Intercountry Differences and HRM

Deanne Mitzi A. Somollo

Globalization and the Destruction of Time and Space

• The rapid growth of global business started with the emergence of the Industrial Revolution.

• Availability of Transportation (Rail roads and Steam Ships) allowed raw materials to be transported from one area to another in bulk. Finished product was also transported through these means.

• As technology advanced further so did business. • The pioneer company that

posited the idea of “going global” was the Ford Motor Company. • The idea was mainly to move

from a regional concentration (America) to a global one.

• In the 21st century, technology has taken global HRM through leaps and bounds.

• There is a rising trend of the use of teleconferencing in meetings, e-mailing of resumes, dot. Com job hunting and the like.

• Global companies (even companies that are just starting out) must deal with the “McDonaldization” of society. –That is looking at the world through a post modern lens.

Human Resource and International Challenge

Perceived global pressures of international companies:

Deployment

Knowledge and Innovation

Dissemination

Identifying and Developing Talent on

the Global Basis

How intercountry differences affect HRM

Cultural Factors• Wide ranging differences from country

to country require corresponding differences in HR practices among a company.

• It is wise for an HR Director/Administrator to learn about the culture of employees of the company particularly if the work force is very diverse.

Cultural Factors. . .continued

A study was conducted by Professor Geert Hofstede and identified five major international cultural differences.

1. Power Distance- how less powerful members of the workforce accept the unequal distribution of power (top power distance countries- Malaysia, Guatemala, Philippines; lowest Austria, Denmark and Israel)

2. Masculinity versus Femininity- how society values assertiveness versus being caring ( Most Masculine cultures-Japan, Austria and Venezuela)

Cultural Factors. . .continued

3. Uncertainty Avoidance- ability of a culture to be “flexible”(Greece, Portugal, Belgium and Japan)

4. Individualism- extent to which people are allowed to “do their own thing” (Individualist- United States and other English Speaking countries)

5. Long term versus short term orientation-how a culture programs people to wait for gratification (Long- term-Taiwan, Hong Kong, Nigeria, Pakistan, Philippines)

Cultural Factors. . .a brief framework

According to the Wayne Cascio, Managing Human Resources, there are 10 brief point of cultural variables that have a profound effect on HR.

These are:1. Sense of Self and Space

2. Dress and Appearance

3. Food and Feeding Habits

4. Communication and Language

5. Time and Time Consciousness

6. Relationships7. Values and Norms

8.Beliefs and Attitudes

9.Work motivation and Practices

10.Mental Processes and Learning

Cultural Factors. . .examples

For the Filipinos, it may be okay to come to an appointment late but for Americans, it is a big no.

For the Japanese, only men can handle higher level management, but in Sweden there is equal opportunity for people (regardless of sex) to advance in management.

For the Chinese it is insulting to stick your chopsticks upright in rice bowl, For Australians proper cutlery must be used in eating while for Filipinos, one can use hands in eating or spoon and fork.

Cultural Factors. . .How to avoid conflict• Conduct Diversity Training• Be genuinely interested in the culture

of other people• Learn the culture of your employees• Create a responsive feedback

mechanism for employees • Treat situations like racist comments

and sexist attitude seriously

Economic Factors

• Differences in economic systems (due to difference in beliefs) also translate into intercountry differences in HR practices.

Economic Factors• Countries to the right of the political

spectrum (Conservative countries, Nationalist countries) view profit as one of the most important goals.

• Countries to the left of the political spectrum (Liberal Countries, Socialist countries, Communist countries have varied HR systems.) Liberal or free enterprise countries tend to favor productivity, efficient workers and staff cutting where market forces dictate but leftist economies tend to shift more towards preventing unemployment.

Economic Factors…

According to the 2014 Index of Economic Freedom the following countries have the most economic freedom:

RANK COUNTRY OVERALL CHANGE RANK COUNTRY OVERALL CHANGE

1 Hong Kong 90.1 +0.8 4 Switzerland 81.6 +0.6

2 Singapore 89.4 +1.4 5 New Zealand 81.2 -0.2

3 Australia 82.0 -0.6 6 Canada 80.2 +0.8

Economic Factors…

While the following countries have the least economic freedom:RANK COUNTRY OVERALL CHANGE

173 Iran 40.3 -2.9

174 Eritrea 38.5 +2.2

175 Venezuela 36.3 +0.2

176 Zimbabwe 35.5 +6.9

177 Cuba 28.7 +0.2

178 North Korea 1.0 -0.5

Labor Cost Factors

• Labor cost is the overall costs to a company associated with one employee, including wages, benefits, taxes and insurance.

• Recruiters and human resources managers have to take labor costs into account in every aspect of their jobs.

• How much the department or hiring manager can pay for an employee will inform everything from the job description, the job title, the way the job is marketed to applicants, the type of candidates the recruiter can seek out and the offers they can make to those candidates.

• Labor costs are generally the highest expenditure for most businesses, as they incorporate the sum total of all human related work needed for company operations.

Labor Cost Factors. . .the elements

• Salary

• Benefits

• Administrative Costs

Labor Cost Factors. . .Examples

1. Madagascar ($0.18 per hour)

2. Bangladesh ($0.23 per hour)

3. Pakistan and Ghana ($0.32 per

hour)

4. Vietnam ($0.39 per hour)

5. India ($ 0.48 per hour)

Industrial Relations Factor

• Industrial relations refer specifically to the relationship between the worker, the union and the employer.

• The differences are dramatic and affects HR practices tremendously

Industrial Relations Factor. . .

worker Labor Union Employer

HR PRACTICES

STATE POLICIES

Industrial Relations Factor. . .

The following are some of the world’s most powerful labor unions:

1. All-China Federation of Trade Unions (ACFTU)

2. Congress of South African Trade Unions (COSATU)

3. General Confederation of Labor (CGT)- France

4. IG Metall- Germany5. Tunisian General Labor Union (UGTT)

The banes and boons of International HRInternational HR, according to Cascio

2010, is a subject worthy of attention because of two things:

1. Scope2. Heightened Risk Exposure

On a final note. . .

According to Cascio 2010 and Dessler 2007, companies that look to take advantage of the international market must:

Not export headquarters-country biasThink in global termsRecognize that no country has all the

answers

References

Dessler, Gary Human Resource Management 2007

Cascio, Wayne Managing Human Resourceswww.wikipedia.comwww.heritage.comwww.foreignpolicy.comwww.recruiter.com