The given example above shows that going international or global requires a proven patience and that only after 5 to 10 years, a global company can start relying on its own internally trained, nurtured international experts and specialists, amongst some can even be promoted to top management positions (after 10 years). Another interesting aspect is that, according to Czinkota et al (2001) and Barlett & Ghoshal (1992)13, in global corporations, there is no such thing as a universal global manager. Instead, there is a network of global specialists in four general groups of managers, who must work together:
A. Global business production managers have the task to maintain and further the company's global scale efficiency and competitiveness. B. Country managers have to be sensitive and responsive to local market needs ; demands but, at the same time, be aware of global implications. C. Functional managers have to make sure that the corporation's capabilities in technical, manufacturing, marketing, human resources, and financial expertise are linked and can benefit from each other.
D. Corporate executives at headquarters have to manage interactions among the three groups of managers as well as identify and develop the talent to fill the positions. It is recommended that our firm should show clear career paths for managers assigned to overseas and develop the systems and the organization for promotion. This approach will serve to eliminate many of the perceived problems and thus motivate managers to seek out foreign assignment. Then, IHRM will become easy. (Quelch & bloom 1999)
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Training and Adaptability Screening: rancesco & Gold (2005) argue that the training and development function includes planned individual learning, organization development, and career development. It is a recognized professional field known as human resource development (HRD). At international level, many companies have HRD professionals, who are responsible for training and development of employees located in subsidiaries around the world, specialized training to prepare expatriates for assignments abroad, and development of a special group of globally minded managers.
According to Marquardt & Engel (1993)14, the delivery of HRD programs may be centralized or decentralized, ethnocentric or geocentric. When it is centralized and ethnocentric, training originates at headquarters and corporate trainers travel to subsidiaries, sometimes making adaptations to fit the local situation. A centralized geocentric training model develops through input from both headquarters and subsidiaries. Trainers from various positions in the headquarters or subsidiaries could travel to any other corporate location. In a decentralized approach, training is on a local or regional basis, following a polycentric or regiocentric model.
Any of the training models described above may fit our firm. The most important in training is the content and objectives. In either model, there are some adaptations that must be taken to each regional market. Training value is subject to local cultures and external environments. For example, Avitabile and Kleiner (2002) 15explore how to train employees to work safely in the Mid East. Screening adaptability is another challenging task of multicultural firms HR managers.
Avitabile and Kleiner (2002) conclude that no amount of classroom training can cover the myriad of things that can go wrong when interactions breed misunderstandings, tension strains relationships, and instability creates conflict. (Avitabile and Kleiner 2002, page 54). Thus, as conclude Francesco and Gold (2005), the most important aspect of expatriate training is cross-cultural training (CCT) that can be delivered either through cultural briefings, area briefings, cases studies, roles playing, culture assimilator, or field experiences. In fact, an organization may choose an appropriate CCT method based on three situational factors of the expatriate' assignment: novelty in the culture, degree of interaction with host country nationals, and novelty of the job (Francesco ; Gold 2005: 161). Training doesn't stop here, because it is imperative to avoid a cultural shock to expats or their family members.
Upon arrival in the host country, the expatriate will be continuously screened for cross-cultural adjustment and adaptability factors. (Black and Gregersen 1991)16 Avitabile and Kleiner (2002) assert 45% companies provide either method of training. Recommendations to International Managers Training in Asia and in Middle-East cannot be done the same way as in Europe or in North America. Global companies should be aware of the existing dissimilarities.
According to Francesco & Gold (2005), in order to maximize training effectiveness, it is important to take into account how trainees learn more effectively, as cultural factors have a strong impact on training practices in different parts of the world. For example, in U.S.A and Canada, where power distance is small, the relationships between trainers and trainees tend toward equality. Trainers and trainees can call each other by first names and trainees can challenge ideas and opinions of the trainers. This can never happen in Asia, nor in the Middle-East, where due to a large power distance, a trainer receives respect and is considered to be an undisputable expert.
In Europe, the trainers will be challenged by a large diversity in cultural management models. In assignment # 1, we saw that Comparative HRD academics found out that there are three most distinctive European Management Models: Anglo-Saxon, French and Germanic. Sparrow 1998 asserts that within Europe, the strong and culturally distinctive (homogeneous) management models in France, Germany, and Scandinavia stand opposed to the Anglo-Saxon model. The Anglo-Saxon model would include UK, US and Canada. Training effectiveness and its value will be different in those models.
As global competition intensifies, note Francesco & Gold (2005), it is increasingly important for successful companies to have a group of globally minded managers (who have a global perspective). Czinkota et al advises to develop such managers through the international resource management development strategic systems. It is important that the firm includes in this group both PCNs and managers from other countries. Having one or more international assignments, working on cross-cultural and cross-national teams and projects, and learning other languages and cultures will contribute greatly to making a manager more globally minded.
Personnel Performance Evaluation According to Francesco & Gold (2005), Performance evaluation is the systematic appraisal of employee's performance within the organization. Performance evaluation is a challenging task for any domestic organization and it becomes even more complex for multinational enterprises. At the international level, the complexity of performance evaluation is greater because the organization must evaluate employees from different countries working in different subsidiaries.
The need for consistency across subsidiaries for performance comparisons can conflict with the need to consider the cultural background of employees to make the evaluation meaningful. Ramamurthy and Carroll (1998) argue that collectivist workforces, such as Asians and Arabs, will not like the type of formal appraisal systems that are common in most Western firm and, of course, in the Toronto headquarters. Communication style may have an influence.
Therefore, the Company will apply different performance evaluation methods in its different subsidiaries. In Asia and the Middle-East, where group and family harmony, authority and seniority are more valued than just competency or professionalism, the firm will have to use methods that are different from those used in Europe, Canada and USA, where individualism is prevalent and where employer and employee can discuss issues. Briscoe (1995) and Francesco ; Gold (2005) define "compensation and benefits" as the function that develops and administers the salary system and other forms of remuneration such as vacation and sick pay, health insurance, and pension funds.
In developing an international system of compensation and benefits, an organization has two primary concerns: The first is comparability (Briscoe 1995). An effective compensation system assigns salaries to employees that are internally competitive and comparable within the marketplace. For example, the salary of a senior manager is higher than that of a supervisor, and each position should receive an amount within the local market range. The international organization must also consider the salary of people who may transfer from other locations. Cost is the 2nd major concern (Dowling et al 1994).
Organizations strive to minimize all expenses, and payroll is one of the largest. Labor costs vary widely by country, and companies often subsidiaries in countries that have lower wage rates than at home. Compensation and benefits reflect local labor market conditions even when an organization takes an ethnocentric or geocentric approach. The availability of qualified local people to fill positions, prevailing wage rates, the use of expatriates, and local laws interact to influence the level of compensation and benefits. Security status is also important as some companies are obliged to cover monetarily the risks an expatriate or a local staff takes when working in a volatile and war torn areas such as in Iraq today.
Czinkota et al (2002) and Francesco ; Gold (20050 argue that a company should usually develop a policy, which could apply globally, to offer salaries and benefits representing a specific market level. For example, a large successful multinational that emphasizes the quality of its products and employees may have a global policy to pay the highest wages everywhere it operates. Another company could offer top salaries in the country where it does research and development yet pay average wages in the country where it manufactures.
Culture may influence the value that people in different societies put on various compensation and benefits practices. For example, more masculine countries like Asian and Arab countries make use of flexible benefit programs and are less likely to provide workplace childcare, opportunities for career breaks, or maternity leave (Schuler and Rogovsky 1998). Childcare is a crucial issue in Europe and Canada.
Recommendations to International Managers In Asia and in the Arab world, the firm should consider the high value of seniority and family security, high power distance and masculinity. Thus, preferred practices should be more certainty in compensation systems (seniority, or skill-based), centralized bureaucratized but separate pension system with many controls and protections. In Europe, we still have some uncertainty avoidance, individualism and feminine cultures. Compared to Asia, there is lower power distance in Europe. Thus, companies will use a combination of defined contribution pension plan with flexible plan implementation. A same type of pension plan will be offered to all employees and family friendly policies (childcare) will apply to enhance quality of life. Laws are tough. In USA and Canada, individual incentives and flexible benefits programs are advised. For executives, stock options and ownership plans may apply. (Hempel 1998)
7. Management of Labor Relations
Francesco ; Gold (2005) note that the labor relations function defines and identifies the roles of management and workers in the workplace. The concept of labor relations varies greatly in different parts of the world. In USA and Canada, for example, labor relations are often formal relationship, sometimes antagonistic, between labor and management defined by a union contract. In Japan, the relationship between management and unions is cooperative, and management often appoints union leaders (Hodgetts and Luthans 1994)17. Dowling (1994) assets that in many countries governments regulate labor relations practices. Consequently, in this function more than HRM functions, an organization may have to be polycentric. However, advises Wahl 2002, even though labor relations are local-level issues it is good to have a corporate strategy to coordinate labor relations policy across subsidiaries.
Recommendations to International Managers Labor relations issues should be dealt with separately, country per country, but there must be a coordination of all the labor relations function at HQ of Toronto. Indeed, as claim Czinkota et al (2002), none of the firm's objectives can be realized without a labor force, which can become one of the firm's major assets or one of its major problems, depending on the relationship that is established and maintained. Because of local patterns and legislation, headquarters' role in shaping the relation is mainly advisory, limited to setting the overall tone for the interaction. However, many of the practices adopted in one or more markets or regions, may come easily under discussion in another (or other), making it necessary for multinational corporations to set general policies concerning future labor relations. Any firm should view its labor relations strategy from three perspectives:
(1). the participation of labor in the affairs of the firm, especially as it affects performance and well being. (2). the role and impact of the unions on relationship. (3). specific human resource policies in terms of recruitment, training and development. Firms should understand that labor cannot be considered anymore as a simple service that can be bought. Increasingly, workers are taking an active role in the decision-making of their firms and in issues related to their own welfare.
Some countries like Japan, have understood a long time already that incorporating labor unions leaders in their top management is more productive than excluding them. But, this also is explained by the high value of harmony, which defines Asians. In Iceland and China, unionization can reach 90%. Labor and trade unions are spread in Europe, but some countries limit these unions power through appropriate legislations that don't oblige Corporate to conduct collective bargaining with workers' unions (Duane 2001). In Arab countries, firms may need to cooperate with local governments. In USA and Canada the company will be careful because even if North -American labor unions seem harmless, they may become very tough and involve international federation of trade unions when they feel that a global firm is doing wrong to the staff. (Jay Mazur 2000)18. The organization should be aware that many countries don't like the use of expatriates.
Implications for Managers of Multicultural Organizations Note: The following will serve as general conclusion to this paper and it constitutes the last and final recommendations to Transnational Software Developers Ltd. Particularities of any Corporate Global Strategy Elashmawi (2001) insists that international managers should be aware of the cultural and cultural complexities met when going global or when expanding business across borders. For example, it might seem for many foreigners that dealing with all Europeans is the same. It is definitely not. Elashmawi (2001) highlights the diversity of European Cultural Values. Europeans are characterized by their diversity and doing business, conducting negotiations or communicating in France, for example, is not the same as in Germany, Ireland or Italy.
The firm should be aware of the diverse dissimilarities within the European workforce's management practices, as well. The advice is also true for compensation and benefits management, labor relations, etc. There are many European management models, of which the most important are French, Germanic, Scandinavian and Anglo-Saxon. While Asians may have common cultural values encountered all over in Asian countries, Lewis 2004 argues that each Asian country has its own cultural particularities. Western businesspeople have frequent cultural clashes with Japanese and South-Koreans. Those clashes are not necessarily caused by the same reasons. For example, Koreans conduct business with a quasi military style. Chinese and Japanese adopt a softer style. It doesn't make them easier (than Koreans) to negotiate with! International managers should know that.
Francesco ; Gold (2005) argue that there are no best practices applicable to different cases, in different regions, under different environmental constraints. However, each organization should have an organizational culture applicable everywhere with additional local re-adjustment. Francesco ; Gold (2005) warns that organizations recruiting PCNs and TNCs must deal with the complexities of employing and moving people outside home countries.
Employing expatriates, although it may be a good business decision, is expensive. Parker and Janush 2001 add that because of the additional compensation required, an expatriate's remuneration package could be two to three times the base salary. Consequently, successfully managing all aspects of expatriate HRM is extremely important. Black et al (1999)19 argue that an expatriate returning home before the end of his/her assignment may cost a company $200000 to $1.2million.
Many scholars, including Macnamara (2004), insist on the training for multicultural and cross-cultural communication skills Thus, managing a multicultural organization is a daunting task. Some claim that IHRM practices are converging under globalization while other academics insist on the importance of HRM skills that cannot be imported wholesale into a given country. It is recommended to have managers' pools (Francesco ; Gold 2005).
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