Micro Issues In International Management

1. Micro Issues In International Management Human Resource (Capital) Management, Motivation and Leadership

2. Micro Issues • At the heart of a manager’s challenge is getting people to perform effectively and efficiently daily. • The concern here is to find out what motivates people to work. At the local level a manager needs to know about the differences in the larger environment that elicit and maintain behavior that leads to high employee productivity. • Micro issues are influenced by some of the previously discussed Macro variables. We will look at specifically Motivation, Leadership and HRM

3. Human Resource (Capital) Management in the International Arena • Human Capital/Talent Management • Factors that make HRM different in the international arena • Difference in the labor market i.e.... mix of workers, level of skill, cost of labor, technology etc. • International mobility problems, some are legal, cultural, and then physical • Management styles and practices differ across national boundaries

4. Factors that make HRM different in the international arena, cont. • Differences in national orientations • Controlling HR functions more difficult due to distance and diversity • Moderating influence of technology on labor mobility

5. Generic approaches to managing HR function by MNCs • Ethnocentric • HR functions follow home country practice, e.g.. recruiting and selecting PCN as managers • May be appropriate when there is lack of local knowledge or as a control mechanism • Host countries and HCN tend not to like approach • Limits the opportunities for HCN and PCN may find it costly to adapt

6. Generic approaches to managing HR function by MNCs • Polycentric • HR functions tend to follow host country practices • Selecting and recruiting HCN • Motivating to HCN and no time wasted for adjusting to different environment • Limits the international/overseas experience of managers • Differences in orientations may lead to conflict

7. Generic approaches to managing HR function by MNCs • Geocentric • Using the best HR practice without much regard to country of origin • Selecting and recruiting the best and most qualified worker • Not as appealing to host countries • Highly centralized organization and thus implementation can be difficult and expensive

8. Selected HR functions and peculiar international HR issues • Recruiting and selection (Staffing) • Technical competence • Adaptation to a different culture, language etc.. • Motivation - congruency with career path • Family situation (#1 reason for expatriate managers’ failure in US MNCs

9. Training • Need for environment specific training • Need for adaptation training, for individual and family • Expatriation issues- adjusting to different cultures and languages

10. Compensation • as remuneration for work Vs. pay as incentive to take overseas assignment • Relative cost of labor is a dynamic issue since it is tied to productivity and exchange rate. • Cost of living adjustments • Intra-company equity in pay, especially with HCN • Choice of currency • Differences in terms of pay, fringe benefits, job security etc..

11. Repatriation issues • Socio-cultural adjustment - reverse culture shock • Derailment from career path • Compensation issues when repatriated

12. Labor relations issues • Socio-cultural environment - adversarial Vs. mutual relationship. • Union Structure - National Vs Local • Protection of labor by law • Codetermination • Multinational ownership and Collective Bargaining - Production switching and diversion of product/resource flows

13. Principles of Effective International HR • Rigorous recruitment and selection procedures; training and development at all levels, developmental appraisal and performance-linked pay. • Flexible job design, reduced organizational hierarchies; team working; empowerment and two way communications were common features.

14. Principles of Effective International HR • Though knowledge capture and dissemination provokes a centralizing tendency, it was clear that organizations are trying to focus on local knowledge and ensuring there is not an HQ-centric view of the world. • The effectiveness of international HR is contingent upon the leveraging of human, social, organizational capitals at all levels and sections of the global business.

15. Principles of Effective International HR • The challenge for global HR functions is to develop the necessary competencies and skills to leverage and broker relationships with disparate line management to ensure that HR practices are aligned with the entire scope of the global business. • Human capital effectiveness is rarely achieved through corporate control or the mandating of practiced option within the organization, but rather through persuasion and positioning and the education of the value of human capital.

16. Principles of Effective International HR • More than any other factor, the ability of the firm to derive value from either leading or innovative HR practices are determined by the role, strength and quality of the organization's leadership. Leadership capability therefore, is central to the effective management of human capital.

17. Some Motivation Theories • Older Theories of Motivation • Maslow’s Hierarchy of Needs • McGregor’s Theory X and Y • Herzberg’s Hygiene and Motivation Factors Newer Theories McClelland Need Theory (Ach, power,aff.) Expectancy Theory (effort /perform /reward) Valence Reinforcement theory.

18. Cross-Cultural Research on Motivation • Motivation is very much a function of the context of a person’s work and personal life. That context is greatly influenced by cultural variables, which affect the attitudes and behaviors of individuals (and groups) on the job.

19. Understanding Culture • A disappointed salesman of Coca-Cola returned from his assignment to Saudi Arabia.     A friend asked,   "Why weren't you successful with the Saudis?" The salesman explained, "When I got posted, I was very confident that I would make a good sales pitch.   But I had a problem. I didn't know how to speak Arabic. So I planned to convey the message through three posters

20. First poster : A man lying in the hot desert sand totally exhausted and fainting.   Second poster : The man is drinking Coca-Cola.   Third poster : Our man is now totally refreshed.   And then these posters were pasted all over the place.  "Terrific! That should have worked!" said the friend. "The hell it should have!" said the salesman.  "No one told me they read from right to left!"

21. Cross-Cultural Research on Motivation(contd.) Some generalized assumptions about motivation based on Hofstede’s research: • High uncertainty avoidance suggests the need for job security, whereas people with low uncertainty avoidance would probably be motivated by more risky opportunities for variety and fast-track advancement. • High power distance suggests motivators in the relationship between subordinates and their boss, whereas low power distance implies that people would be more motivated by teamwork and relations with their peers.

22. Cross-Cultural Research on Motivation(contd.) • High individualism suggests people would be motivated by opportunities for individual advancement and autonomy; collectivism (low individualism) suggests that motivation will more likely work through appeals to group goals and support. • High masculinity suggests that most people would be more comfortable with the traditional division of work and roles; in a more feminine culture, the boundaries could be looser, motivating people through more flexible roles and work networks.

23. Work Centrality and Motivation • Work centrality is defined as “the degree of general importance that working has in the life of an individual at any given point in time.” • The higher the mean work centrality score, the more motivated and committed the workers would be.

24. Functions satisfied by work • Work provides a needed income • Is interesting and satisfying • Provides contacts with others • Facilitates a way to serve society • Keeps one occupied • Gives status and prestige The MOW team looked at the score for each function for various countries

25. The Relative Meaning of Work in Eight Countries Mean work centrality score 8.0 7.78 N = 3144 Japan (7) 7.75 7.5 7.30 (former) Yugoslavia (5) N = 521 Work is more important and more central in life 7.25 7.10 Israel (4) N = 893 N = 996 N = 446 7.0 6.94 USA (3) 6.81 Belgium (1) 6.75 6.69 Netherlands (1) Germany (1) N = 976 N = 1276 6.67 6.5 6.36 Britain (0) N = 409 6.25 Numbers in parentheses indicate the number of countries significantly lower (p<0.05) in work centrality than the country designated 6.0

26. The Role of Culture in Job Motivation Culture Values/Attitudes/Norms Individual/ Group Behavior MOW (Meaning Of Work) Needs Motivation Appropriate Motivators (Intrinsic-extrinsic)

27. Leadership Behavior • The content of leadership comprises the attributes of the leader and the decisions to be made • The context of leadership comprises all those variables related to the particular situation.

28. Some Leadership Theories • Trait Theories • Behavioral Theories (Autocratic, Democratic, Participative Styles) • Ohio State Studies (Initiating and Consideration) • Michigan Studies ( People Vs Task Orientation) • Fiedler’s Theory (LPC, Leader-member relations, task structure and position power) • House’s Path Goal Theory ( Leader Behavior, Subordinate contingency factors, Environmental contingency, all will impact both satisfaction and performance.

29. Factors Affecting Leadership AbroadContent Characteristics of Decision Situation • Degree of complexity, uncertainty, and risk • In-country information needs and availability • Articulation of assumptions and expectations • Scope and potential impact on performance • Nature of business partners • Authority and autonomy required • Required level of participation and acceptance by employees, partners, and government • Linkage to other decisions • Past management legacy • Openness to public scrutiny and responsibility

30. Factors Affecting Leadership AbroadContent • Attributes of the Person • Job position knowledge, experience, expectations • Longevity in company, country, functional area • Intelligence and cultural learning or change ability • Personality as demonstrated in values, beliefs, attitudes toward foreign situations • Multiple memberships in work and professional groups

31. Factors Affecting Leadership AbroadCONTEXT Attributes of the Job or Position • Longevity and past success of former role occupants in the position • Technical requirements of the job • Relative authority or power • Physical location (e.g., home office, field office) • Need for coordination, cooperation, and integration with other units • Resource availability • Foreign peer group relations

32. Factors Affecting Leadership AbroadCONTEXT Characteristics of the Firm and Business Environment • Firm structure: size, location, technology, tasks, reporting, and communication patterns • Firm process: decision making, staffing, control system, reward system, information system, means of coordination, integration, and conflict resolution • Firm outputs: products, services, public image, corporate culture, local history, and community relations • Business environment: social-cultural, political-economic, and technological aspects of a country or market

33. Culturally-Contingent Beliefs Regarding Effective Leadership Styles Sample comments made by managers from various countries: • Americans appreciate two kinds of leaders. They seek empowerment from leaders who grant autonomy and delegate authority to subordinates. They also respect the bold, forceful, confident, and risk-taking leader, as personified by John Wayne. • The Dutch place emphasis on egalitarianism and are skeptical about the value of leadership. Terms like leader and manager carry a stigma. If a father is employed as a manager, Dutch children will not admit it to their schoolmates. • Arabs worship their leaders – as long as they are in power!

34. Culturally-Contingent Beliefs Regarding Effective Leadership Styles(contd.) • Iranians seek power and strength in their leaders. • Malaysians expect their leaders to behave in a manner that is humble, modest, and dignified. • The French expect their leaders to be “cultivated” – cultured, highly educated in the arts and in mathematics.