Chapter 9: IHRM in the host-country context
Standardization and localization of HRM practices
* Controlling cross-border operations of an MNE centres around what processes, routines, procedures and practices can be and should be transferred abroad. In the process of transferring systems and know-how the role of people is critical. * The aim of global standardization of HRM practices is to reach consistency, transparency and an alignment of geographically fragmented workforce around common principles and objectives * The aim of realizing local responsiveness is to respect local cultural values, traditions, legislation or other constraints such as government policy. Though attempting to implement methods and techniques that have worked in one country may be inappropriate for another. * The challenge of multinationals is to create a system that operates effectively in multiple countries by exploiting local differences and interdependencies and at the same time sustaining global consistency. Factors driving standardization
* Strategic issues – multinational firms operate in the context of worldwide conditions, including the external contexts of industry, nation, region, and inter-organisational networks and alliances. These factors not only impact on IHRM strategy and practice but also on MNE goals. * The organisational context – includes various organisational structures such as export and sales subsidiary to more complex varieties such as the matrix and heterarchy and their impact on HRM. Also the consideration of organisational culture. * Firm size – the impact of a firm’s size in relation to the important differences between HRM in SMEs and MNEs. Closely linked to the firm size is the degree of international experience. Factors driving localization
* The cultural environment – appropriate HRM practices can help support the cohesion between different units of the MNE. If HRM practices do not match local norms and values, they must be adapted to the distinct features of the host-country culture. * The institutional environment – institutional pressures may be powerful influences on human resource practices. Not only can the host-country’s institutional context foster localization, but the forces exist from the country-of-origin as well, it can be seen that America MNEs learn from their subsidiaries in the United Kingdom. Code of conduct – monitoring HRM practice in the host country A critical issue in the management of the international supply chain is ensuring that quality standards are met. Major known brands have been accused in the past of condoning the use of child labour and low working hours for minimal pay as well as unsafe working environments. The role of HRM related to a global code of conduct may include the following: * Drawing up and reviewing code of conduct
* Conducting a cost-benefit analysis to oversee compliance of employees and relevant alliance partners * Championing the need to train employees and alliance partners in elements of the code of conduct * Checking that performance and rewards systems take into consideration compliance to code of conduct. Managing human resources in ‘offshoring countries’
Offshoring is an important trend for reaching competitive advantage in the globalized economy. The development of offshoring within some locations arises as a result of strong government support to help the country meet those requirements that have an impact on the choice of the location of offshored activities. Important issues emerge in regard to the situation of offshore activities within countries such as skill shortages and the resulting consequences. * A possible role of HRM – offshoring activities can fail and common reasons for this include; unsatisfactory quality of products or services, problems of management control, rapid turnover of local staff and language problems. The starting points for strengthening local HRM systems could be...
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