HRM in The H ost C ountry C ontext

1. HRM in The Host Country Context Dony Eko Prasetyo, S.IP.

2. Subsidiary issues • Approach to subsidiary management a function of: • The nature of the relationship between units and ‘parent’ • The level of equity involved • Factors within host-country environments that facilitate or constrain the transfer of global management practices and business processes

3. Standardization of work practices • Depends on • Receptivity of local workforce to adhere to corporate norms of behaviour • Effectiveness of expatriates as agents of socialization • Whether localization is timely (not just prompted by cost considerations) • Appropriateness to the local environment

4. Factors influencing standardization • Host-country culture and workplace environment • Mode of operation involved • Size and maturity of the firm • Relative importance of the subsidiary

5. Host-country culture • Work behaviour is culturally determined • Whether corporate culture supersedes or supplants other ‘cultures’ is a subject of much debate • Often, what is meant by corporate culture translates into universal work behaviours – standardisation of work practices

6. The linkage between culture and behaviour

7. Mode of operation • Choice of mode of operation important in determining standardization of work practices • Ownership and control important factors – wholly owned subsidiaries provide greater opportunities for transferring work practices than in IJVs

8. Factors influencing standardization of work practices

9. Work standardization • The size of the firm, maturity and international experience also important • Motorola in China a case in point: • Large size • Wealth of international experience • Management could draw on these aspects when entering China

10. Subsidiary mandate • The position a subsidiary holds within the global ‘family’ is an important aspect when discussing the transfer of work practices • Transferring knowledge and competence is difficult as subsidiary initiatives are often not seen as relevant (corporate immune system) • Staff movements can assist here

11. Global or local work practices? • Not a case of ‘either-or’ • As Huo et al conclude: “While the recruiting practices used in different countries are inching toward global convergence, we expect national cultures to continue affecting the hiring practices. … The best IHRM practices ought to be the ones best adapted to cultural and national differences”

12. Retaining local staff • The paradox – ‘expense of cheap labour’ • Poaching of key subsidiary staff • Access to skilled labour as important as unit cost (eg. attraction of India for the IT industry) • The amount and quality of training is an important consideration

13. Developing staff • Investing in human capital • Providing training and career development can assist in retaining good local staff • A fair environment and good management practices play an important role in countries such as China

14. Retrenching staff • The reverse of the employment ‘coin’ • Strategic decisions regarding foreign operations have HR implications, including retrenchment • Not confined to subsidiary operations but may affect home base - eg. transferring call centres from UK and US to India

15. HR implications of language standardization • Adopting a common corporate language puts pressure on employees to become competent in the corporate language • Affects • Promotion • Ability to attend corporate programs and meetings • Availability for international assignments

16. HR implications of language standardization

17. Shadow structure of KONE based on language

18. Monitoring host country subcontractors • Outsourcing activities to host-country subcontracting firms requires some monitoring of HR practices • Vocal groups have accused multinationals of condoning work practices that would not be permitted in their home countries

19. HR’s role • Drawing up and reviewing codes of conduct • Conducting a cost-benefit analysis to justify an expatriate as a monitor • Championing local operators as monitors • Being a member of the team who conducts periodic ‘checking’ visits • Overseeing external monitors and auditors where used • Checking rewards and performance systems take compliance into consideration