Human Resource Management in Multinational Retail Enterprises (MNREs)

1. Human Resource Management in Multinational Retail Enterprises (MNREs) Strategic issues and specific application in China

2. Objectives • Develop an understanding of strategic business roles of International Human Resource Management (IHRM) in Multinational Retail Enterprises • Analyze several approaches to IHRM: strategies, structures and evolution over time • Consider interaction of business strategy/design and impact of host country culture on IHRM decisions and practices • Provide examples of challenges and practical implementation issues in execution of IHRM practices • Understand specific challenges and opportunities for IHRM in China retailing • Define knowledge, skill and ability implications for effective HR management in MNREs

3. Outline • Overview of Human Resource Management Issues and Challenges in Multinational Enterprises • Approaches to IHRM in Multinational Retailing: strategy, structure and change over time • IHRM Impact of History, Culture, Politics and Relationships: general issues and the specific case of retailing in China • Core IHRM Practice in the MNRE (Part 1): recruiting, selection, training, general management practice • Core IHRM Practice in the MNRE (Part 2): performance management, recognition and rewards, legal and governmental constraints, business ethics

4. 1. Overview of Human Resource Management Issues and Challenges in Multinational Retail Enterprises

5. Differences in Culture and Behavior • Communications • Status differences • Gender roles • Stereotypes • Rewards and recognition

6. Cultural Impacts on International Business Practice: Examples from China Language History Religion The lingering Colonial impact

7. Culture and Behavior: An Experiment An exercise in “national characteristics” Warm-up: With one or two people seated near you, briefly discuss the adjectives on the list you just received. Do the adjectives fall into logical groupings? Which do you think are positive and negative traits?

8. Culture and Behavior: An Experiment • Complete the handout, using the adjectives from the first list.

9. Culture and Behavior: An Experiment • Complete the handout individually, using the adjectives from the first list. • Working with people seated near you, quickly compare your answers and see if you came to similar conclusions

10. Culture and Behavior: An Experiment • Complete the handout individually, using the adjectives from the first list. • Working with people seated near you, quickly compare your answers and see if you came to similar conclusions. • Write down a few stereotypes for your own nationality.

11. Culture and Behavior: An Experiment • Complete the handout individually, using the adjectives from the first list. • Working with people seated near you, quickly compare your answers and see if you came to similar conclusions. • Write down a few stereotypes for your own nationality. • Now (if you are not Chinese) write down a few stereotypes for “Chinese people”. • Finally, write down a few for “American business managers”.

12. Defining “Culture”: Schein (2004) Artifacts and Behaviors: can be observed directly (e.g., office layout, dress, stories/jokes) Values: may be explicitly stated (e.g., “Our Values”; posters) or aspirational Assumptions: Values that an organization actually expresses (may not be the same as the ones on the poster!)

13. Culture: A Working Definition Culture is the characteristic way of behaving and believing that people have developed over time, and that they share (Briscoe, Schuler and Kraus, 2009)

14. Defining “Culture”: Hofstede (1980) Power Distance Degree to which managers and employees accept the amount of distance Individualism vs. Collectivism As noted in “Confucianism discussion Masculinity vs. Femininity Social values Uncertainty Avoidance Tolerance for ambiguity

15. “Global” whether you choose to be or not • Sourcing • Manufacturing • Low-cost suppliers • Global competitors • Integrated monetary systems

16. Factors in Globalization • Increased travel • Global communications • New technology • Free trade • Education • Mass migrations • Knowledge sharing • Cost pressures • Search for new markets • Homogenization of cultures • E-commerce

17. “People” issues become more prominent and complex HR Challenges in Global Companies

18. Specific Challenges: Some Examples • Diverse legal environments • Localizing compensation and benefits • Taxes • Government relations and regulation • Expatriate management • Unions • Training • Cultural expectations and differences

19. Culture Example: Confucianism, Guanxi and HR – A Tough “Fit”? SourceS Source:Wang, et al., 2005

20. Brief Exercise: U.S. Management and Organization Practice • Divide into two groups: those from China, and those from the U.S. (if from somewhere else, choose the group you think is closest to your own background) • Brainstorm ideas that you think represent “typical” characteristics of U.S. business organizations. Consider such things as: • Nature of relationships of managers and employees • Communication practices and style • Who gets rewarded/recognized, and for what • How you can “get ahead” • How work groups are organized • How problems are identified and solved • What it “feels like” to work there

21. Example: Confucianism, Guanxi and HR – Tough “fit”! SourceS Source:Wang, et al., 2005

22. Some Potential Conflicts? • Western discomfort with strict hierarchical relationships (and Chinese discomfort with the lack of hierarchy) • Perception that failure to question decisions reflects lack of commitment, initiative, accountability, participation (“resistance”) • Western inability/unwillingness to fully grasp guanxi • Frustration over lack of rules, procedures • Disconnect of performance from compensation (in favor of seniority) or selection (in favor of relationships)

23. Internal Organization Challenges • Organization design and structure (hierarchy vs. “flat”; global) • Communications (formal/informal, up/down, medium) • Interpersonal relationships ( collegial, egalitarian, role-based) • Control mechanisms (decision-making; performance tools) • Language barriers (including idioms, nuance, culture) • “Practical” challenges (currency; housing; compensation; tax) • Process coordination (standardization vs. localization) • Staff movement (advancement; transfers; reintegration)

24. Core HR Functions: Strategic Decisions • Organization design and structure • Talent management • Performance management and measurement • Compensation • Communications • Policies and procedures • Labor relations • Compliance

25. Some Special Dilemmas • Matching HR design to business realities • Maintaining consistency vs. “localization” • Differences in expected behaviors across cultures • Injecting parent company values and culture • What to centralize versus decentralize

26. HR Managers- often “the last to be involved” • Do we have HR capacity to expand globally? • Is it a good “fit”? • Where should we expand? • Do we organize centrally, or create separate international entities? • How will we need to adapt and change to address local practices and culture? • Local, national or ex-pat managers?

27. IHRM Managers • More HR functions and activities • Broader expertise and perspective • More involvement in people’s lives • Wider and more complex employee mix • More external factors/influences • Higher risk

28. A Typical Sequence in the Internationalization Process 1.) Internationalization through import/export 2.) International division or global product division 3.) Multi-country/multi-domestic strategy 4.) Regionalization 5.) The “global” firm 6.) The “transnational” firm 7.) The “born-global” firm 8.) The globally integrated enterprise

29. Strategies for Entering Foreign Markets Franchising Joint ventures (CJVs vs. EJVs) Merger and Acquisition (M&A) Wholly owned subsidiary Direct investment in new operation (WFOEs and FICEs)

30. Class divisions take a toll Nationalist and Communist Parties WWII and temporary, strained “unity” Post-war strife and purge “People’s Republic of China”- 1949 Austerity, cultural repression and Fenpei Supply Chain Management in Hongyan Supermarket

31. A Special Cace: Customer Service • Your Own Experience: Pick a specific “best” or “worst” customer service experience in a retail store (or restaurant) Note a few things that created that type of experience for you Group discussion

32. General Western “Service” Features

33. General Western “Service” Features • Professional, “clean” appearance • Knowledgeable, helpful, efficient • Listening and communication skills • Attitude of service, interest in customer; sincere desire to satisfy needs; “values” customer • Positive attitude, enthusiasm • Proper actions (depends on store type): • Acknowledge, greet, welcome • Available, but not intrusive, pressuring • Questions, probes to identify needs • Provide “solutions” – not just “products” • Assist with questions, concerns • Easy closing and checkout • Follow-up (depends on store type)

34. Organizational Conditions for Service • Right “Place” • Right Items • In-Stock • Effectively Displayed and Merchandised

35. Organizational Conditions for Service • Organizational culture: ”how things really work when the boss isn’t looking” • Proper selection, training and nurturing of service-oriented employees • Leadership by example • Clear standards/expectations -- and consequences (positive and negative) • Ongoing coaching and improvement • Performance management, team-building and leadership training and skills

36. Service Award Winner http://www.youtube.com/watch?v=lHo1SaPLkiw

37. Example: Luxury Hotel Service

38. Example: Luxury Hotel Service • Grand Hyatt Shanghai (Ferreira & Alon, 2010) • Facing lack of qualified, professional staff • High turnover • Graduates unwilling to join hotel industry • Big gap between what is taught in schools and “the real world”

39. HR Challenges at Grand Hyatt • Expatriates is most management positions • Few management programs for locals (hands-on training for staff) • High turnover (move for pay increase; little loyalty) • Hotel industry has little appeal (careers there seen as short, low-skill requirement, but intense physical work • Cultural history: Communist society goal to eliminate “servitude”; until 1983, could not select career; educational system emphasizes rote learning (versus creative problem-solving), “face” issues in correcting performance, on-the-spot decisions, etc. • AMCham (2006) – HR #1 concern for US firms

40. HR at Grand Hyatt: Solutions • Extensive, hands-on training for staff – much more than elsewhere, to develop “service” idea • Cross-cultural training for expatriates (e.g., guanxi, local culture) • Role-playing, practice situations • Focus on non-verbal behavior: eye contact, smiling, body language • “How to say it nicely!” • Create passion for the company, and honor of working at 5-star hotel • Selection via multiple interviews, test of English skills • Career development, management support, inclusive work culture • Competitive compensation