Chapter 12
HRM in the Local Context:
Knowing When and How to Adapt
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Key Questions
Regarding Local Employees
• How can we identify talented local employees?
• How can we attract these employees to apply for jobs?
• Can we use our home country’s training methods with
local employees?
• What types of appraisal methods are customary?
• What types of rewards do local people value?
• Do any local laws affect staffing, compensation, and
training decisions?
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Exhibit 12.1:
How the National Context Leads to National
Differences in Local HRM Practices
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Characteristics of the National
Context That Affect HRM
•
•
•
•
Education and training of the labor pool
Laws and cultural expectations of selection practices
Types of jobs favored by applicants
Laws and cultural expectations regarding fair wages
and promotion criteria
• Laws and traditions regarding labor practices
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Recruitment Strategies
•
•
•
•
•
•
•
Walk-ins or unsolicited applications
Advertisements placed in newspaper or on the Internet
Company Web site job postings
Internal job postings
Public and private personnel agencies
Placement services of educational institutions
Current employee recommendations
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Example: Recruitment in the U.S.
vs. Collectivist Societies
U.S. managers:
• Tend to see online or print
advertising as one of the most
effective recruitment methods.
• Fear employee referrals result
in the recruitment of people
with similar backgrounds
• Fear that recruitment by
personal contacts may result in
biases against some groups.
Managers in collectivist societies:
• Tend to focus on the in-group,
such as the family and friends
of current employees.
• Backdoor Recruitment:
prospective employees are
friends or relatives of those
already employed
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Example: Selection in the U.S.
vs. Collectivist Societies
• Gather information on a
candidate’s job qualifications
• Find a match between the
candidate’s skills and the job
requirements.
• The focus is on the individual’s
achievements rather than group
affiliations.
• Many firms prohibit Nepotism, the
hiring of relatives.
• Many also prohibit managers from
supervising family members.
• Hiring always takes the in-group
into account.
• Preference is given to hiring
relatives of first, the employer,
then relatives of employees.
• This selection values potential
trustworthiness, reliability, and
loyalty over performance-related
background.
• High school and university ties
may substitute for family
membership.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Implications for the Multinational:
Recruitment and Selection
• Recruitment and selection of host country workers
requires that managers of MNCs understand and adapt
to local practices.
• If local norms are not followed, the MNC may not get
the best employees, and may offend cultural norms or
break host country laws.
• Many firms now using Electronic Human Resources
(eHR).
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Training and Development
• Within a country, the need for training and
development varies widely industry, technology, etc.,
but broad national differences exist.
• Differences in training and development are due to:
• Differences in educational systems
• Emphasis on training placed by national
governments
• Cultural values regarding other personnel practices
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Example: Training and Vocational
Education in Germany
• A sophisticated and standardized national system
provides two major forms of vocational education:
• General and specialized vocational schools and
professional and technical colleges
• Dual system: A combination of in-house apprenticeship
training with part-time vocational-school training leads
to a skilled worker certificate.
• With advanced training, one can achieve the status of
Meister: a master technician.
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The German Dual System
• Stems from collaboration among employers, unions,
and the state
• Costs are shared between companies and the state.
• Employers have an obligation to release employees for
training.
• Produces a well-trained national labor force with skills
that are not company specific
• Dual System under stress due to economic downturn
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Implications for the Multinational:
Training and Development
• Before operating in a host foreign country,
multinational managers must:
• Consider the quality of workers and managers there
• Examine the feasibility of exporting training to them
• Adaptation of management-development to different
national contexts depends on intended use of host
country managers.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Example: Performance Appraisal in
the U.S. vs. Collectivist Societies
• U.S. system values links
among individual rights, duties
and rewards, and equal
opportunity.
• The ideal U.S. system is
rational, logical and legal.
• Such systems have four
elements:
•
•
•
•
Performance standards
Performance measures
Performance feedback
Human resource decisions
In Collectivist Societies:
• Age and in-group memberships
provide a large component of
the psychological contract with
the organization.
• Human resource decisions take
into account personal
background characteristics,
besides achievement.
• Managers indirectly sanction
poor performance, and may
often avoid direct performance
appraisal feedback.
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Compensation
• Compensation: includes wages and salaries,
incentives such as bonuses, and benefits such as
retirement contributions.
• There are wide variations among countries and
organizations on how to compensate workers.
• A country’s economic development, cultural traditions,
labor unions, and legal institutions all affect
compensation.
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Example: Compensation in
the U.S. vs. Japan
In the U.S., wages and salaries
differ based on two major factors:
• External: includes local and
national wage rates, government
legislation, and collective
bargaining
• Internal: includes the importance
of the job to the organization, its
affluence and its ability to pay, and
the employee’s relative worth to
the business
• 94% of firms use comparative
wage data
Like U.S. firms, Japanese firms
determine base salaries largely by
classification of positions.
• Seniority can factor into pay
decisions.
• Economic pressures have led to
adoption of the Nenpo System, an
evaluation based on yearly
performance evaluations that
emphasize goals.
• Bonus system: Usually given twice
a year, during traditional gift giving
seasons.
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Exhibit 12.13:
The Japanese Pay Raise Formula:
Changing the Balance
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Implications for the Multinational:
Performance Appraisal and
Compensation
• Multinational companies must match their performance
evaluation system to their multinational strategies.
• If a multinational is located in many nations, it may
need several different compensation packages for host
country nationals.
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A Comparative View of
Labor Relations
• Variations of labor relations arise from cultural
differences, but also:
• Historical factors
• Ideological reasons
• Management views of unions
• Union-Member Density is the proportion of workers in a
country who belong to unions.
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Types of Unions
• Enterprise Union: represents all people in one organization, regardless of
occupation or location
• Craft Union: represents people from one occupational group, such as
plumbers
• Industrial Union: represents all people in a particular industry, regardless
of occupational type
• Local Union: represents one occupational group in one company
• Ideological Union: represents all types of workers based on some
particular ideology or religious orientation
• White collar or professional Union: represents particular occupational
group, similar to craft union
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Implications for the Multinational:
The Search for Harmony
• When they use local workers, multinational companies
must deal with local labor practices, traditions and
laws.
• These must be considered in any strategic decision
regarding locating in another country.
• Example: In the U.S., Japanese companies have
avoided locations in the more union-friendly Northern
states, favoring instead Southern locations with less
union activism.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.