WORKFORCE PLANNING CONSTRAINTS AND CHALLENGES FACED BY MNCs

1. WORKFORCE PLANNING CONSTRAINTS AND CHALLENGES FACED BY MNCs

2. Background • More complex operating environment for MNCs than local firms • Increasing globalisation • Competitive advantages crucial to success or survival of MNCs • Strategic workforce planning can make the difference!

3. Defining workforce planning Workforce planning relates to “the strategic alignment of an organization’s human capital with its business direction. It is a methodical process of analyzing the current workforce, determining future workforce needs, identifying the gap between the present and future, and implementing solutions so the organization can accomplish its mission, goals, and objectives”

4. Objectives • Identify the internal and external constraints faced by multinational companies (MNCs) • Explain the implications for the workforce planning process • Understand the benefits of a strategic approach to workforce planning to MNCs

5. Agenda • Internal workforce planning constraints A) Dominant international orientation B) Firm-specific characteristics C) Standardisation/differentiation? II. External workforce planning constraints A) Labour markets B) Legal and political context C) Socio-cultural aspects • Case Study IV. Conclusion and recommendations

6. INTERNAL WORKFORCE PLANNING CONSTRAINTS

7. Dominant international orientation • Ethnocentric: Foreign subsidiaries managed by the Parent Country Nationals • Polycentric: The MNC appoints executives from Host country as well as the Parent country. • Geocentric: All positions are filled with executives who are best for the position irrespective of the nationality • Regiocentric: The MNC operates in different regions and transfers the staff members within these regions

8. Dominant international orientation(cont.) Ethnocentric: • Shows rejection towards the HCNs. • Better communication and coordination. • High cost of expatriation, resentment among the local staff • unutilized knowledge of the locals Polycentric: • Maintains a balance but can lead to conflict and less coordination between the Head Quarter and the subsidiary. • Lower cost, culture familiarity, low turnover and less language barriers. Geocentric: • This leads to the formation of best teams. • Costly due to training and development needs and bringing staff from different countries Regiocentric: • Staff enjoys transfer from the Headquarters to the subsidiary and vice versa. • Might limit career development of employees (Shen, 2006).

9. Firm-specific characteristics • State of MNC’s finances and labour costs • Fit between firm’s strategy and staffing practices (innovation, quality, cost leadership) • Firm’s stage and mode of internationalisation, maturity, and industry • Organisational culture (e.g., Japan and emphasize on PCNs)

10. Standardization/differentiation of policies and practices. • One of the most pressing challenges is to adapt a “one size fits all” theory vs one that’s specifically adapted for a particular scenario. • Dilemma between local responsiveness and global integration (best practice vs best fit) • It seems to be best to consider local sensibilities while framing and choosing policies.

11. EXTERNAL WORKFORCE PLANNING CONSTRAINTS

12. Labour markets • Labour supply/demand • Characteristics: - Size of candidate pool - Age profile - Skill set - Ethnicity • Elements impacting on workforce planning: - Demographic change - Economic, industrial, technological advancement - Social & educational policies - Competition, globalisation - Time pressures to jump on market opportunities - Employment relationship, ‘psychological contract’ & expectations

13. Employment regulation and legislation • Degree of government interventionism in regulating the labour market • Different levels to consider : • Regional • National • Supra-national • Conflicting national employment laws • Various areas of concern: • Minimum wages • Working time • Equal opportunities & fairness • Dismissal law • Maternity/parental leave

14. Employment regulation and legislation(cont.) • Immigration issues: - Acquisition of visas & work permits for IAs and their spouses/partners • Host country’s expatriate quota system • System of industrial relations: - Power of bargaining - Type of contract - Degree of flexibility - Wages - Likelihood to recruit internally uppermost

15. Geo-political context • If political instability: • Concern about local citizens’ perceptions (eg, American expats in Iraq) • Importance of cultural awareness • Priority to recruit HCNs v. PCNs or TCNs • Difficulty to anticipating & planning • Short-term corporate strategy and short-term assignment as a result

16. Socio-cultural variations • Culture can affect the leadership style of managers • The working environment may be inappropriate for expatriates • Hofstede’s cultural dimensions (1980): - Individualism/collectivism - Power distance - Uncertainty avoidance - Masculinity/feminity - Time orientation

17. Individualism vs Collectivism problems when expatriates from collectivist countries have to work in multinational companies where individualist values dominate Autonomy and independance are accepted in individualist societies, which is not really the case in collectivist societies

18. Power distance will an expatriate from Venezuela take a decision without the supervision of its boss? In Mexico, a leader tends to be assertive with his/her employees to attain high efficiency which is not the case in low power distance countries

19. Uncertainty avoidance will an expatriate from Italy perform as well in a risk-taking organisational culture? In high uncertainty avoidance countries, employees expect their leaders to follow rules. Leaders are expected to be procedural and cautious, not risk-taker.

20. Masculinity vs Femininity Will an Austrian expatriate easily accept the feminine style of leadership displayed by a Swedish manager? In masculine societies, leaders are expected to be confident, ambitious and sometimes aggressive. On the contrary, leaders are expected to be quiet, warm and sensible in feminine societies (more soft skills).

21. Time orientation Will an American expatriate understand the Chinese way of doing business? Conflicts concerning priorities and perspectives at work can arise when employee from different time orientation culture work together

22. CASE STUDY Expatriate learning: exploring how Japanese managers adapt in the United States, and the challenges therein. Study conducted by: Yamazaki, Y. and Kaynes, C.D., 2007, International Journal of Human Resource Management, Vol. 18, Issue 8

23. Purpose of the study • Japan and the US – important trading partners, but radically different cultures. • A high concentration of Japanese MNCs in the US. • Research shows that Japanese managers experience extreme difficulty in dealing with their counterparts in the USA. • Japanese and US cultures provide fertile ground to understand the disparities that are encountered with cross-cultural adaptation.

24. Method of Analysis • Questionnaire distributed to Japanese expatriates, as well as their American counterparts. • Kolb’s Learning Style Inventory (LSI) implemented. • Focus on studying learning orientations on four learning modes: concrete experience, abstract conceptualization, reflective observation and active experimentation.

25. Propositions forwarded

26. Propositions forwarded (cont.) • Expatriates develop multiple mechanisms to adapt to a new culture such that they develop greater adaptive flexibility to use different modes of adaptation rather than relying on a single mode.

27. Implications of the study • Cultural Adaptation of expatriates. • A switch between learning styles is to be emphasized for expatriate success. • Time needs to be devoted for effective cross cultural transformation. • Significant weightage required on workforce planning.

28. Conclusion Complexities, that encompass internal and external influences, require HR proactive practices. In particular, MNCs should consider the impact of firm’contigencies and strategy, as well as labour markets, legal & political frameworks, and culture on workforce planning.

29. Recommendations • Staffing: hiring people that suits a particular business international orientation and strategy. • Rewards: defining rewards that take into account the labour markets and help MNCs to compete. • Training & Development: not training only, but developing people to equip them with the skills required at a given time and for a strategic future. • Planning and strategy: looking at the perspective of what suits MNCs’ strategy but also the local picture.

30. References • Aycan, Z. (2005) The Interplay between Cultural and Institutional/Structural Contengencies in Human Resource Management Practices. International Journal of Human Resource Management, July, 16 (7), pp. 1083-1119. • Brewster, C., Sparrow, P. and Harris, H., 2005, ‘Towards a new model of globalizing HRM’, International Journal of Human Resource Management, 16(6), pp. 949-970. • Scandura T, Dorfman P (2004), Leadership research in an international and cross-cultural context. Leadership Quarterly, 15, 277-307. • Shen, J. (2006) Factors Affecting International Staffing in Chinese Multinationals (MNEs). The International Journal of Human Resource Management, February, 17 (2), pp. 295-315.

31. Thank you for your attention Any questions?