Human Resource Intercountry Differences Essay
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Human Resource management consists in the planning, organization, development and coordination, as well as control of techniques, that enable the company to promote the efficient performance of the personnel and at the same time allows indirectly and directly that the people who collaborate within the company will reach their personal objectives. Managing Human Capital means to conquer and to maintain people in the organization, who will work and give the maximum of themselves, with a positive and favorable attitude.
HR represents all those things that cause that the personnel remains in the organization.
The following work will attempt to answer the question Can Inter-country differences affect HRM. What are some of the ways you expect “going international” will affect HR activities in your business, in order to answer this question this project will open with a review of the literature that has been written on the issues raised by the question above. It should be noted that a vast amount of writing has been done on these issues but only a few of them dimmed to provide the most benefit to the purposes and intent of this assignment have been sited.
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The reason why going international affects not only HRM but the whole company in general is because organisations are not only based on elements like technology, machines or information; but “the key of a right company is its management and the people who participate in it”, for this reason if we take in count that each person is a phenomenon subject that is affected for the influence of many variables then we can understand why going international will affect the main resource of the company which is the people and therefore the organization will have to adapt all the different areas of the company in order to meet the differences of the environment that eventually will affect the employees and the company itself.
This paper makes a review of Inter-country Differences towards HRM having in count the cultural differences and the effect that these have on Human Resource going international. To further illustrate this point, the group also takes a look at what has been written on the relationship between more fundamental issues of HR management and the general concept of HR globalisation paying particular attention to the subject matter of the above question. These issues that include, Cultural, Economical, Labour factors among some others are discussed in the body of this assignment bringing out the major difficulties that will be faced in each of these areas, by HR management departments in organisations that have opted to go international.
Examples are drawn from a variety of both secondary and primary sources and they serve to ilustrate the points that have been made. The work concludes with some suggestions as to how the difficulties that have been identified in the course of this work could be surmounted by HR managers.
II. Inter-country DifferencesAs business nowadays becomes more global, Human Resource Management becomes a bigger and more interesting issues for all organizations. The differences between each countries in terms of cultures, economics, legislation, or even environment have both direct and indirect influence to the owners, managers, employees, and other people related to the company. These influences cover the areas of Human Resource activities, which are recruitment and selection, training and development, and performance and reward management. Several years ago, researchers asked senior international human resources managers, “what are the key global pressures affecting human resource management practices in your firm?” and the three that emerged were:(Gourlay, S. 1999)
Example 1:The case study called Cross-cultural Assessment over a Cup of Coffee from Vance (2006) could be one of the good examples showing how international difference would affect Human Resource. According to the case study, Livia is a consultant who work in the United Kingdom. She was once conducting an organizational study in Hungary with various groups of managers from different countries. During her study, she interviewed with American managers and she had the feeling that she was not welcome by them. On the other hand, the Hungarians offered her coffee.
Therefore, she assumed that Americans were rude and lack of hospitality skills. In terms of doing business, Americans had an attitude of “get down to business” One the other hand, she thought Hungarians seemed to be more relationship oriented since they spent more time getting to know people. Therefore, she questioned herself whether it was because the culture differences or could be because Americans drink less coffee than Hungarians or Americans do not like Hungarian coffee. The answers would base on individual overviews. Example 2:In china, special insurance should cover emergency evacuations for serious health problems, and medical facilities in Russia may not meet international standards.
(Gourlay, S. 1999)Example 3:One of the major challenges that might be encountered by HR is that of finding the right people for the jobs that have been exported. A person trained in India and who has never left the country to experience aspects of the English culture, is recruited to work in a call centre set up for a UK based bank. It is obvious that such a person will have problems interacting with customers in England who make calls to the call centre. It is a known fact that often, callers have been frustrated with these call centre workers to extent that some of them have moved their accounts to other banks.
This defeats the whole purpose of the organisation’s move towards out sourcing which is to maximize profit by reducing cost in the sense that when customers continue to move their accounts to other banks with UK based call centres, it will get to the point where the bank will loss all business to it’s competitors. Take note that in recent times, this trend has been so rampart, such that some banks and Nat West being an example now use the phrase the phrase UK based call centres to in their adverts to attract new customers.
In theory, it has been proved by many researchers that differences in countries have effects to Human Resource Management. In summary, there are some main factors that have a great impacts on managing organizational human resources, including:CulturalInternationalization of HRManagementLabour Cost FactorsEconomicRelations Factors2.1) Cultural FactorsThese is dealing with; language, religion, value, attitudes, education, social organization, technology, politics, and laws of the country.
Example 4:The use of language has critical implications because of differences in languages from one country to another country. So in the interviews or appraisal feedback meeting people managers must be aware of cultural differences covering.
Example 5: The cultural norms of the Far East system affect the typical Japanese worker’s view of his or her relationship to an employer as well as influence how that person works. Japanese workers have often come to expect lifetime employment in return for their loyalty, for instance. As well, incentive plans in Japan tend to focus on the work group, while in the West the more usual prescription is still to focus on individual worker incentives.
Example 6:A few months ago in London a Muslim woman that was working in a restaurant as a waitress sue the restaurant over claims that she was fired for refusing to wear a dress that suggested she was “sexually available.”. Her cultural and Religions believes were first and for this reason she didn’t use this dress that as she said :”If you put this dress on, you might as well be naked…” (www.upi.com, 2008)2.1.1. Dimension to cultureExample 7:Hofstede (1980) stated that there are four main cultural dimensions affecting the international organization which include power distance, uncertainty avoidance, individualism, and masculinity. He has said that Japanese have high uncertainty avoidance tend to concern more on saving faces and not making people feel embarrassed in public (Jackson, 2002).
Example 8:When you compared several thousand IBM employees in over 50 countries using attitude questionnaires. Significant differences are found between employees in one country and another, despite their similar jobs and membership of an organization which is renowned for its strong corporate culture. The dimension of culture is as follows:Power distance: the nature of people, marked is the status differences between people with high and low power. Example 9:In Colombia employees try to be more relaxed and les formal within their professional relationships, the CEO of a company could be very close to the lower level of the company without jeopardizing the Company’s interests, stricted hierarchy rules are not taking in account.
Individualism :how people related to others it can be individuals or groups.
Example 10:For example, American’s emphasis on individuality main help to explain why European managers have more employment related problems, for instance in relation to laying off workers. (Gourlay, S. 1999)Managing Global Human ResourcesUncertainty avoidance :primary mode of activity, this measure of flexibility and need for rules.
Masculinity or femininityLong term or short term orientation – Time orientation is the most effect to human resource management because different cultures have different attitudes towards time. Time-keeping is treated tolerantly in underdeveloped societies – with few things to do, one can do them in any order. But in industrialized countries there are many things to do and they must be co-ordinated with other people. Hence, time becomes more important and is regarded as something precise and highly significant. Cultural AspectsDressFoodClimateHousingCross cultural differences in work place – Cross culture differences which can affect human resource management in work place are easily seen in the following situations:How interviews should be conductedHow training should be deliveredHow managers should act with their subordinatesHow negotiations should be conductedHow people should be paid for workIn another theory, Tayeb (2005) compared the attitude of employees towards power and authority between in high-inequality cultures and low inequality cultures.
He found that in high-inequality cultures, people tend to be afraid of power, employees are less likely to confront with their managers. The management style is likely to be autocratic and decisions are usually made by a few senior managers. Instructions always come from the top to the lower levels who are expected to follow the orders. In contrast, in low-inequality cultures, the management style is totally different. Employees are still respect their managers but feel more comfortable to give their opinions. Unlike in high-inequality culture, junior employees can be part of the decision makers. Another example given by Tayeb (2005) is the overview on leadership behaviours.
He concluded that Japanese and British leadership are different. The Japanese employees would see a manager as a good leader if he/ she spends extra time at work, frequently meets with members and subordinates to discuss about work progress and evaluates group performance. In comparison, the British employees prefer seeing a manager show them how to use equipments in the organization and provide them an opportunity to make suggestions and discuss a problem with a group. Example 11:A company taking its production abroad could get highly benefits, in Barranquilla, Colombia is a multinational company that produce umbrellas, but taking in count that Colombia has 20 bank holidays during the whole year, the company had to move all the production plant to a different country where there where less bank holidays and the production could be opened for longer days during the year.
2.2) Economic FactorsEconomic systems among countries also translate into intercountry differences in human resource practices. In free enterprise systems, the need for efficiency tends to favor human resource policies that value productivity, efficient workers, and staff cutting where market forces dictate. Moving along the scale toward more socialist systems, human resource practices tend to shift toward preventing unemployment, even at the expense of sacrificing efficiency. All the differences in the systems as Economic systems are directly translated in differences in human resources management politics and policies due to the fact that some companies agree more with the idea of a free enterprise than others.
2.3) Labour Cost FactorsIn labour costs may also produce differences in HR practices. High labour costs can require a focus on efficiency and on HR practices (like pay-for-performance) aimed at improving employee performance. Intercountry differences in labour costs are substantial.
Example 12:Nike, and American company, producing and marketing sports shoes has had a bitter experience with out sourcing it’s factory. In the nineties, Nike saw that it’s cost of production was becoming too high them to maintain a profit and to keep up with their competitors and so they set production factory in Cambodia which proved to be a solution to their demise in the sense that cost of production was greatly reduced while maintaining the quality of the goods produced. Had things gone on like this, critics who argue that there are instances where labour can be successfully exported without resulting in a fall in the quality of the work done would have been held correct.
However as earlier mentioned, what those critics failed to do was to look at other areas of HR which might be affected in a Negative way as a result of this. In Nikes case problems arose when it was made known to potential consumers of their products that the Cambodians who worked in factories where subjected to work long hours in near slave situations, and a call was made for the boycott of Nike products. The Cambodians themselves had no issues neither with their pay or working condition.
To them it was just the way of life to work such long hours under the situation in which they did and for such little money. In fact, they considered themselves better off as opposed to other Cambodians. What happened in this case was that a comparison was made by the working conditions in these factories, to those in the American offices.
Example 13:Working hours and labor cost are closely related with this economical factors, the working hours and the compensation for it are different from country to country and make a substantial difference in labor cost.
Example 14:In Germany, for instance, codetermination is the rule. Here, employees have the legal right to a voice in setting company policies. On the other hand, in many other countries, the state interferes little in the relations between employers and unions. Lastly, the difference in industrial relations factor of each country has a great influence on the relationship among the workers and the employees in the organization, and the unions.(Gourlay, S. 1999)Example 15 :France and Belgium is a good example regarding to the industrial relations factor. In the past, Belgium used to be a dependent province of France. Even though, later on, it has been independent, some cultures from France still impact Belgium people until now. One of them would be the French language that has been used as a legal language for Belgium government. However, in terms of the influence of trade unions, they are totally different (Chris, 2004).
Example 16:In France, the number of trade union members are quite low. More than half of the French companies stated that the number of union members is lower than 10% which is the lowest score among other European countries. The main reason is because French unions do not offer any collective services. On the other hand, in Belgium, more than half of companies reviewed that about 50% of workforce are union members. This is because there is a competition among the group of three powerful union organizations at the national, regional, and company level (Chris, 2004). III. International Human Resources ActivitiesGoing international is a crucial decision for a business in all of its aspects. As for the HR activities in a business, there are other small sub-factors that need further consideration, in special, the current day to day running of Human Resource Management. The reason why this is changeable overseas is owed to the same aspects that other countries or regions will conduct and perceive practices.
It can be said that one of the main concerns for moving into a global business is based on cultural differences. One of the decisions that firms need to make is on the re-design and structure of the organization. This include the adaptation for a new cultural environment for the whole process of HR planning and strategies. This decision involves choosing the forms, understanding the stages of development, and implementing the strategy through each functional level of the organization, including HR management. To support and advise on the firm’s strategic direction, HR managers must understand the organizational design issues that firms face, the evolving phases in the development of the firm as it grows internationally, and the most common methods of implementing human resource strategy within those designs and phases (Briscoe & Schuler, 2004).
International Human Resource Management is characterized by increased complexity of HR activities, cultural awareness and tolerance, stronger relationship with employees and their families, different expectations and requirements of employees across cultures, management of cross-cultural teams and diluted risk on the business front and increased risk on the people front.
When a company is recruiting, the search for new employees should include opportunities for all types of sub-cultures including age, gender, ethnicity, nationality, etc provided that the environmental circumstances are appropriate. If, for instance, an organization advertises job vacancies in only one source, such as in magazines mainly destined for young people or for the male sex, it is rather possible that employers would be limiting vacancies to young males only.
Expansion of business horizons implies greater challenges in terms of human resource management. The different IHRM activities include normal HR activities like human resource planning, performance management, compensation management, training, etc., but at a higher level of complexity. The specific IHRM activities include expatriate assignment management, expatriate training, management of cross-cultural work-teams, cross-cultural training etc.
3.1) Recruitment and SelectionThe procedures of selection and recruitment process will be different because of the society and internal organizational factors. In developed countries, such as the US, the formal procedures including interviews and written tests will be used to select the most suitable person. In developing countries such as some in the Middle East and Africa, the recruitment process is normally done through informal networks of relatives and friends. (Tayeb, 2005).
Example 17:The international Nike case problem emerged when Cambodians working in the manufacturing sector were told they have being paid less than if they were working in Nike Company home country. However, the Cambodians themselves were in fact glad to be paid the salary sum, despite the boycott because normally no Cambodians are given the opportunity to receive such salary for the job they have been doing. The report called the situation a case of slavery, despite it was found that the workers themselves were satisfied with the salaries.
The example above stands out job expectations from different countries, hence the necessity of organizations to understand international human resource protectionist laws that can affect the current HR practices in the home country.
3.1.1 Criteria of SelectionExample 18:The criteria of selection is also different.
In Japan, companies prefer selecting someone with a wide range of educational qualifications and will be then trained to perform cross- functional jobs. The main purpose is to make the internal employees flexible and skilful so they are able to perform any jobs when necessary (Tayeb, 2005).
In the US, the criteria are base on specialism. They tend to employ new skilful people who are able to perform the jobs without further training.
In Britain, the combination of the two is used. Applicants are selected on a fit-the-job basis, and are then trained to perform that specific job properly (Tayeb, 2005).
For recruitment method, both in Turkey and Israel tend to use the current employees as a main method to fill the manager positions. However, the second source in Turkey is using recruitment companies or consultancy while in Israel using newspaper advertisement.
In selection process, 94% of the Israel companies use interview as a tool to select the applicants while in Turkey, filling application form is the most popular method (Chris, 2004).
3.2) Training Most of the companies use induction and on-the- job training as the main training method. However, nowadays, further training is necessary since competencies arise. While some countries take a form of informal training, others take the form of either in-house tuition or externally – provided services. In the past, employee training is widely used in UK. Now, it has been replaced by more formal courses. For developing countries, skill training is still necessary. The relationship between the supervisor and the new recruit is similar to teacher and pupil, or even parent and child. In many countries, training policies and practices are normally not required by the law.
However, some countries such as France, medium and large companies are required by law to spend some percentage of their annual turnover on employee training. Apart from France, Japanese, German and US companies also spend a sum of money and time on training. (Tayep, 2005)3.3) Job expectations and motivation policiesIt is obvious to agree that the majority of people have their own goals and try their best to achieve them. Different societies with a variety of cultures and environment may have different views of job expectations and motivation (Tayeb, 2005).
Example 19:According to the employee attitude survey conducted in English and Indian organisations by Tayeb (1988), it can be concluded that ‘being creative and imaginative at work’ and ‘good pay and fringe benefits’ were more important to the English employees than to the Indian employees. On the other hand, ‘having an opportunity to learn new things’ and ‘having freedom and independence’ were more important to the Indian employees than the English employees. 3.4) Performance appraisal, reward, and promotion policiesIn many traditional countries such as in the Middle East, loyalty to a superior is more important that effective performance. In addition, harmony in the organisation can help it run smoothly instead of using performance measures.
Example 20:Segalla’s (1998) conducted the research on 100 European managers and found that different countries have different aspects to human resource decisions. Promoting managers in German is based on objective performance. French managers, on the other hand, promoted on a basis o seniority or group loyalty. Regarding to the redundancy, more than 70% of the English respondents would have made redundant a middle-aged, high-salary manager with average performance.
On the other hand, German respondents prefer discharging young managers who could find new jobs easier. French respondents were more likely to redundant a younger average quality manager than an older one (Tayeb, 2005). IV.RecommendationsWhen a company decides to expand internationally, it must follow the same steps that its local employees accomplish when incorporating for its first time, but with a higher care in details and considering certain requirements that are fundamental for the success of the new project of going international.
The steps that we recommend are the following:Every company that is planning in the short or long term going international must do a rigorous selection having in account not only the technical knowledge, but the adaptability that can have an employee in the future. The acquired experience is important also (labour, level of education, language skills,etc.), since the majority of companies looks for candidates who have evolved very well in similar positions in other parts of the world, making easier to achieve the goals of the new challenge.
In the case of a manager or other employee who is going away to make a position of the company in a determined country, the HR department is due to prepare this person as far as the customs that will find, the language that will be spoken, the conditions of life that will find and all the information required in order to accomplish successfully this challenge.
In order to enable the employees so that the organisation’s politics and strategies prevails abroad the company will have to stablish some measurement process, owing to the fact that if the company is well prepared the impact by the cultural differences will not affect the success of the business.
There is always very important that the company majes an evaluation or the organisation’s strategy, goals and also a very detail SWOT analys which will help the company to have a complete analysis and in this way they HR deaprment will be prepare in how the challenges of going abroad will influence the company in its future performance..
Another step occurs with employee that will be transfer abroad, who will need all the information concerning the country destiny and some abilities of adaptation in order to make this person to fit in the new site of work.
Compensations is a point of extreme importance when going international, because costs of life are very different and the remuneration must be in agreement with this item, or with majors incentives or a better wage.
Finally, the true key to succeed in the mission of taking a company’s operation abroad is to enable in the best way possible each one of the employees involve in this process, for each one of the persons that participate in the internationalisation having the information and knowing beforehand the challenges that will take place and how to handle it will make the differences in which companies succeed and which doesn’t.
V.ConclusionIn a world with so immediate changes and where internationalization is increasing every day, a good HRM will be fundamental so that the companies that wishes to project to go international can, prevail in foreign marketsGlobalisation, opening, unification, are referring terms to the new world order that has been displaying with great force in the last years. The companies have been part fundamental of these events and they do not remain apart from all the internationalization process that has come displaying in all sense.
For such reason after writing this report is understood that the change process includes all the directed activities to help the organization so that it successful adopts new attitudes, new technologies and new forms to make businesses, due to the fact that the new challenges that HRM faces in a world where the globalisation, not only of the companies, is latent. We already treated the steps that must follow a company so that their employees can be successful abroad, that is to say, how he is due to select, to enable and to compensate dices the new challenges which they are going away to face. Nevertheless, other factors exist to very consider like the remarkable differences as far as the legal systems, the availability of manpower, etc., that exist in the countries.
Like final conclusion, the adventure can affirm that to look for new courses always will bring challenges. The best thing, therefore, is to prepare itself of the best form and to adapt completely to the new specifications that are in this difficult but exciting way.
Writing this report has made us understood that the change process includes all the directed activities to help the organization so that it successful adopts new attitudes, new technologies and new forms to make businesses. The effective administration of the change of going international, allows the transformation of the strategy, the processes, the technology and the people to reorient the organization to the profit of its objectives, to maximize its performance and to always assure the continuous improvement in an atmosphere of businesses/ money changer.
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