HRM in the Local Context: Knowing When and How to Adapt

1. 11 HRM in the Local Context: Knowing When and How to Adapt

2. Learning Objectives • Understanding how the national context affects HRM practices • Identify how recruitment and selection practices differ in various national contexts • Identify possible host adaptations in recruitment and selection practices

3. Learning Objectives • Identify how training and development techniques are used in different countries • Identify sources of high-quality workers in different nations • Understand how training must be adapted to host country workers • Identify how performance evaluation and compensation practices differ in various national contexts

4. Learning Objectives • Identify possible host country adaptations in performance evaluation and compensation practices for a multinational company • Understand how labor costs vary • Have an appreciation of how the national context and historical conditions affect the relationship of management and labor

5. Why Do Nations Differ in HRM? • Because of the national context • National culture and social institutions influence how managers make decisions regarding strategies • Countries vary widely with regards to social institutions and national culture • Multinationals must select and implement practices that meet national context

6. Exhibit 11.1: How the National Context Leads to National Differences in Local HRM Practices

7. Why Do Nations Differ in HRM? • Resource pool: all the human and physical resources available in a country • Both from natural and induced factor conditions • Include quality of labor, availability of scientific laboratories

8. Key Factors that Influence the Resource Pool • The quality, quantity, and accessibility of raw material • The quantity, quality, and cost of personnel available • The scientific, technical, and market-related knowledge available to firms

9. Resource Pool • The cost and amount of capital available to firms for operations and expansion • The type, quality, and costs of supporting institutions such as the systems of communication, education, and transportation

10. Why Do Nations Differ in HRM? • Natural factor conditions: national resources that occur naturally • E.g., abundant water supply • Induced-factor conditions: national resources created by a nation • E.g., superior educational system

11. Characteristics of the National Context That Affect HRM • Education and training of the labor pool • Laws and cultural expectations for selection practices • Types of jobs favored by applicants • Laws and cultural expectations regarding fair wages and promotion criteria • Laws and traditions regarding labor practices

12. Recruitment Strategies • Walk-ins or unsolicited applications • Newspaper or Internet advertisement • Company Web site job posting • Internal job postings • Public and private personnel agencies • Placement services of educational institutions • Current employee recommendations

13. Exhibit 11.2: Steps in the Recruiting Process

14. Recruitment in the U.S. • U.S. managers tend to see newspapers as one of the most effective recruitment methods. • Fear that recruitment by personal contacts may result in bias against some groups. • U.S. value open and public advertisements as a reflection of individualistic culture.

15. Exhibit 11.3: Most Effective Recruiting Sources for U.S. Companies

16. Recruitment in Korea • Backdoor recruitment: prospective employees are friends or relatives of those already employed • Managers are recruited from prestigious universities

17. Recruitment Around the World • Individuals around the world have preferred way to find jobs • International Social Survey Program data was analyzed • Looking for jobs through public vs. private agencies • Individuals in former communist and socialist societies were more likely to rely on public agencies

18. Recruitment Around the World (cont.) • Advertising in newspapers and responding to newspaper ads • Both very public forms of recruitment • Individualistic societies have higher preference for such forms • Apply directly versus asking friends/relatives for job • Individualistic and high femininity societies more likely to favor direct application • Socialist societies rely on asking friends/relatives

19. Exhibit 11.4: Preferred Ways to Look for a New Job—Public vs. Private Agency

20. Exhibit 11.5: Preferred Ways to Look for a New Job

21. Exhibit 11.6: Preferred Ways to Look for a New Job

22. Selection in the U.S. • Job qualifications • Match skills and job requirements • Individual achievements • Prohibitions against nepotism—the hiring of relatives • Forbidding managers to supervise family members

23. Exhibit 11.7: Typical Steps in U.S. Personnel Selection

24. Selection in Collectivist Cultures • Based on the in-group • Preference for family • Value potential trustworthiness, reliability, and loyalty over performance-related background • High school and university ties substitute for family membership

25. Implications for the Multinational: Recruitment and Selection • Managers must follow local norms to get best workers • Often a tradeoff between home practices and costs of following local traditions

26. Training and Development • Need for training and development varies by country • Differences in training and development due to • Differences in educational systems • Values regarding educational credentials • Cultural values regarding other personnel practices

27. Exhibit 11.8: Training Systems around the World

28. Exhibit 11.9: Key Specific Training and Development Characteristics of Selected Countries

29. Exhibit 11.9: Key Specific Training and Development Characteristics of Selected Countries

30. Exhibit 11.9: Key Specific Training and Development Characteristics of Selected Countries

31. Exhibit 11.9: Key Specific Training and Development Characteristics of Selected Countries

32. Exhibit 11.9: Key Specific Training and Development Characteristics of Selected Countries

33. Training and Development in the U.S. • Companies with over 100 employees invest more than $60 billion in training costs. • Management development and computer skills are the most popular. • There is growing pressure for training as the U.S. shifts to the service sectors.

34. Exhibit 11.10: Skills Taught by U.S. Organization

35. Training and Development in Germany • Two major forms of vocational education • General and specialized vocational schools and professional and technical colleges • Dual system: combination of in-house apprenticeship training with part-time vocational-school training, and leads to a skilled certificate • Meister: a master technician

36. German Dual System • Stems from collaboration among employers, unions, and the state • Costs shared between companies and state • Employers have obligation to release employees for training

37. Exhibit 11.11: Skilled Worker Training in Germany

38. Exhibit 11.12: Germany’s Apprenticeship Program under Pressure

39. Training and Development in the U.S. • Senior level managers often identify managerial potential • Appraisals of managerial readiness based on • Assessment centers • Mentoring • “Fast track” careers • Remains the responsibility of the individual

40. Training and Development in Japan • Permanent employment • Recruitment directly from universities • Join the company as a group • Selected on personal qualities that fit the corporate culture • Similar pay and promotion for first ten years—age seniority • Informal recognition of those high performing managers

41. Training and Development in Japan • Shifting social institutions: pressures for change • Asahi ties promotions to evaluations • Matsushita uses merit pay for managers • Honda is phasing out seniority

42. Implications for the Multinational: Training and Development • Examine feasibility of exporting training • IHRM orientation affects training needs of local managers • Locations advantages

43. Exhibit 11.13: Workers of the Future: Student Math and Science Scores from Selected Countries

44. Performance Appraisal • Identifying people to reward, promote, demote, develop and improve, retain, or fire • Not everyone can climb the corporate ladder • Need to assess how employees perform

45. U.S. Performance Appraisal • U.S. legal requirements regulate performance evaluation practices to ensure their fairness • Performance evaluations must relate clearly to the job and performance • Performance standards must be provided in writing • Supervisors must be able to measure the behaviors they rate

46. U.S. Performance Appraisal(cont.) • Supervisors must be trained to use evaluation measures • Supervisors and subordinates must discuss appraisals openly • Appeals procedures must be in place

47. Performance Appraisal in Collectivist Cultures • Managers work indirectly to sanction poor performance • Often avoid direct performance appraisal feedback

48. Exhibit 11.14: Cross-National Differences in Purposes of Performance Appraisals

49. Compensation • Wages and salaries, incentives such as bonuses, and benefits such as retirement contributions • Wide variations on how to compensate workers

50. Compensation in the U.S. • Wages and salaries differ based on two major factors • External: include local and national wage rates, government legislation, and collective bargaining • Internal: include the importance of the job to the organization, its ability to pay, and the employee’s relative worth to the business