Strategic HR iisues

7/27/2019 Strategic HR iisues

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StrategicInternational

Human ResourceManagement

M. Khasro MIAH Ph.D.


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The development of international business strategy

from three different perspectives;The development of Strategic IHRM;The links and relationships between strategicinternational business and SIHRM;The critical international strategic decisioninvolving the centralization or localization of strategic IHRM policy and practice;


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IBRegularly performan environmental

analysis or scan

A c t i v el y

en g

a g e d

i n s t r a t e gi c

Pl anni n

g an

d s t r a t e gi c

m an

a g em en

t

Developglobal

strategies

External treats andopportunities

Internal treats andopportunities

Firms

Vision andobjectives


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Challenge of External and Internaleffects

Uncertainty Future importance of

Resources &Capabilities Environmental changes

Complexity Interrelationships

IntraorganizationalConflicts Political forces Differences of opinion

Result: Managing R&Csis Challenging


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Evaluationand

control

Organizationalvision, mission

and goals

Environmentalscanning

Strategyformulation

Strategyimplementation

Basic elements of the strategic managementprocess


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Mgt. positioningthe firm in its ChosenMarket arena

People(HR)

Game plan

Investingmoney

S u p e r i o r

p e r f o r m a n c e

1 .

F o r

d e v e l o p

i n g

S u s

t a i n a

b l e

C o m p e

t i t i v e

a d v a n

t a g e

2 .

P l e a s

i n g

i t s c u s

t o m e r s


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Strategies are developed in either orboth of two ways:Proactively (making changes to improve something beforeproblems happen) : as a forward-looking plan todeal with anticipated market forces ; orReactively : as a response to what the firmis experiencing in the marketplace;

But strategy developed stem from acombination of these forces;


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There are two very compelling needs:First :need to actively shape how their firm's will

be conducted;Second:

need is that of molding the independentdecisions and actions initiated byDepartments, Managers and employees

across the company into a coordinated ,

company wide game plan;Both motives have become increasinglycomplex in current business environment.


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It is much more complex way:

When a firms STRATEGIC PLANING GOES INTERNATIONAL

Because, Managements began to develop;Implemented global strategic plans; andFirms also began to concern themselves withGlobal Human Resources;


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Evaluation of the MNE

The degree of internationalization andgeographic scope:The basic choices ( by a firm) for entry intointernational business ;The extent of global mind-set or globalorientation of the firm and its executive;


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Degree of decentralization andgeographic scope:

Firms Go international but WHYFacing competition from outside its national

borders;Seeks cheaper resources;Expand markets in other countries;

It such case Firms obviously affects everyfunction of the orga., including HRs.


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13

IB strategy categories the degreeof internationalization of the firm

International;Multinational or multi-domestic;Regional;Global;

Transnational;


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Multi-country/ Multi-domestic

A firm decides to establish subsidiaries in multiple countries,Typically operating independentlywithin each country;Independently operations in othercountries;

( LINCOLN ELECTRIC pursued thisstrategy)


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Regionalization

A firm may decide initially toconduct its international business ona regional basis

i.e.., Ford Motor CompanyFirst organizing to conduct businessin only one or two regionsEurope or Latin America thenAsia and other region;


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The global firmBlind to national borders;

Best technology and innovative ideas aresought everywhere and applied to marketsthroughout the world;

Product and services are created where

cost are the lowest;quality is the highest;time to delivery is the shortest;delivered wherever demand is sufficient;resources (money, material, parts, insurance, evenpeople) are sought from wherever the best qualityfor cost can be found;


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Choice of business form for entry intointernational business

Go internationalFaced with a number of choices for implementing thisstrategyIdentifying general IHR Strategies for staffing andhelping to achieve organizational IB Strategies:Exporting;Licensing;Subcontracting;Forming joint ventures;

Alliances and partnershipsUsing FDI through wholly-owned subsidiaries;Acquisition; Greenfield exercise, or turnkey project


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To obtain vital raw materials ortechnology;To spread the risks;

To improve competitive advantage;More cost-effective and;Efficient in the face of increasedglobalization and markets;


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Alliances, Partnerships and Consortia

MNE developing and using alliances,partnerships, joint ventures andother kinds of linkages to Go

international To gain access toTechnology; Research and

laboratories; whichGain competitive advantage in theglobal economy


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Forms of International Business

Direct import/export

Counter tradePure barter;Clearing arrangements;Switch trading;Counter purchase;

Buy back;Portfolio investments;Contract manufacturing;Licensing;Turnkey projects;Foreign manufacturing/ service centers/ storesWholly owned subsidiaries;Joint venture;Investment /equality participation;Alliances/partnerships/consortia

Global/transnational firm


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Evolution of the MNE

Foreignenquiry

Global/transnational firm

Integration of foreignaffiliates

Production abroadContract

LicensingDirect investment

Joint ventureWholly-owned

Acquired

Turnkey

Simpleexport

The exportmanager

The export departmentand direct sales

Sales branches andsubsidiaries

Assembly

abroad

H li i d ti


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Short-termassignee

(PCN,TCN)

Long-termassignee

(PCN-TCN)

Local hires(HCN, TCN)

Immigrants

Returnees

1

2

3

4

5

E x p o r t

S u

b c o n t r a c

t /

l i c e n s e J

o i n t v e n

t u r e

P a r t n e r s

h i p /

a l l i a n c e

F o r e

i g n

s u b s

i d i a r y

Human resource policies and practicesA B C

AA

BB

CC

DD

T y p e o

f I n t e r n a

t i o n a

l

E m p l o y e e

Figure 2.3


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The Model: HR Policy and PracticesFigure 2.3 displays HR policies and practices grouped by areas of the HR responsibilities that are important in the Internationalarena, whether managing the international assignee population or

managing local workforces in foreign subsidiaries and jointventures;

Procurement: Recruit, Select, train, assign; Management: Pay, benefits, performance management,

health and safety, labor relations, Informationsystem;

Out processing : retirement, layoff, termination, downsize,divestiture;

These three areas of HR policy and practice very dramatically from

country to country and from type of employee to type of employeeTo isolate the specific intersections of three variables :The form of IB activity and strategyThe type of IB employee andThe IHR policy and practices that combines the first two together


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The Model: Organizational Outcomes integrating IHRM and IB Strategy

Intersection of the three componentsof this model that SIHRM can gain itsgreatest value;

To assess the desired firm outcomesfor the interactions of threecomponents of IHR;

Intersection of the three componentscan provide a new level of understanding for SIHR;


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International employee types linked withtraditional categories

Parent country nationals:Domestic internationalities;Short-term foreign agencies;Long-term foreign agencies;Permanent transfers;Permanent cadre;Returnees;Second generation expertise;Reward or punishmentassignees ;

Third Country Nationals

Immigrants (a)Immigrants (b)InternshipsSelf-initiated foreign work

experiences

Host-country nationals

Local hiresInternational transferences

Multiple categories

International commuters;Long-term business trips;Boomerangs;Just-in-time assignees;

Outsourced;Virtual expertise Retirees;


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Individual Employee Outcomes

Performance/productivity ( efficiency andeffectiveness);Job satisfaction and motivation;Retention and commitment;But which type of IB assigned to whichinternational Org. Strategy will produce thebest performanceHighest job satisfaction and

best commitment


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This include:The degree of orga. Centralization Vs. localizations;Culture ( national and organizational)Organizational concerns for cost and effectiveness and;

The concerns for all the multiple stakeholders of theMNE;Influence choice;Implementation of IS;

Choice and M of type of International Employee andpriority and assessment of various organizational andemployee outcomes;


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What type of employee is most appropriate

for each IB strategy?

What is the best way torecruit/select/train/assign each type of employee

in each particular IB strategy?

What is the best way to manage each type of employee in each particular IB strategy?

What do you know now? and

What do we still need to determine?


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Given consensusAbout cultureCost and orga

structure

National andCorporate cultures

Will influencemethods for such

Staffing and managing

Develop strategicfocus

Attempt toPrescribe

IHR applied particular

situation

Desired outcomesTechnology transfer

Control, ROI

ImplementingHR Strategiesfor successful

achievement of internationalvision and objectives


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Centralization Vs Localization

Centralization is the concentration of authority and Decision making toward thetop (HQ) of an organization;Decentralization is the dispersion of authority and decision making tooperating units throughout theorganization;

Centralization and localization is becominga major dilemma for IHRM and largeglobal firms;


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How you create a business advantageand able to optimize a business globally?

To specialize in the production of components;To drive economics of scale as far as youcan;To rotate managers and technologiesaround the world;To share expertise and solve problems;


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But you also want to have deep localroots everywhere you operate-Building products in the countrieswhere you sell them;Recruiting the best local talent fromthe Universities;Working with the local governmentto increase exports


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Convergence : use of parent-company policies and

procedures throughout a firms globaloperations.

MNEs face strong incentives to maximize economics of scale in research

and development; Purchasing; Production and markets and

Encounter relatively low barriers to thedissemination of technologies and bestpractices.


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Operate as quasi-independentcompanies( multi-domestic orregional strategy)Adapted to local circumstances and

Markets with very little interferencefrom headquarters;


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Divergence

Attempts by local subsidiaries tobecome centers of excellence;Universal techniques and procedures(globally applied) are implemented (invarying ways) within differencingcountries.


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Culture and

nstitutional influences

C onv

er g

en

c e

Firm strategies tointernationalize and

parent countrycultures

Parent companypolicy and procedures

Local subsidiariesto become centre of

excellence (localization)

Di v

er g

en c e

Firm strategies toMulti domestic

and regional

adapted to localcircumstances

MNEs involveHRM function with

their Strategicdecisions relatedto integration Vsdecentralization

Strategic HR iisues

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