1. Chapter © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 HRM in the Local Context: Knowing When and How to Adapt

2. © 2013 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 can we identify talented local employees? How can we attract these employees to apply for jobs? Can we use our home country’s training methods with local employees? What types of appraisal methods are customary? What types of rewards do local people value? Do any local laws affect staffing, compensation, and training decisions? How can we identify talented local employees? How can we attract these employees to apply for jobs? Can we use our home country’s training methods with local employees? What types of appraisal methods are customary? What types of rewards do local people value? Do any local laws affect staffing, compensation, and training decisions?

3. © 2013 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

4. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Characteristics of the National Context That Affect HRM Education and training of the labor pool Laws and cultural expectations of selection practices Types of jobs favored by applicants Laws and cultural expectations regarding fair wages and promotion criteria Laws and traditions regarding labor practices Education and training of the labor pool Laws and cultural expectations of selection practices Types of jobs favored by applicants Laws and cultural expectations regarding fair wages and promotion criteria Laws and traditions regarding labor practices

5. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Recruitment Strategies Walk-ins or unsolicited applications Advertisements placed in newspaper or on the Internet Company Web site job postings Internal job postings Public and private personnel agencies Placement services of educational institutions Current employee recommendations Walk-ins or unsolicited applications Advertisements placed in newspaper or on the Internet Company Web site job postings Internal job postings Public and private personnel agencies Placement services of educational institutions Current employee recommendations

6. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example: Recruitment in the U.S. vs. Collectivist Societies U.S. managers: Tend to see online or print advertising as one of the most effective recruitment methods. Fear employee referrals result in the recruitment of people with similar backgrounds Fear that recruitment by personal contacts may result in biases against some groups. Managers in collectivist societies: Tend to focus on the in-group, such as the family and friends of current employees. Backdoor Recruitment : prospective employees are friends or relatives of those already employed

7. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example: Selection in the U.S. vs. Collectivist Societies Gather information on a candidate’s job qualifications Find a match between the candidate’s skills and the job requirements. The focus is on the individual’s achievements rather than group affiliations. Many firms prohibit Nepotism, the hiring of relatives. Many also prohibit managers from supervising family members. Hiring always takes the in-group into account. Preference is given to hiring relatives of first, the employer, then relatives of employees. This selection values potential trustworthiness, reliability, and loyalty over performance-related background. High school and university ties may substitute for family membership.

8. © 2013 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: Recruitment and Selection Recruitment and selection of host country workers requires that managers of MNCs understand and adapt to local practices. If local norms are not followed, the MNC may not get the best employees, and may offend cultural norms or break host country laws. Many firms now using Electronic Human Resources (eHR). Recruitment and selection of host country workers requires that managers of MNCs understand and adapt to local practices. If local norms are not followed, the MNC may not get the best employees, and may offend cultural norms or break host country laws. Many firms now using Electronic Human Resources (eHR).

9. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Training and Development Within a country, the need for training and development varies widely industry, technology, etc., but broad national differences exist. Differences in training and development are due to: Differences in educational systems Emphasis on training placed by national governments Cultural values regarding other personnel practices Within a country, the need for training and development varies widely industry, technology, etc., but broad national differences exist. Differences in training and development are due to: Differences in educational systems Emphasis on training placed by national governments Cultural values regarding other personnel practices

10. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example: Training and Vocational Education in Germany A sophisticated and standardized national system provides two major forms of vocational education: General and specialized vocational schools and professional and technical colleges Dual system : A combination of in-house apprenticeship training with part-time vocational-school training leads to a skilled worker certificate. With advanced training, one can achieve the status of Meister : a master technician. A sophisticated and standardized national system provides two major forms of vocational education: General and specialized vocational schools and professional and technical colleges Dual system : A combination of in-house apprenticeship training with part-time vocational-school training leads to a skilled worker certificate. With advanced training, one can achieve the status of Meister : a master technician.

11. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The German Dual System Stems from collaboration among employers, unions, and the state Costs are shared between companies and the state. Employers have an obligation to release employees for training. Produces a well-trained national labor force with skills that are not company specific Dual System under stress due to economic downturn Stems from collaboration among employers, unions, and the state Costs are shared between companies and the state. Employers have an obligation to release employees for training. Produces a well-trained national labor force with skills that are not company specific Dual System under stress due to economic downturn

12. © 2013 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: Training and Development Before operating in a host foreign country, multinational managers must: Consider the quality of workers and managers there Examine the feasibility of exporting training to them Adaptation of management-development to different national contexts depends on intended use of host country managers. Before operating in a host foreign country, multinational managers must: Consider the quality of workers and managers there Examine the feasibility of exporting training to them Adaptation of management-development to different national contexts depends on intended use of host country managers.

13. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example: Performance Appraisal in the U.S. vs. Collectivist Societies U.S. system values links among individual rights, duties and rewards, and equal opportunity. The ideal U.S. system is rational, logical and legal. Such systems have four elements: Performance standards Performance measures Performance feedback Human resource decisions In Collectivist Societies: Age and in-group memberships provide a large component of the psychological contract with the organization. Human resource decisions take into account personal background characteristics, besides achievement. Managers indirectly sanction poor performance, and may often avoid direct performance appraisal feedback.

14. © 2013 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 Compensation: includes wages and salaries, incentives such as bonuses, and benefits such as retirement contributions. There are wide variations among countries and organizations on how to compensate workers. A country’s economic development, cultural traditions, labor unions, and legal institutions all affect compensation. Compensation: includes wages and salaries, incentives such as bonuses, and benefits such as retirement contributions. There are wide variations among countries and organizations on how to compensate workers. A country’s economic development, cultural traditions, labor unions, and legal institutions all affect compensation.

15. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example: Compensation in the U.S. vs. Japan In the U.S., wages and salaries differ based on two major factors: External: includes local and national wage rates, government legislation, and collective bargaining Internal: includes the importance of the job to the organization, its affluence and its ability to pay, and the employee’s relative worth to the business 94% of firms use comparative wage data Like U.S. firms, Japanese firms determine base salaries largely by classification of positions. Seniority can factor into pay decisions. Economic pressures have led to adoption of the Nenpo System, an evaluation based on yearly performance evaluations that emphasize goals. Bonus system : Usually given twice a year, during traditional gift giving seasons.

16. © 2013 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

17. © 2013 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 Appraisal and Compensation Multinational companies must match their performance evaluation system to their multinational strategies. If a multinational is located in many nations, it may need several different compensation packages for host country nationals. Multinational companies must match their performance evaluation system to their multinational strategies. If a multinational is located in many nations, it may need several different compensation packages for host country nationals.

18. © 2013 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 Variations of labor relations arise from cultural differences, but also: Historical factors Ideological reasons Management views of unions Union-Member Density is the proportion of workers in a country who belong to unions. Variations of labor relations arise from cultural differences, but also: Historical factors Ideological reasons Management views of unions Union-Member Density is the proportion of workers in a country who belong to unions.

19. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Types of Unions Enterprise Union : represents all people in one organization, regardless of occupation or location Craft Union : represents people from one occupational group, such as plumbers Industrial Union : represents all people in a particular industry, regardless of occupational type Local Union: represents one occupational group in one company Ideological Union: represents all types of workers based on some particular ideology or religious orientation White collar or professional Union : represents particular occupational group, similar to craft union Enterprise Union : represents all people in one organization, regardless of occupation or location Craft Union : represents people from one occupational group, such as plumbers Industrial Union : represents all people in a particular industry, regardless of occupational type Local Union: represents one occupational group in one company Ideological Union: represents all types of workers based on some particular ideology or religious orientation White collar or professional Union : represents particular occupational group, similar to craft union

20. © 2013 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 When they use local workers, multinational companies must deal with local labor practices, traditions and laws. These must be considered in any strategic decision regarding locating in another country. Example: In the U.S., Japanese companies have avoided locations in the more union-friendly Northern states, favoring instead Southern locations with less union activism. When they use local workers, multinational companies must deal with local labor practices, traditions and laws. These must be considered in any strategic decision regarding locating in another country. Example: In the U.S., Japanese companies have avoided locations in the more union-friendly Northern states, favoring instead Southern locations with less union activism.