Global Leadership and Strategic Human Resource Management

1. Global Leadership and Strategic Human Resource Management Chapter 9

2. Strategic human resource management • Human resources have a central role in the success of global and transnational strategy • Human resources are of singular importance because: • they play a unique part in organisational learning and competence building; • their management poses particular questions in a global context; • they are crucial in converting strategies into action.

3. Leadership and management in transnationals • Management is concerned with • Planning • Organizing • Directing • Budgeting • Controlling etc. • Leadership is concerned with • Vision and strategic intent • Organisational transformation • Creating shared values • Motivation • People development

4. Nature of leadership • Qualities or traits theories – traits of leaders • Functional or group theories – functions that leaders carry out • Behavioural theories – behaviours of leaders • Style theories – nature of the approach adopted by leaders to their role • Situational approach and contingency models – organizational and environmental context in which leadership takes place • Transitional or transformational theories – examine the impact of leadership on the development of the organisation

5. Modern approaches to leadership • Leadership is required at all levels of the organization • Leadership is concerned with • Mentoring • Motivation • Sharing of knowledge • Organizational development • Personal development

6. Leadership involves • Developing an innovative and distinctive vision • Capability to learn and develop new knowledge-based competences • Risk taking based upon knowledge-based judgement • Ability to develop, empower and motivate others by communicating the vision to them • Capacity to combine task orientation with people orientation • Development of a culture and shared values which support the leader’s vision and encourage trust and sharing, risk taking, and team working

7. Leaders in learning organisations Leaders in learning organizations must be: • Designers • Vision, strategies, policies, and structures • Teachers • Facilitating learning • Stewards • Developing people

8. Leadership and cultural issues • Leadership must take account of and adapt to cultural differences (see chapter 2) • Leadership uses cultural diversity to improve organizational performance

9. Managing cultural diversity • Tayeb (2001) & Perlmutter (1969) identify 4 alternative approaches to managing cultural differences: • An Ethnocentric Policy - imposing the culture and practices of the home country & parent organisation on overseas subsidiaries ignoring local cultural differences • A Polycentric Policy - following the culture and practices of each host country - multinational approach • A Global Policy - a global company wide policy to shape global organisational culture combining different cultural approaches • A Transnational or Hybrid Policy - this incorporates both global integration of culture, to produce world-wide norms to guide activity towards a common set of goals and differentiation of culture to allow it to be adapted to local differences

10. Shaping culture in transnational organizations (I) • Successful cultural change involves the learning of new values, attitudes, and behaviours within the organisation which will entail: • determining the desired values, attitudes, norms and behaviours which are to form the new organisational culture • unfreezing the existing culture to make members of the organisation receptive to change • building the new culture • refreezing the new culture once the desired change has been achieved

11. Shaping culture in transnational organizations (II) • Leaders can seek to promote desired cultural change through: • A vision which is communicated throughout the organisation • Education and training to foster organisational learning • New organisational and power structures which support devolved decision-making • New reward systems which promote the behaviours desired within the organisation • Creating new stories, myths and symbols which emphasise desired values and actions

12. Implementation of HR strategy • Complex due to variations in culture, language environment & industrial relations • Global business must resolve 4 key issues: • human resource strategy - its determination & integration with transnational strategy; • staffing policies - use home, host or third country nationals as managers; • expatriate policies - to ensure smooth exchange of managers between the parent company &subsidiaries; • global management development - to ensure adequate supply of globally experienced managers at all levels.

13. Strategic human resource management • HR are important determinant of the success of global strategy • HRM "involves all management decisions and actions that affect the nature of the relationship between the organisation and its employees - its human resources." • People crucial in devising & implementing strategy, in strategic decision making and in making strategy successful.

14. A Strategic Approach to HR • The case for this approach is based on the fact that it: • defines opportunities & barriers for achieving business objectives; • prompts new thinking about issues & orientates &educates participants and provides a wider perspective; • tests management commitment for actions; creates a process for allocating resources to specific programmes and activities; • develops a sense of urgency and commitment to action; • establishes selected long-term courses of action considered high priority over the next 2 to 3 years; • provides a strategic focus for managing the business and developing management talents.

15. Features of HR strategy • Recognition of the impact of the external environment; • Recognition of the impact of competition and the dynamics of the labour market • Long-range focus - three to five years • Choice and decision-making focus • Consideration of all personnel • Integration with corporate strategy and functional strategies

16. HR strategy, core competences and organisational learning • Organisational learning and knowledge building are based upon individual knowledge and learning • Strategic human resource management has a pivotal role to play in knowledge management and development, and in competence building.

17. A competence-based approach to strategic HRM I • Job design - technical knowledge required, rotation of roles, project teams • Staffing issues - internal transfers, relationships with educational institutions, potential of individuals must be assessed • Training and development - increased investment, increasingly decentralised, away from traditional skills, performance review to assess the contribution of employees rather than to determine pay

18. A competence-based approach to strategic HRM II • Rewards systems - will be based upon group or organisational outcomes, banding of jobs, job evaluation will shift from a quantitative to a qualitative focus, compensation systems will become flexible.

19. HR and Generic Strategy • HR strategy will be integrated with generic strategy through appropriate • Selection and training • Level of supervision • Level of cost control • Level of reporting • Emphasis on training • Emphasis on improved productivity • Reward systems • Organisational structure

20. Problems of integrating HR strategy and Transnational strategy • Different approaches to HR might be needed for different markets • Changes in business strategy changes require changed HR strategy - difficult because of need for structural & cultural change • Qualitative nature of HRM - difficult to prove importance to success of global strategy • HRM need to be long-term and large-scale but can easily be subverted to short termism

21. Criticisms of the concept of Strategic HRM • an American concept • lacks clarity and precision • too prescriptive and normative • lacks supporting empirical evidence; • difficult to distinguish from personnel management • HRM strategy is seen as driven by corporate strategy, rather than contributing to it • is overly prescriptive with regard to industrial relations history and practice in Europe (& in other continents)

22. European and American approaches to HRM • Two common elements of American models of HRM are the ideas of: • organisational independence and autonomy • the integration of HRM and business strategy.

23. Differences between Europe and USA • Organisational autonomy is more restricted in Europe because of: • Culture and legislation - USA individualistic, Europe more state regulation • Patterns of ownership - Europe has more SMEs and public ownership • Europe is more heavily unionised • Labour market more regulated in Europe

24. HRM and business strategy • Brewster and Hegewisch (1994): • little evidence of the integration of HRM and business strategy in the USA • higher degree of integration of HRM at the top levels of organisations in Europe.

25. Transnational model of HRM strategy Global Business Environment Sector • Culture • Legislation • Ownership patterns • Trade Union representation • Employee involvement • Communication • Bargaining arrangements • Labour markets • Education and training • Working practices Organisation: size, structure, culture Corporate Strategy HR Strategy HRM Practice

26. Global staffing policies • Three main alternatives: • employment of home country nationals (ethnocentric), • host country nationals (polycentric) • a combination of home, host and third country nationals (geocentric or global). • only third is consistent with a global and transnational approach, • each of the alternatives has its own advantages and disadvantages

27. Staffing policies and strategy • Policies adopted by global business organisations are influenced by: • characteristics of parent and subsidiary • characteristics of the host country • relative costs of the alternatives • availability of local management talent • government restrictions on employment of expatriates • differences in salary levels • expatriate transfer costs and failure costs

28. HR and transnational strategy • HR Strategy requiring high degree of co-ordination will require: • employment of home country nationals at subsidiary level • significant cross-national exchange of personnel • effective expatriate policies to ensure smooth staff exchange • a pool of internationally experienced executives • extensive global management development programme • control of labour problems at each location • standardisation of employee benefits between subsidiaries • significant transfer of parent country industrial relations practices to subsidiaries

29. HR and transnational strategy II • HR strategy requiring local responsiveness: • predominance of host country nationals in key management positions in subsidiaries • limited cross-national transfers of personnel • few expatriate or international management development policies • decentralised subsidiary level industrial relations decision-making • industrial relations practices will be based on host country customs and practices