Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Chapter 9 Industrial relations Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Chapter objectives • Discuss key issues in industrial relations and the policies and practices of multinationals. • Examine the potential constraints that trade unions may have on multinationals. • Outline key concerns for trade unions. • Discuss recent trends and issues in the global workforce context. • Discuss the formation of regional economic zones such as the European Union. The focus of the preceding chapters has been on managing and supporting international assignments, post-assignment and the issues in subsidiary operations. In this chapter we: Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Introduction • We need to consider some general points about the field of international industrial relations. First, it is important to realize that it is difficult to compare industrial relations systems and behavior across national boundaries; an industrial relations concept may change considerably when translated from one industrial relations context to another. • Cross-national differences also emerge as to the objectives of the collective bargaining process and the enforceability of collective agreements. (cont.) Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Introduction (cont.) • Schregle has observed: “A comparative study of industrial relations shows that industrial relations phenomena are a very faithful expression of the society in which they operate, of its characteristic features and of the power relationships between different interest groups. Industrial relations cannot be understood without an understanding of the way in which rules are established and implemented and decisions are made in the society concerned.” (cont.) Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Introduction (cont.) • Poole has identified several factors that may underlie these historical differences: – the mode of technology and industrial organization at critical stages of union development – methods of union regulation by government – ideological divisions within the trade union movement – the influence of religious organizations on trade union development – managerial strategies for labor relations in large corporations. (cont.) Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Introduction (cont.) • Union structures differ considerably among Western countries. These include industrial unions, which represent all grades of employees in an industry; craft unions, which are based on skilled occupational groupings across industries; conglomerate unions, which represent members in more than one industry; and general unions, which are open to almost all employees in a given country. (cont.) Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Table 9-1: Trade union structure in leading western industrial societies Introduction (cont.) Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Introduction (cont.) • These differences in union structures have had a major influence on the collective bargaining process in Western countries. Some changes in union structure are evident over time. • The lack of familiarity of multinational managers with local industrial and political conditions has sometimes needlessly worsened a conflict that a local firm would have been likely to resolve. • Increasingly, multinationals are recognizing this shortcoming and admitting that industrial relations policies must be flexible enough to adapt to local requirements. • This is evidently an enduring approach, even in firms that follow a non-union labor relations strategy where possible. Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Key issues in international industrial relations • Industrial relations policies and practices of multinational firms – Because national differences in economic, political and legal systems produce markedly different industrial relations systems across countries, multinationals generally delegate the management of industrial relations to their foreign subsidiaries. However, a policy of decentralization does not keep corporate headquarters from exercising some coordination over industrial relations strategy. – Generally, corporate headquarters will become involved in or oversee labor agreements made by foreign subsidiaries because these agreements may affect the international plans of the firm and/or create precedents for negotiations in other countries. – Multinational headquarters involvement in industrial relations is influenced by several factors, as detailed below. (cont.) Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Key issues in international industrial relations (cont.) • Industrial relations policies and practices of multinational firms (cont.) – The degree of inter-subsidiary production integration. • High degree of integration was found to be the most important factor leading to the centralization of the industrial relations function within the firms studied. • Industrial relations throughout a system become of direct importance to corporate headquarters when transnational sourcing patterns have been developed, that is, when a subsidiary in one country relies on another foreign subsidiary as a source of components or as a user of its output. • In this context, a coordinated industrial relations policy is one of the key factors in a successful global production strategy. [...]... style of US firms Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Key issues in international industrial relations (cont.) • Industrial relations policies and practices of multinational firms (cont.) – International human resource management approach • The various international human resource management approaches utilized... the Single European Market in 199 3, there has been growth in large European-scale companies (formed via acquisition or joint ventures) that centralize management organization and strategic decision-making • However, processes of operational decentralization with regard to industrial relations are also evident Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning... not the case for many European firms, whose international operations represent the major part of their business • Lack of a large home market is a strong incentive to adapt to host-country institutions and norms Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Key issues in international industrial relations (cont.) •... strategies utilized by labor, management and governments are particularly important Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Key issues in international industrial relations (cont.) • Industrial relations policies and practices of multinational firms (cont.) – Another key issue in international industrial relations... collectively bargain, abolition of forced labor and non-discrimination in employment Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch The response of trade unions to multinationals (cont.) – Regulation of multinationals by international organizations (cont.) • In 197 7 the ILO adopted a code of conduct for multinationals... Badger case Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch The response of trade unions to multinationals (cont.) – Regulation of multinationals by international organizations (cont.) • A recent development with the OECD guidelines (which are addressed by 36 OECD and non-OECD governments) has been the follow-up procedures... multinationals: Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch The response of trade unions to multinationals (cont.) – – – – Formidable financial resources Alternative sources of supply The ability to move production facilities to other countries A remote locus of authority (i.e the corporate head office management of a multinational... the plant will become obsolete and economically non-competitive Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch The response of trade unions to multinationals (cont.) • Another issue reported by trade unions is their claim that they have difficulty accessing decision-makers located outside the host country and obtaining... facilitate the exchange of information Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch The response of trade unions to multinationals (cont.) – International trade secretariats (ITSs) (cont.) • One of the fastest growing of the ITSs is the European Regional Organization of the International Federation of Commercial, Clerical,... via multinational investment policies Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch The response of trade unions to multinationals (cont.) – Regulation of multinationals by international organizations • Attempts by trade unions to exert influence over multinationals via international organizations have met with some . with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Chapter 9 Industrial relations Use with International Human Resource. (cont.) – International human resource management approach. • The various international human resource management approaches utilized by multinationals; these have implications for international. given country. (cont.) Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch Table 9- 1 : Trade union structure in leading