the investigation of sources of guidance' (see Smith et
al., 2002). In sum, culture is said to fulfil the function of meeting human needs. Since they
are universal human needs, they are universal (etic) aspects to culture (the cultural
dimensions) and to human behaviour. These dimensions can be investigated through the
study of people's orientation to values.
An impressive amount of studies have used these dimensions to test the relationship between
culture and various aspects of management, such as motivation, reward allo- cation, hierarchy

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preferred forms of training, and leadership (see a review by Kirkman et al. 2006 on the
studies using Hofstede's cultural framework). For example, in a cultural environment with
high Power Distance, organisations are likely to have centralised decision-making structures,
tall hierarchies, a large proportion of supervisory personnel, privileges and status symbols for
managers that are both expected and accepted, and a wide salary range between employees at
the top and the bottom of the organisation pyramid (Hofstede, 2001: 107-8)
In the GLOBE project (House et al., 2004), additional cultural dimensions are developed and
existing dimensions are further refined. For example, GLOBE considers the dimension
'Humane Orientation that encourages and rewards individuals for being fair altruistic,
generous, caring and kind to others (Kabasakal and Bodur 2004). In an environment scoring
low on Humane Orientation, there will tend to be greater control of organisations exerted
through IHRM practices, than in an environment scoring high on Humane Orientation, where
'organisations are relatively autonomous in their employee relations' (Kabasakal and Bodur,
2004: 584).
Cross-cultural management research largely adopts a mainstream psychological approach
(see Smith and Bond, 1998), that tends to define culture as an independent variable
influencing human cognition or behaviour Values, and consequently the study of values
across countries, are a fundamental part of cross-cultural com- parison studies. The Rokeach
Value Survey (Rokeach, 1973) is the point of depar- ture for the seven value-types (similar to
cultural dimensions) devised by Schwartz and colleagues (see Schwartz and Bilsky, 1987).
He distinguishes the same seven types of values in each country (see Smith and Schwartz,
1997 Schwartz, 2004) and assesses their implications for management For example, role
overload and role con flicts are more likely to be reported by managers working in a cultural
environment where values of Mastery and 'Hierarchy' are praised, and where values linked to
'Harmony have a low priority (Sagiv and Schwartz, 2000: 427). In environments where
values of Embeddedness' are important for individuals, it is less likely that managers will
choose pay levels exclusively based on their employees work productivity. They tend to also
take employees' family situation into account (Sagiv and Schwartz, 2000: 432)
Another important contribution made by psychologists to cross-cultural management research
is the work of Triandis (e.g., 1995) on Individualism and Collectivism This dimension has
been investigated regarding its direct or moderating impact on,

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for example, motivation, job attitudes and group processes (see reviews by Earley and
Gibson, 1998 Gelfand et al. 2004). In sum, the positivist viewpoint on culture with its
predilection for values and their influence on attitudes and behaviour is the basis of a large
body of research that describes how culture influences management. Culture in summary is
seen as an external variable that has an impact on both people and organisations

Interpretive views
Interpretive views, in contrast to the positivist ones, pay a stronger attention to the way
individuals make sense of their reality. For interpretive researchers, 'behaviour cannot be
'observed", rather it has to be understood and experienced from within, and interpreted'
(Chapman 1997: 5). Briefly stated, the interpretive approach emphasises symbols and
meanings, and is often associated with the work of Weber and Schutz (see Burrell and
Morgan, 1979, Guba and Lincoln, 2005; Schwandt, 1994 2000). For example, Weber (e.g.
1911/1978) argues for a distinct approach to social sciences, where verstehen understanding)
is central, contrasting with the positivist approach where the aim is begreifen' (grasping)
Meaning for actors is essential to understanding their actions. In interpretive studies, the
researcher's attention is focused on local, specific and perhaps unique meanings. The
interpretive view used in research on culture and management is highly influenced by the
disciplines of cultural anthropology and interpretive sociology, which are very briefly
introduced and explained below

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Cultural anthropology
In anthropology the emphasis placed on meanings, and the symbols that support meanings
becomes predominant with Geertz Geertz (1973/1993) developed a semantic
conceptualisation of culture as webs of significance spun by individuals. He asserts that the
analysis of these webs is not an experimental science but an interpretive activity in search of
meanings. Interpretive anthropologists abandon claims of explanation and comparison in
order to focus on the frameworks of interpretations used by individuals from distinct groups.
A culture is not described as a set of dimensions, with high or low scores, but rather as a
system of sense-making. For example, Geertz 11973/1993) explains a range of socio-cultural
interactions between Balinese people using a metaphor of a specific ſemic) kind Balinese
cockfights.

Interpretive sociology
Sociological works, too, have influenced the conceptualisation of culture in management. In
simplified terms, traditional Western sociology has explored culture through two principal
traditions. In Durkheim's view, culture is engraved in society and within its structures. As
culture is seen as pervasive, it does not however receive particular attention. In contrast,
through the Weberian tradition culture is studied through investigation of the forces
influencing individuals. For instance, Weber's work on the Protestant Ethic and the Spirit of
Capitalism (1904/1996) provides an analysis of socio-economic transformations with a focus
on material and ideational forces. Material forces are for example, technological innovations
(in communication and transport) or the development of capitalist modes of production. The
ideational forces are seen as the religious beliefs (such as those which hold ascetic behaviour
to be desirable) or more broadly speaking, the meaning that people give to social institutions.
Together, these forces shape socio-economic development along different paths, which
contributes to explain differences between countries.

'Culture and meanings'

The influence of Geertz on research on culture and management is particularly noticeable in
organisational culture and comparative management studies.In studies of organisational
culture, shared interpretations are frequently seen as the expression of a common (sub)culture
in the organisation (Czarniawska-Joerges,1992, Ybema, 1997). In these studies, meanings
and especially shared meanings are at the core of the understanding and investigation of
culture. For example, subgroups of employees of an organisation may have developed the
same meanings linked to certain organisational practices, such as how the corporate code of
conduct should be interpreted, but their subculture and views may differ from the one
promulgated by the headquarters. Other interpretive contributions, inspired by
anthropologists such as Goodenough, are adopted in the study of employees' cognition or
collectivemental frameworks (Shrivastava and Schneider, 1984 Sims and Gioia, 1986) or
symbols and meanings (Czarniawska, 1986; Gagliardi 1990; Pondy et al., 1983). In sum,
interpretive studies of organisational culture(s) often tend to regard cultural groupings as
composed of people sharing the same interpretations In comparative management, Gannon
(2004, 2009) proposes 'cultural metaphors' to help understand the culture of a nation. When
positivist studies offer scores on dimensions, Gannon sketches the cultural profile of a

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country by comparing it with one of its local features. For example, Nielsen et al. (2009) use
the metaphor of the Fado' la popular form of song) to describe the Portuguese culture. Using
the rich metaphor of a social institution in a given country, cultural metaphors explain the
complexity of a local culture in an intuitive way. Similarly, fine wine serves as a metaphor
for French culture American Football for the US culture and the summer cottage of the stuga
helps people to understand the Swedish culture (see Gannon, 2004). Cultural metaphors can
contribute to the preparation of employees for expatriation, as well as assist with making
sense of the cultural differences between two partners The attention given to struct in a
merger.

The attention given to structures of meanings is also applied in comparative studies of

management across countries, for instance in the works of d'Iribarne (1989, 2009). This
approach interprets the ways that local structures of meanings (culture) are mobilised to make
sense of a situation. For example a French multinational had repeatedly tried to implement
Total Quality Management (TQM) in its Moroccan subsidiary without success, and then it
suddenly worked. The origin of the success was attributed to a combination of elements that
enabled employees to make sense of TQM, and thus to implement it. The new CEO adopted
an exemplary leadership attitude, combining it with a new form of TQM training that
articulated parallels between the key principles of TQM and verses of the Qur'an. This ability
to relate the values of TQM in a culturally meaningfully way meant that employees could
make sense of the implementation of TOM with the emic concept of the Zaouia They drew a
semantic parallel between the community of the Zaouia, with its exemplary leader and its
religious connotations, and their own organisation, now including an exemplary leader a
community of employees, and TQM principles associated with moral guidance (see d
Iribarne, 2002). Resistances, failures or difficulties in the transfer of HRM practices have
been linked to disparate understandings and cultural practices occurring between for example
the headquarters and foreign subsidiaries. Henry (2007) investigates the resistance of a
French consulting firm to the implementation of detailed job descriptions in the Société d'
Electricité du Cameroun, when these job descriptions were in fact explicitly requested and
thus were part of the consultants brief. After the analysis of the cultural meanings associated
with job descriptions by the French consultants (eg lack of freedom, disempowerment) and
the Cameroonian employees leg. protection against arbitrary and pervasive use of power
clarification and delimitation of tasks) both interlocutors were then able to come to an
agreement and move forwards with the specification of acceptable job descriptions
Interpretive views on culture are not solely linked to investigating shared meanings in
organisations, they also include the study of meanings developed by institutions and their
implications for organisations practices. Child (2000: 40f.) shows the relationship between
Weber's view and institutional theory. He explains that management and business have
distinctive institutional foundations in different societies. These institutions (eg. state, legal
system, etc.) and the role they play shape different national business systems' (Redding, 2005,
Whitley, 1992a, b). Local systems of ideas (political religious etc.) influence the ideology
structure and culture of institutions, which themselves influence organisations, organisational
behaviour and HRM. Budhwar and Sparrow (2002) report how different contextual variables
(such as industrial relations, labour markets, business systems) in India and the United

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Kingdom shape different logics of actions for managers, even when they are aiming to
achieve the same goal of improving integration between HRM and business strategy
Institutional influences are presented in this book (see Chapter 2) to explain differences
across countries regarding HRM practices (see also Ferner et al., 2001).

Critical views
in contrast to the interpretive and positivist views, the critical views aim to reveal how our
reality is influenced by social and historical forces that are in tension with each other. What I
call here the critical views on culture and IHRM aim to show these tensions, power struggles,
social constructions and extent of closure Brienly stated, critical researchers contend that
social situations are the temporary outcome of struggles between various views defended and
perpetuated by actors engaged in power relationships. A situation can be seen as the status
quo imposed by people occupying a powerful position, who have silenced the voice of others.

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Critical researchers investigate for example how the power of the dominant party in the
relationship is exerted pervasively by influencing norms, habits, rules and discourses that is
ways of talking about people and the content of the messages) Revealing these mechanisms
may improve a situation, thus, critical studies can be constructive (see Carr, 2006) Critical
views are pluralist in nature and a more thorough presentation of them are found in Alvesson
and Deetz (2000) and Guba and Lincoln (2005) in research on culture and management
several streams of thought have been influential and I present just two of them below: critical
and postcolonial anthropology.

Critical anthropology
Due to the influence of predominantly French writers on structuralism (eg. Levi- Strauss
Barthes), semiotics (eg, Pierce, de Saussure) and later post-structuralismleg.. Dertida,
Baudrillard), the considerations of discourses, texts, power and science have become more
central. The activity of writing about culture for comple, is carefully examined in terms of
power relations and its use of language. For example, Geertz (1988) advises that
anthropologists' monographs are not neutral reports since they are constructed for particular
purposes (eg., gaining credibility within the aca- demic discipline or satisfying an influential
stakeholder or sponsor) and on closer inspection reveal the problematic relations existing
between the ethnographer, reader and subject matter. In addition, the account being produced
arises from a particu- lar viewpoint: most often that of the white, middle class, educated
Euro-American male, whose country of origin often politically or militarily dominates or
previously dominated the one studied (Erickson 1998: 135ff.). In critical anthropology,
language and literary analysis become the centre of anthropological research endeavour (see
Clifford and Marcus, 1986, and for example, Mutman, 2006). It is no longer the 'foreign' or
'exotic' culture itself that needs to be elucidated, but rather the anthropologist's explanation of
that culture in order to understand from which standpoint the description is made). In
anthropology as a discipline, issues of power relationships and cultural hegemony animate
research debates and are a major influence on the literature D Andrade, 2000; Harris, 1999)
Post-colonial perspectives The very notion of culture is challenged by post-colonial studies
(see Bhabha, 1994, Said, 1978, Spivak, 1987). They denounce the idea that talking about
culture' implies one is addressing and dealing with simplifications, exclusions and power
relationships. For example referring to the 'Hungarian culture' implies sameness,
homogenisation and also positions certain features as representing 'Hungary' (and thus
excludes or silences - others). Those journalists, ethnologists or researchers using cultural
dimensions, 'decide what the Hungarian culture is, and from their relative position of power
impose their views on others. Guided by Foucault's ideas on power/knowledge, Said (1978)
outlines that knowledge and political, military, or economic interests are connected. By
making statements ('scientific' or not) about others, one gains a superior position, since one
has a voice and is free to talk in the name of other Western academia, for example, with its
way of talking about culture (definitions, measurements, ethnographies, etc.) creates a
discourse that otherises and classifies non-Western peoples so that they often appear as very
different (other) and even inferior (since they are not as 'individualist' or 'assertive' as the
implicit Euro-American norm). Post-colonial views can help us to question the fact that
cultural differences are presented as real when they are also social constructions of

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researchers or politicians and serving various agendas such as increasing managerial

influence on employees or justifying colonisation. Additional aspects on post-colonial
perspectives in research can be found for example, in Young (2001), and in Özkazanç-Pan
(2008) and Westwood (2006) regarding management.

Culture and power

The linguistic turn has been influential on many subject disciplines including management
and organisation studies (Alvesson, 2002). Since the 1980s there has been a greater focus on
language itself, the study of metaphors being a notable example see Morgan, 1980, 1986 or
Alvesson, 2000a for the concept of organisational culture and its associated metaphors)
Critical thinking influences the study of organisational culture through its rejection of what is
argued is the illusion of achieving comprehensive knowledge with broad theories and meta-
narratives Kunda, 1992: Parker, 2000; Willmott, 1993). It searches for poly vocality and thus
several voices, for instance, the voices of managers together with the voices of blue collar
workers. Critical thinking can help to reveal the multiplicity of cultures across and within
organisations in regard to functions tenure hierarchy and gender, etc. Respecting cultural
diversity for HR managers goes beyond the consideration of traditional forms of diversity
(such as gender, age people with a disability to include for example, religious belonging,
professional training and sexual preferences IBM and Volvo group for example, are actively
managing this multi-faced diversity of their international workforce through programmes
such as Diversity and inclusive leadership Critical perspectives can contribute to diversity
management for HR managers by encouraging more questioning on their views on diversity
Zanoni and Janssens(2004) assert that HR managers discourse on diversity may reflect
dominant views and reaffirm management practices and underlying inequalities Critical
perspectives can thus help HR managers to realise that they may involuntarily be reproducing
the inequalities they intend to address Organisational or national culture differences are
shown for example by Riad (2005) or Vaara (2002) as a narrative construction (in other
words a story) to explain the success or the failure of mergers and acquisitions. Discourses on
cultural differences between organisations present suitable narratives for explaining
incompatibility between organisations and legitimising partial actions, or making sense of
failures. They appear for example in conversations company case studies, press releases or
corporate internal communication Using for example, cultural incompatibility to explain a
merger's failure can be a convenient way to silence other analyses, for example a poorly
prepared merger, lack of managerial commitment hostile attitude from one organisation and
its consequence on workers motivation strategic misfit underestimated costs, and structural
incompatibility in operations. Other studies show that discourses on culture are constructed
and mobilised during power struggles. Ybema and Byun (2009) reveal that when Dutch and
Japanese employees collaborate at work in Japan or in The Netherlands, the cultural
differences they report depict a negative picture of the other culture, and especially so
whenever its representatives are in a superior position. For example, they show that Dutch
interviewees, annoyed at being excluded by their Japanese bosses tend to emphasise their
Dutch' values of egalitarianism This is done in opposition to the Japanese regime. They claim
that Japanese management tries to preserve the status quo by emphasizing Japanese values of
hierarchy and consensus However interviewed Japanese employees working in The

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Netherlands mention that they are being encouraged by their approachable Dutdi superiors to
be more assertive! Yet, when they talk about the Dutch way of decision making they refer to
it as being "top-down rather than egalitarian (Ybema and Byun, 2009: 350). The authors
reveal how employees use culture' to discursively erect symbolic boundaries between them
and their co-nationals) and others belonging to a foreign culture. In other words, the cultural
differences are talked about in a way that creates two different groups: the Japanese and the
Dutch who are essentialised as different especially when they are connected to different
hierarchical levels. These boundaries serve the reproduction of power and status inequalities
in their organisations.

Critical views address the discourse about the other and about concepts of difference. They
contribute to cross-cultural management knowledge that is used for expatriation training leg.
Dahlén. 1997 Lowe 2001, 2002). Pre-expatriation training may implicitly reproduce
stereotypes about non Western cultures, thereby justifying the transfer of HRM practices
from the headquarters to subsidiaries in developing countries. For example the use of
discourse essentialising others and presenting them as culturally determined and backward'
(Fougère, 2006: Fougère and Moulettes,2007 Kwek 2003) may lead to IHRM policies and
practices in favour of bureaucratic control mechanisms rather than cultural ones based on
training - since the assumption is that they are not going to change or that any change will be
difficult Further contributions from critical views to IHRM are presented in Peltonen (2006).

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Comparative Human Resource Management

The meaning and impact of comparative human resource management. Many scholars of
HRM have to focus on a narrow definition of the topic that fits the liberal market agenda
widespread in some countries but fails to capture the reality of any country – a problem
brought into stark relief by comparative studies of HRM. On the basis of that analysis, it will
be argued that multiple stakeholder perspectives focused on the long-term benefits to
organizations. Employees and the wider community is a more powerful analytic tool.

As an increasing number of organizations seek to operate in foreign markets. It is vital that

management practitioners develop a better understanding of, and sensitivity to, the impact of
different national settings on the management task. In the field of cross-cultural
management/organization, scholars have sought to assist practitioners in achieving. This by
conducting research that has generally guiding by two key questions: (1) what is general and
universal in the management of organizations, and (2) what is peculiar or specific to one
nation or culture?

Difference between international and comparative HRM

International Human Resource Management has defined as HRM issues, functions. Policies
and practices that result from the strategic activities of MNEs. International Human Resource
Management deals principally with issues and problems associated with the globalization of
capitalism. It involves the same elements as domestic HRM but is more complex to manage.
In terms of the diversity of national contexts and types of workers. The emphasis is on the
MNCs’ ability to attract, develop and deploy talented employees in a multinational setting
and to get them to work effectively despite differences in culture, language, and locations.
International HRM tends to mitigate the impact of national culture and national employment
practice against corporate culture and practices.

Comparative Human Resource Management, on the other hand, is a systematic method of

investigation. That seeks to explain the patterns and variations encountered in cross-national
HRM rather than simply describe HRM institutions and practices in different societies.
Different national business systems arise from differences in specific historical, cultural and
institutional heritage in certain countries. Comparative differences occur due to decisive
historical events such as the process of industrialization or due to the legacy of pre-modern
forms of social organization. Hofstede adopted the ‘culturalist’ perspective where he argued
that national business styles emerge due to ingrained cultural attitudes and mental schemas.
He described culture under five dimensions which are power distance, individualism,
masculinity, uncertainty avoidance and long-term orientation.

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Human Resource Management policies and practices are becoming universal and that
country-of-origin effects are no longer relevant. The pressure to build standardize operations
internationally is strongest in sectors. Where competition is highly internationalizing, and
where firms compete on the basis of a similar product or service across countries. Such as in
cars and fast foods. They have put forward several reasons to explain this trend.

Firstly, all MNCs operate in one global market and therefore have to respond to the same
environmental pressures such as globalization and technology. The growth in international
trade and the move towards an internationally-integrated financial system.

Secondly, the widespread practice of benchmarking ‘best practice’ in terms of cost. Quality
and productivity may also have contributed to the convergence of international HRM models
for e.g. Japanese style ‘lean-production’ system in the 1980s and 1990s. Moreover, these
pressures towards convergence stem in part from the influence of MNCs themselves through.
Their ability to transfer practices across borders and erode country-of-origin effects.

Finally, the formation and development of like-minded international cadres mostly from
American or European business schools. May have contributed to homogenize international
HRM policies and practices.

Since the early 1990s, the international HRM literature has dominated by models and
typologies aim at identifying how international HR fits with organizational strategy. The
main issue for all multinational companies is the need to trade-off the advantages global
efficiency namely. The coordination of its operations to achieve economies of scale and
scope as opposing to the need to differentiate its products and services to meet the local
demands. They also identify a third pressure, namely worldwide innovation and learning.
Whereby firms are encouraging to support innovation and learning across. Their network of
subsidiaries rather than simply relying on research and development at the headquarters.
MNEs then follow the appropriate HRM policies and practices according to the structure of
the organization. The competitive strategy is chosen or stage of corporate evolution reach.

GLOBALISATION & HRM

Introduction to Globalization

Background to Globalization: International Business evolved from the age of World War I
(1919) & World War II(1939 ) . The economies of several counties were down. Exports &
imports were restricted due to unhealthy relations. Then the world war countries found the
need of international cooperation in global trade. This lead to the formation of IMF(
International Monetary Fund) & World Bank. The attempt of these advanced countries ended

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with the GATT( general Agreement of Trade & Tariffs) & gradually GATT was replaced by
WTO(World Trade Organisation) in 1995.

Hence the efforts of IMF, World Bank & WTO lead to the globalization of business during
1990s.

Phase 1 – From export-import to International Marketing: Earlier organisations used to only

export or import their products across nations. Later these organisations began their
promotion in the countries where their products were in demand thus starting international
marketing.

Phase 2 – From International Marketing to International Business: Since the demand of the
products started increasing in the neighboring countries, it was becoming difficult for the
producers to export at a larger rate hence they decided to manufacture their products in the
countries where there is high demand. Eg: Uni lever established its subsidiary in India i.e
HUL/HLL. Now HUL produces its product in India and markets them not only in India but to
Bangladesh, Sri Lanka, Nepal etc. Thus began the International Business

Globalization:

 Doing business in more than one country

 Operating and expanding the business throughout the world
 Establishing manufacturing and distribution facilities in any part of the world
 Global organizational structures, organizational culture & strategies

Advantages & Disadvantages of Globalization

Advantages:

 Cheaper Products for Consumer: Mass production leads to availability of products at low
price.
 Consumers get the product they want at more competitive prices.
 Consumers to get much wider variety of products to choose from.
 Globalization leads to Outsourcing in some cases which can increase of job in other
countries. Eg: Moving call centers to India.
 The international barrier gets reduced between counties which fosters the relation among
nations.
 Better qualities of products are available due to standard norms set for production across the
globe.
 Helps prevent market saturation in a specific market i.e it reduces too much competition in
one place. For e.g too much call centers were existing in UK market which moved to India
 Standardization of product: The same products can be seen in some many places – e.g coke
and McDonalds
 Companies get access to much wider markets which give a scope of further development of
organisations

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 Increased Standard of living due to the availability of goods & services across the globe
 Increased flow of skill and non skilled jobs and workers which enables better employment
conditions across the countries. Eg: Large numbers of Indian citizens work in the Middle East
country which helps both the countries.

Disadvantages of globalization:

 Companies face much greater competition. This can put smaller companies, at a disadvantage
as they do not have resources to compete at global scale.
 It can increase spread of communicable diseases.
 Economic depression in one country can trigger adverse reaction across the globe.
 Widening of Gap between rich and poor countries
 Exploitation of workers: Paying the workers in less economic developed countries a fraction
of what would be paid to the parent citizen workers

Impact of Globalization in India:

 Indian consumers are availing cheaper products due to globalization. There was one stage
where only Ambassador Cars were available at high prices but now plenty of automobile
companies are existing supply at low prices.

 Indian consumers have more choices to choose from. In consumer durable industries at one
point , only Videocon, Onida & BPL ruled the market, but now these companies are no more
capturing a big market share. Consumer has plenty to choose from variety of companies such
as Samsung, Sony, HP etc.

 Indian consumers have an access to better quality of products due to global standardization.
MNC’s such as Mc Donald’s, Coke etc maintain the same standard in India which is
maintained throughout the world.

 Indian consumers now have a better standard of living due to the easy access of products
across the globe. Online marketing, E Business & Mobile banking has helped Indian
Consumers to establish a global living standard.

 Due to globalization the concept of outsourcing is made possible. The employment in India
has improved to a great extent due to the emergence of call centers, BPO’s & KPO’s.
 Any Indian company can dream now to become a Indian MNC due to globalization. In finger
tips the world market is available to them. Companies get access to much wider markets
which give a scope of further development of organisations
 Increased flow of skill and non skilled jobs and workers which enables better employment
conditions across the countries. Eg: Large numbers of Indian citizens work in the Middle East
country which helps both the countries.

Global Mind Set:

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The process of globalization forces companies and individuals to develop global mindset.

A Mindset is the way we, whether an individual or an organisation observes, accepts and
makes sense of the world around us.

A global mindset will comprise of the following aspects:

Intellectual global mindset:

 Understanding of how to build and manage global alliances, partnerships and value networks
 Ability to manage the tension between corporate requirements and local challenge
 Ability to handle complex cross-culture issue
 Understanding of global business and industry
 Understanding cultural similarities
 Understanding other cultures and histories

Psychological global mindset:

 Respect for cultural differences

 Willingness to adapt, learn and cope with other cultures
 Willingness to accept good ideas no matter where they come from
 Acknowledgement of validity of different views
 Openness to cultural diversity
 Ability to suspend judgment about those from other cultures
 Positive attitude toward those from other cultures and regions
 Ability to adjust behaviour in a different cultural and regions
 Willingness to work across time and distance
 Desire to learn about other cultures and other parts of the world

Social global mindset:

 Ability to generate positive energy in people from a different part of the world
 Ability to excite people from a different part of the world
 Abilty to connect with people from other parts of the world
 Collaborative

Human Resource Management:

HRM is a management function that helps a manager to plan the required manpower, recruit,
select, train, motivate, engage and develop employees for the Organisation.

In other words, it is an organizational function that is related to the employee concerns such
as recruitment, employee motivation & development, training, wellness, compensation,
benefits and administration

Importance of Human Resource Management:

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 It helps an Organisation to supply the required manpower to accomplish the organizational

goals.
 It trains the employees to gain specific skills and knowledge required to work.
 It facilitates and provides opportunities for employee development.
 It engages the employees to their work & to the organization.
 It provides an employee their wages, benefits, recognition, motivation, social security &
status.

Functions of Human Resource Management:

Manpower Planning Performance Management

Recruitment Employee Engagement

Selection Compensation and benefits

Training & Development Employee Exit

Impact of Globalization on HRM

Globalization symbolizes free flow of technology and human resources across national
boundaries presenting an ever-changing and competitive business environment. Globalization
is a process that is drawing people together from all nations of the world into a single
community linked by the vast network of communication technologies. This aspect of
globalization has also affected the HRM in the business world of today. HR managers today
not need to rely in a small limited market to find the right employees needed to meet the
global challenge, but today they can recruit the employees from around the world. The future
success of any organizations relies on the ability to manage a diverse body of talent that can
bring innovative ideas, perspectives and views to their work. Thus, a HR manager needs to be
mindful and may employ a ‘Think Global, Act Local’ approach in most circumstances. Many
local HR managers have to undergo cultural-based Human Resource Management training to
further their abilities to motivate a group of professional that are highly qualified but
culturally diverse. . Furthermore, the HR professional must assure the local professionals that
these foreign talents are not a threat to their career advancement. In many ways, the
effectiveness of workplace diversity management is dependent on the skilful balancing act of
the HR manager.

Global HRM refers to Human Resource Management practices that deal with managing a
diversity of workforce from all around the world.

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The impact of globalization on HRM is as follows:

 Managing Cultural Diversity: Managing different employees from different cultures in the
same organisation is a complex activity. Employees from each country think differently,
perceptions are different towards work culture, the languages change, vocabulary differs and
even non verbal communications are quite different from each region. This makes the task of
the human resource department challenging due to globalization.
 Managing Expatriates: Preparing the home country employees to work in a different
country is a herculean task. The beliefs, value system, culture, attitude are diverse in nature.
Recruiting, retaining and motivating expatriates have a major impact on the business.
Understanding expatriate’s need is a prime concern for the human resource team.
 Difference in the Employment Laws: The employment laws or the labour laws differ from
one country to another. The understanding of not only the monetary benefits becomes
essential but also the non monetary benefits such as leaves, flexi timings are important to be
included in the human resource policy.
 Managing Outsourcing of employees: Outsourced employees to manage business are the
big impact of globalization. Managing the BPO, KPO employees working with a different
culture, different language, working in completely opposite shifts is a new shift in the area of
human resources. Managing the expectation of these employees is a challenge for today’s HR
and this challenge is a result of globalization.
 Managing virtual employees: Majority of the information technology based organisations
have employees working “on-site” at a client’s location which is completely new to them.
The virtual employees have to be managed, retained and motivated in a different way unlike
the “off-shore” employees. This practice of managing the virtual employees is a result of
organisations going global.
 Corporate Social Responsibility: Corporate houses actively participating in the practice of
doing for the betterment of the society has emerged from the western countries. It is one of
the ways make the presence felt in the host countries. Employees are encouraged to
participate in such activities which help to reduce stress working with MNC’s.
 Coping with flexible working hours: The practice of flexible working hours has emerged as
one of the retention initiative of workforce specially women employees who can maintain the
work life balance. This practice of flexible working hours is result of working beyond normal
time zones. Organisations which have a global presence need the attention of employees at
various time zones which is not possible for all employees doing a continuous shift. Hence
this practice emerged from globalization and has a positive impact on the HRM practice.
 Evolution of more part-time and temporary work (especially among women, the elderly
and students): The concept of part time employment, contract jobs have emerged from the
practice of MNC’s since hundred percent of workforce on permanent payroll is quite a
expensive matter to these organisations. Majority of large MNC’s in the information
technology sector has their employees under contract employment.
 Coping up with emerging technologies & quality measures: Every employee in today’s
leading organisation is being trained with the latest technologies especially with the ERP
concept like SAP or Peoplesoft. This step has been taken by MNC’s to equip the employees
with latest technology enabling the employees to cope up with the changing technology.

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Certifications like Six Sigma are availed to employees to manage the business on an
international platform.
 Changing perspective from subordinates to business partners: The shift has been
observed in today’s MNC that culture of subordinates is getting extinct. Employees have
been treated as business partners’ i.e every employee is responsible towards the growth of the
organisation and considered as a partner in the company. This impact is the result of
globalization.

Differences in HRM practice

These best practices are:

1. Providing security to employees

2. Selective hiring: Hiring the right people
3. Self-managed and effective teams
4. Fair and performance-based compensation
5. Training in relevant skills
6. Creating a flat and egalitarian organization
7. Making information easily accessible to those who need it

Approaches of IHRM
Approaches to International Human Resource Management
Cross-cultural Management: One approach stresses on cross-cultural management. It
examines human behavior within organizations from an international perspective. Culture
which varies from country to country at least on a few dimensions like family, work ethics,
business practices etc. It makes all the difference.
Comparative Industrial Relations: The second approach, which was developed from
comparative industrial relations describes, compares and analyses HRM systems in various
countries. It is a study of countries, their work patterns and managerial practices.
Management of Multinational Firms: The third approach focuses on aspects of HRM in
multinational firms. In this the focus is on the management of multinational firms having
operations in different countries and finding universal principles that apply to the operations
of the multinationals across the world.

Fundamentally there have been different approaches to International Human Resource

Management.
Approaches of IHRM are:
1. Ethnocentric Approach
2. Poly-centric Approach
3. Regiono- centric Approach

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4. Geo-Centric Approach

Ethnocentric Approach
In Ethnocentric approach, management believes that the approach of the parent company in
managing things is the tried and tested practice and it should be followed in all units of the
organization in different countries. This leads to the adoption of all systems, procedures,
policies of the parent company from the parent country in all other centres of activities.
This may lead to conflicts in certain circumstances. When a company operates in different
countries, the expectations and norms may vary from country to country.

Industrial unrest due to this mismatch of expectations and believes is quite common. In India
agitations in Maruti, Honda etc in the recent past were examples of this approach.

In ethnocentric approach, most of the major decision making is centralised with the parent
company. This is more in the case of management of Human Resources. The top
management in host countries is also posted from the parent company so that the culture of
the unit remains in line with the parent country.

The approach and practices of the parent country are not necessarily considered the best.
There has to be a fit between the management approach and the culture of the host country.
Therefore feelings, attitudes, norms, beliefs and societal acceptance of right and wrong of the
host country should have an influence on the practices of parent country.

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This led to gradual modification in Ethnocentric approach. At present time Ethnocentric

organisations are very few and are gradually moving towards Poly-centric or Geo-
Centric approach of management.
Poly-centric Approach
In Poly-centric approach or philosophy, MNCs realize the importance of the host country
and its governing laws. Further, they are aware that the National culture plays an important
role in all aspects of management. Hence it is prudent to follow the market needs of the host
country and frame a strategy which can give the best results.
To implement such a strategy they need local knowledge and indepth understanding of the
way of working in that country. They have to align their management style to suit the local
culture and aspirations of the people in that country.

In this approach, organisations have local people are recruited at senior positions. There are
very few Parent country nationals. The decision making is highly decentralised and local
management takes all decisions. Apart from broad policies which are framed by the corporate
at Parent country, all operational policies are decided at a local level.

In case of Management of Human Resources as well, the policies including compensation are
decided locally. The guiding principles of culture like Values are driven from the corporate
office in the Parent country, generally, all other policies are framed locally keeping in view
the practices in that country.

Since in this approach there are very few ex-pacts in local unit or subsidiary, the cost of
operation is limited. Such companies are able to compete on cost basis with the local
companies as well. Otherwise, most of the companies create their market through a
Differentiation strategy rather than cost focussed strategy.

Further these units become highly localised and empowered hence their connect with the
corporate becomes loose over the years. At time they come out of the parent company and
become purely locally owned subsidiary.

Regino-Centric Approach
In Regino-Centric approach, MNCs believe that though there is a difference in various
aspects of culture from country to country yet there are similarities in a particular region.
For example, there may be differences in the cultures of India, Sri Lanka, Japan yet there are
lot of similarities hence it may be appropriate that one Region is managed by one regional
office. Thus MNCs set up regional offices to manage entire region consisting of all countries
in this region.

They may classify Regions according to their business and presence in particular regions.
Some companies may have Asia as a region while some other MNC may have the Asia

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Pacific as one region. There are various MNCs who now prefer to have a Regional Office of
the Asia Pacific region or Asia region in India.

Such organisations are strong in innovation and creativity due to diversity in their workforce.
Simultaneously such MNCs are able to channelise innovative practices across the globe in a
significant manner. Inter region transfers and managing expatriate becomes the quite critical
activity of Human Resource Management.

Geo Centric Approach

Geocentric approach of management believes in using the best strength wherever it is
available within the organization without any consideration of geographical region or
country.
Such organisations are very matured in their management structure, processes and systems.
These organisations create a culture that has right proportion of flexibility as well as defining
culture and boundaries which make them unique and highly effective.

The decision making processes in such organisations give weightage to local issues and
concerns without deviating from the core value system of the organisation. Managing such an
organisation need quick decision making and continuous monitoring of all functions across
the globe. The IT-enabled integrated systems like ERPs have made it possible to achieve the
above-stated objectives in a very smooth manner.

In these companies mobility of talent is frequent. Top positions are manned by people from
any country. Professionalism is the diving force and equal opportunity irrespective of race,
cast, religion, nationality, gender etc is one of their strong core values.

Geocentric approach is highly professional hence need very competent leaders at the top.
Their training and coaching is given high importance by such companies. Generally, such
companies believe and follow ‘homegrown talent strategy. They spend huge efforts in
developing talent which is Culture fit.

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Review of IHRM approaches

HRM Concepts

Clarifying the concepts

In order to understand what teacher management involves, it is important to consider it in the

broader field of HRM. HRM seeks the best possible adaptation of human resources to the
needs of an organisation, both quantitatively and qualitatively. Since the 1980’s, the
designation ‘personnel management’ has shifted toward ‘human resource management’ in
many Ministries of Education.

This change reflects the awareness of a mismatch between human resources and the needs of
organisations. Indeed, the concepts within public sector organisations in terms of personnel
have changed significantly over the past decades in order to deal with the growing
requirements for effective management.

In fact, this change was initiated in the private sector. However, in this module we shall focus
more particularly on human resource management in the public sector since this concerns
teachers directly. Definitions of the concepts of “Personnel Management” and “Human
Resource Management” are given below. To date, these definitions have not yet been
recorded in a unique reference system. Other definitions can be consulted in the literature
specialised in this field.

Evolution from personnel management to human resource management

About twenty years ago, what was known as personnel management existed in many
organisations. The changes brought about by the emergence of human resource management

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reside in two aspects: on the one hand, the fact that this management is strategic and
mobilises personnel and, on the other hand, the way in which employees are considered as a
resource contributing substantially to the success of the organisation. The organisation,
whether private or public, is seen in a new light in that it is now considered as a group of
human beings who coordinate their activities to reach specific goals. In other words, the
organisational system no longer depends on a single person, the one in charge, but on all the
staff and their will, motivation and comprehension of the goals to be reached. Consequently,
to achieve its goals effectively, an organisation must clearly define its human resource
management policy and the required means at different levels of responsibility within the
organisation. An organisation’s social network depends on it.

HRM seeks to create a match between the needs and personnel resources:

• The "needs" in human resources corresponds to the different jobs that must be filled
appropriately to enable the structure to accomplish its missions.

• Human "resources" corresponds to the employees who are actually going to fill the different
jobs. The best possible match between an organisation’s needs and human resources will be
sought:

(i) on the one hand, quantitatively, i.e. in terms of the workforce, by striving to reduce the
number of situations of over or understaffing;

(ii) on the other hand, qualitatively, i.e. in terms of skills and motivations, by striving to
reduce the number of situations of under or over qualification and by ensuring that the
motivations of employees are not at odds with those required by the different jobs.

Are IHRM models applicable to other contexts?

Nowadays, internationalization is key for the survival of firms. Internationalization of a firm

involves an internationalization of all the functional areas of the firm, of which international
human resource management (IHRM) is one of the most relevant. In an international context,
managers should make decisions about what human resource practices are best suited to the
firm’s international operations. Being aware of the differences between domestic and
international human resource management will help readers and managers to establish
operational mechanisms to deal with country differences in terms of industrial labor, culture,
and firm practices. Therefore, after reading this chapter, readers should be able to deal with
aspects like adaptation or standardization of HR practices, international staffing, and relevant
issues around expatriation and repatriation.

Factors Affecting Approaches to International Human Resource Management (IHRM)

Factors affecting approaches to international human resource management (IHRM) are
discussed below:

While these attitudes have been a useful way of demonstrating the various approaches to
staffing foreign operations, it should be stressed that the above categories refer to managerial

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attitudes that reflect the socio-cultural environment in which the internationalising firm is
embedded. A number of factors influence the IHRM approach taken by an MNC.
These include the level of international experience of the firm, the method by which
worldwide subsidiaries are founded, the technology and the nature of the product or products
of the MNC, etc.

Factors
1. The nature of IHRM may be restricted by government policies and legal regulations in the
host country.

This is especially felt in developing countries, where management and technical training
within the host country’s educational system is rudimentary and the local government views
the presence of MNCs as a means of developing local expertise.

2. Culture, particularly national culture at the headquarters, plays a role in determining IHRM
practices. Culture may affect HQ decisions in two ways:

(a) Some cultures are simply more comfortable than others in taking an ethnocentric
approach to management.

(b) The mix of cultures in the subsidiaries of an MNC and the level of cultural difference
among the subsidiaries of an MNC will restrict the IHRM approach taken.

3. MNCs with extensive international experience have had the opportunity to develop more
diverse methods of maintaining coordination and control over their foreign operations.

4. The method used to establish operations in foreign locations may also affect HR policies.
For example, HR practises in the acquired/ merged operation will reduce the wholesale
exportation of home-country HR systems into the subsidiary.

5. An MNC opening subsidiaries in developed countries face a much different I HRM

challenge than one opening subsidiaries in developing countries. Developed countries have
well educated staff having technical and management experience.

Therefore, there is the opportunity to develop polycentric or geocentric IHRM strategies.

Whereas in developing countries a more centralised IHRM strategy is necessary.

For technologically sophisticated products, or services, the need to maintain specific

production standards and quality controls necessitates a greater degree of centralisation of
IHRM functions at the MNCs headquarters. Whereas in some products like food items, the
host-country tastes have to be looked into to succeed in the local market.

What are the implications of change for IHRM approaches?

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Recruitment and Selection

A global company has the following alternative approaches to recruitment and selection of
employees.

1. Ethnocentric-all key positions, in headquarters as well as subsidiaries, are staffed by parent-

country nationals.
2. Polycentric-key positions in subsidiaries staffed by host-country nationals and those in
headquarters staffed by parent-country nationals.
3. Regiocentric-key positions staffed by host-country nationals within particular geographical
regions (such as continent-wise).
4. Geocentric-key positions in headquarters as well as subsidiaries staffed by people based on
merit, irrespective of their nationality.

Different MNCs adopt different approaches for recruitment. For example, a survey
of recruitment practices adopted by MNCs reveals that 50 per cent MNCs believe in
geocentric approach while 35 per cent MNCs believe in ethnocentric approach and key
functionaries from parent country national are put on foreign assignments for two-three years.
While selecting personnel, MNCs generally place emphasis on technical skills. Not much
emphasis is placed on skills for cultural adaptability. With the result, expatriate failure rate is
high. In order to overcome this problem, many MNCs have adopted the practice of recruiting
fresh graduates from host countries and providing training in parent country.

Performance Management

Performance management, that is, assessment of employee performance, discussing its results
with employees, and suggesting and working out way for improvement in performance, is
based on the practices adopted by MNCs in this respect for parent-country nationals.
However, this has posed a serious limitation in the American MNCs which adopt,
generally, management by objectives (MBO). MBO works in an environment which is open
and provides platform for discussion between superior and subordinate on equal footing. In
countries where people are highly oriented towards authority, any open discussion with
superior by subordinate is treated as insubordination, and MBO system does not work.
Therefore, the alternatives suggested are recognizing and formally incorporating the
difficulty level of operating in different countries, relying the foreign on-site manager to
consult the home-site manager before finalizing assessment, and involving the expatriate in
deciding on performance criteria and making them more appropriate to the expatriate’s
position and circumstances.

Training and Development

MNCs provide pre-departure training to expatriates. However, in many cases, such a training
is superficial without really addressing the issues uppermost in the minds of expatriates and
their families. The depth and breadth of training can vary from a simple information-giving

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approach (films/books) to effective approach (culture and language training) and impression
approach (field experience) depending on the length of stay and nature of the position.
Regarding training and development, it is suggested that MNCs develop a global pool of
international managers and rotate them across foreign locations to facilitate transfer of best
HRM practices and mentoring of future global managers. Emphasis should be placed on
making managers sensitive to cultural differences and adept at managing them.

Compensation Management

There are two commonly used approaches in international compensation systems — going-
rate approach in which compensation is tied to host-country norms and the balance-
sheet approach in which compensation is tied to home-country norms. In both approaches,
additional expenses in the form of housing and additional taxes are reimbursed. Both the
approaches have their own merits and limitations.

Industrial Relations

Industrial relations depend on the history, legal framework, power relations, and ideologies of
management and trade unions in each country. Therefore, MNCs have to adopt specific
industrial relations strategies to suit local conditions. However, MNCs face pressure
for standardization in terms of productivity at least within a region if not internationally.
Therefore, they have to strike a balance between industrial relations strategies to suit local
conditions and standardization. Some MNCs lobby with local governments to have better
industrial relations.

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Prof. Manjunatha S, Assistant Professor, Department of Management Studies, SVIT Page 43