Companies realise if they are to be successful internationally they must develop an appropriate human resource strategy. It still shares some of the characteristics of a domestic HR strategy ETC . However there are notable differences which companies must address if they are to develop a successful HR strategy which will lead to international success. There are many issues that are related to an international HR strategy and hopefully in this essay I will explain some of the main issues surrounding HR strategy and various aspects which must be included within the strategy.
The type of company we are studying are likely to use a polycentric or regiocentric staffing approach etc . Whichever approach the company chooses they are going to have deal with effective recruitment and selection. There are three different types of employees the company has to deal with. Firstly there is Parent Country Nationals or Expatriates these are employees from the company’s country of origin, next there is Home country nationals these are employees from the country the firm is working in and finally there are third country nationals where employees are of origin different to the country they are working in and different to the parent company’s country. All of these types of employees have their advantages and disadvantages and all must be incorporated into the firms HR strategy. However integrating these three types of employees and getting them to communicate and working efficiency is much harder. The first issue firms must address to have any chance of integrating the workforce is to deal with the problem of culture. Culture within itself is very hard to define ranging from expression through the arts to social perceptions. However the definition of culture below by Kluckhomn (1951) despite being rather long is the best definition I can provide.
‘ Culture consists of patterns, explicit and implicit of and for behaviour acquired and transmitted by symbols, constituting the distinctive achievement of human groups, including their embodiment in artefacts; the essential core of culture consists of traditional ( ie historically derived and selected) ideas and especially their attached values; culture systems may on one hand be considered as products of action, on the other as conditioning elements of future acts. `
MNC’S bring together many people of both different nationalities and different cultures into the workplace and are expected to develop a working relationship. Cultural differences can be advantageous through sharing of knowledge and processes, however unless cultural diversity is managed well there is little shared learning but more arguments and disagreements that can hinder a firm’s profitability. Cultural differences can display themselves either as simple misunderstandings or at times even conflict between staff. People from one country and culture behave differently than another worker from a different background, for example eye contact can be seen as disrespectful in some cultures whilst in others it signifies respect. It is these kinds of misunderstandings that lead to conflict, some of these issues can be resolved through an MNC’s HR strategy for example briefing staff properly and encouraging mutual respect. One method open to the HR department is to utilise its own corporate culture which can promote social cohesion and act as the ‘glue’ that bonds an organization together. This approach allows people to work towards common goals so they can identify each other and hopefully work together in harmony because the uncertainties and differences have been transformed into a common organizational culture. However to get these workers to operate in teams is more complex and depends on the firm’s ability to achieve a ‘fit’ between these various cultures. The term fit refers to the extent that cultures are brought into a working relationship that allows tension and misunderstanding to disappear within the relationship. Cultural fit does not imply an integration of cultures but merely provides a mutual acceptance from all parties involved .Perhaps one of the most difficult elements in culture is those cultural attributes that are more deeply rooted than others if individuals can not lose these beliefs than a cultural fit will be unlikely to be achieved. I have talked about some of the main issues regarding culture and how to deal with it , but it all depends on how far HQ want to accept local cultures to fit in with their own. DEPENDS ON DECENTRALISED
One of the biggest problems for firms is the problem of expatriate failure and it is up to the firm to try and prevent this. Expatriates leaving not only cost the company in terms of salary wasted but when combined with personal and family training, travel and relocation can cost the company nearly three times as much as they spend on a HCN. There can also be indirect costs like the potential breakdown of relations with either host government officials or even the workforce where productivity could suffer as a result as the manager leaving. Not only does it cost the company in foreign operations when he returns his loss in confidence and self-esteem may effect profits domestically.
Tung identified 5 main reasons for failure they are listed below :
1/ Inability of spouse to adjust
2/Managers inability to adjust
3/ Other family reasons
4/ Managers personal or emotional state
5/ Inability to cope with larger overseas responsibility
Sufficient measures must be built into the HR strategy to reduce the chances of expatriate failure. One of the easiest methods is to improve the selection of expatriates various literatures has stressed the importance of not only managerial and technical competence but also effectiveness and coping skills. Mendenhall and Oddou believed expatriate success depended on four dimensions: The self-oriented, the others-oriented, the perceptual and the cultural toughness. Mendenhall and Oddou recommend two main ideas to firms firstly that selection is based on a multi-dimensional approach and that comprehensive acculturation training programs incorporating the four main dimensions are designed.
Another method how expatriate failure can be reduced is by involving the expatriate’s family in the selection procedure, this is one of the biggest reasons for failure with the spouse or children often failing to settle in. However many companies do are reluctant to intrude in matters outside their domain so are unable to include the family in selection. However the company can include the family in see-in visits, perhaps even training and development before during and after their visit to make sure they do not suffer from culture shock. Companies should try and bear the families in mind when relocating expatriates things like a safe community, good school, good health care and access to shops are all measures the company can use to smooth the transition over for the family.
Repatriation
Another vital aspect which must be included within the HR strategy is sufficient training, I have already mentioned expatriate training earlier so I will now deal with training for the HCNs and TCNs. Technical training can often be passed down onto the HCNs and TCNs quite easily through on the job training at the particular subsidy once cultural and language barriers have been broken down. Another cost-effective method of teaching technological issues is by using satellite technology to deliver custom-designed training courses from home country locations. As for managers the company often try and develop HCN and TCN’S people skills as they want them to lead, motivate and develop employees in their own country. One of the most successful training methods is to send the staff to corporate HQ , Fiat and Ericsson are just two of the companies which use this approach. While this approach improves management skills it also exposes them to corporate culture which should help them develop a corporate perspective as well as their own interests. In contrast some firms send in overseas managers to train the HCHs and TCNs in their own subsidiary. A more radical approach is to use off the job training by sending managers on the global leadership programme at the University of Michigan to improve their global business skills through action learning which is a mixture of seminars and lectures, adventure based exercises and field trips to various countries.
The issue of appraisal must also be incorporated into ones international HR strategy, however in doing this firms often encounter many problems. When workers are working in several different countries it is very hard to compare and comment on their success as the environments and the economies are completely different. This non-comparable data makes appraisal extremely difficult especially when it comes to financial data due to currency conversions. Despite these problems there are certain methods open to the firm one being the use of transfer pricing and other financial tools to try and reduce the complexities of the international environment. Another approach used by firms is to ignore the financial implications and try and assess the workers of a division by the achievement of long term goals such as market share growth or health and safety improvements. Many firms even just carry out their domestic appraisal methods although they can not always be applied to HCNs and TCNs as they cannot be linked to their jobs. Whatever method firms choose they must be careful not to upset workers as performance appraisal itself conflicts the issue of cultural applicability. Unfortunately appraisal can be interpreted as a signal of distrust or even an insult in some cultures for example the Japanese never directly talk about failure but just mention the possible implications. Firm’s must remember that evaluation requires cultural sensitivity which can be overcome by devising a suitable system with the guidance of HCNs.
TungTraining YES Chapter 5 HCNS P137
Bibliography
Simon Cutsforth
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