Chapter 12 HRM in the Local Context: Knowing When and How to Adapt © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Learning Objectives •• Understanding Understanding how how the the national national context context affects affects HRM HRM practices practices •• Identify Identify how how recruitment recruitment and and selection selection practices practices differ differ inin various various national national contexts contexts •• Identify Identify possible possible host host adaptations adaptations inin recruitment recruitment and and selection selection practices practices © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Learning Objectives •• Identify Identify how how training training and and development development techniques techniques are are used used inin different different countries countries •• Identify Identify sources sources ofof high-quality high-quality workers workers inin different different nations nations •• Understand Understand how how training training must must be be adapted adapted toto host host country country workers workers •• Identify Identify how how performance performance evaluation evaluation and and compensation compensation practices practices differ differ inin various various national national contexts contexts © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Learning Objectives •• Identify Identify possible possible host host country country adaptations adaptations inin performance performance evaluation evaluation and and compensation compensation practices practices for for aa multinational multinational company company •• Understand Understand how how labor labor costs costs vary vary •• Appreciate Appreciate how how the the national national context context and and historical historical conditions conditions affect affect the the relationship relationship between between management management and and labor labor © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Key Questions Regarding Local Employees •• •• •• •• •• •• How How can can we we identify identify talented talented local local employees? employees? How How can can we we attract attract these these employees employees toto apply apply for for jobs? jobs? Can Can we we use use our our home home country’s country’s training training methods methods with with local local employees? employees? What What types types ofof appraisal appraisal methods methods are are customary? customary? What What types types ofof rewards rewards do local local people people value? value? Do Do any any local local laws laws affect affect staffing, staffing, compensation, compensation, and and training training decisions? decisions? © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Why Do Nations Differ in HRM? •• Because Because ofof the the national national context context National National culture culture and and social social institutions institutions influence influence how how managers managers make make decisions decisions regarding regarding strategies strategies •• Countries Countries vary vary widely widely with with regards regards toto social social institutions institutions and and national national culture culture Multinationals Multinationals must must select select and and implement implement practices practices that that meet meet national national context context © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 12.1: How the National Context Leads to National Differences in Local HRM Practices © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Why Do Nations Differ in HRM? •• Because Because ofof the the resource resource pool: pool: all all the the human human and and physical physical resources resources available available inin aa country country Include Include quality quality ofof labor, labor, availability availability ofof scientific scientific laboratories, laboratories, and and sources sources ofof fuel fuel Arise Arise from from both both from from natural natural and and induced induced factor factor conditions conditions Unique Unique toto each each country country © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Key Factors that Influence the Resource Pool •• •• •• •• •• The The quality, quality, quantity, quantity, and and accessibility accessibility ofof raw raw material material The The quantity, quantity, quality, quality, and and cost cost ofof personnel personnel available available The The scientific, scientific, technical, technical, and and market-related market-related knowledge knowledge available available toto firms firms The The cost cost and and amount amount ofof capital capital available available toto firms firms for for operations operations and and expansion expansion The The type, type, quality, quality, and and costs costs ofof supporting supporting institutions institutions such such as as the the systems systems ofof communication, communication, education, education, and and transportation transportation © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part National Factor Conditions: Natural and Induced •• Natural Natural factor factor conditions: conditions: national national resources resources that that occur occur naturally naturally E.g., E.g., abundant abundant water water supply supply •• Induced-factor Induced-factor conditions: conditions: national national resources resources created created by by aa nation nation E.g., E.g., superior superior educational educational system system © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Compensation •• Wages Wages and and salaries, salaries, incentives incentives such such as as bonuses, bonuses, and and benefits benefits such such as as retirement retirement contributions contributions •• Wide Wide variations variations on on how how toto compensate compensate workers workers © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Compensation in the U.S •• Wages Wages and and salaries salaries differ differ based based on on two two major major factors factors External: External: include include local local and and national national wage wage rates, rates, government government legislation, legislation, and and collective collective bargaining bargaining Internal: Internal: include include the the importance importance ofof the the job job toto the the organization, organization, its its affluence affluence and and its its ability ability toto pay, pay, and and the the employee’s employee’s relative relative worth worth toto the the business business •• Concern Concern with with external external equity equity © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Compensation Around the World (Study of 10 countries) •• Eight Eightcompensation compensationpractices practicesthat thatwere werefelt felttoto be benecessary necessary Pay Payincentives incentivesshould shouldbe beimportant important Pay Payshould shouldbe becontingent contingenton ongroup groupperformance performance Pay Payshould shouldbe becontingent contingenton onorganizational organizationalperformance performance Incentives Incentivesshould shouldbe beaasignificant significantamount amountofofpay pay Job Jobperformances performancesshould shouldbe bethe thebasis basisofofpay payraises raises Benefits Benefitsshould shouldbe beimportant important Benefits Benefitsshould shouldbe bemore moregenerous generous Pay Payshould shouldbe bebased basedon onlong-term long-termresults results •• Less Lessemphasis emphasison onseniority seniorityas asaadeterminant determinantofofpay pay © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Compensation: Japan •• Nenpo Nenpo system: system: based based on on yearly yearly performance performance evaluations evaluations that that emphasize emphasize goals goals Although Although goals goals are are not not always always the the same same as as inin Western Western companies companies •• Bonus Bonus system: system: often often receive receive as as much much as as 30% 30% ofof base base salary, salary, usually usually given given twice twice aa year, year, during during traditional traditional gift gift giving giving seasons seasons © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 12.13: The Japanese Pay Raise Formula: Changing the Balance © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Implications for the Multinational: Performance Evaluation and Compensation •• Match Match performance performance evaluation evaluation system system toto multinational multinational strategies strategies •• IfIf located located inin many many nations, nations, multinationals multinationals may may need need several several compensation compensation packages packages for for host host country country nationals nationals •• Seek Seek location location advantages advantages inin wages wages © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part A Comparative View of Labor Relations •• Patterns Patterns ofof labor labor relations relations depend depend on: on: Historical Historical factors factors Ideology Ideology reasons reasons Management Management views views ofof unions unions © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Union-Membership Density •• Proportion Proportion ofof workers workers inin aa country country who who belong belong toto unions unions U.S.: U.S.: declined declined over over past past 30 30 years years Industrialized Industrialized countries countries :: average average over over 50% 50% South SouthAfrica Africa :: more more than than doubled doubled inin size size © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 12.14: Union Density in Selected Countries © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Historical and Institutional Differences: Germany •• Germany Germany Formalized, Formalized, legalistic, legalistic, and and low-conflict low-conflict with with centralized centralized bargaining bargaining among among unions unions and and large large corporations corporations •• French French Militant/strong Militant/strong ideologies ideologies •• U.S U.S “Bread “Bread and and butter” butter” issues: issues: wages, wages, benefits, benefits, and and working working conditions conditions © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Union Structures •• Enterprise Enterprise union: union: represents represents all all people people inin one one organization, organization, regardless regardless ofof occupation occupation or or location location •• Craft Craft union: union: represents represents people people from from one one occupational occupational group, group, such such as as plumbers plumbers •• Industrial Industrial union: union: represents represents all all people people inin aa particular particular industry, industry, regardless regardless ofof occupational occupational type type © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Union Structures (cont.) •• Local Local union: union: represents represents one one occupational occupational group group inin one one company company •• Ideological Ideological union: union: represents represents all all types types ofof workers workers based based on on some some particular particular ideology ideology or or religious religious orientation orientation •• White White collar collar or or professional professional union: union: represents represents particular particular occupational occupational group, group, similar similar toto craft craft union union © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 12.15: Popular Form of Unions in Selected Countries © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Implications for the Multinational: The Search for Harmony •• Must Must deal deal with with local local labor labor practices, practices, traditions traditions and and laws laws ifif hire hire local local workers workers •• AAfactor factor inin location location choice choice ofof multinationals multinationals © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Conclusion •• Chapter Chapter highlighted highlighted fundamental fundamental national national differences differences inin the the various various HRM HRM functions functions •• Chapter Chapter discussed discussed how how national national context context affects affects HRM HRM •• Chapter Chapter compared compared the the U.S U.S with with many many other other countries countries on on recruitment, recruitment, selection, selection, training, training, performance performance appraisal appraisal and and compensation compensation •• Chapter Chapter also also dealt dealt with with differences differences inin labor labor relations relations © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part ... cultural cultural expectations expectations for for selection selection practices practices Types Types ofof jobs jobs favored favored by by applicants applicants Laws Laws and and cultural cultural... systems Emphasis Emphasis on on training training placed placed by by national national governments governments Cultural Cultural values values regarding regarding other other personnel personnel... historical conditions conditions affect affect the the relationship relationship between between management management and and labor labor © 2011 Cengage Learning All Rights Reserved May not be scanned,