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8/12/2019 International HRM or Personnal Management
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International HRM/ Personnel
Management :
Sapna suri
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Developments leading to IHRMECONOMIC DEVELOPMENTS
I. International division of labourII. Emergence of service sctor
III. Demand has moved from protected economy to market
economy
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Second source of change is associated in the
area of technology after 1980s
I. Technical revolution
II. Computerization paradox
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Third area of change is relationship
between strategy and organization
I. First generation model had organization structures on basis of
strategic concern such as productivity, centralization,decentralization, etc
II. Second generation models while accepting the link between
strategy and structure
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Focus in Development processEconomic
Development
Technology
Strategy
Structure of theorganization
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Forms of International BusinessParentcountry
Goods andservicesservices
Hostcountry
Parentcountry
Primarily technicalknow-how Host country
Parent
country
Managerial and
technical know-howParent country
Host country
Materialsservices and
personnelParentcountry
Host country
Parent country Capital and know how
Capital and know how
Host country
Host country
Host country
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Types of organizations :
GLOBAL
Views the world as a singlemarket operations are
controlled centrally from thecorporate office
TRANSACTIONAL
Specialized facilitiespermit local
responsiveness; complexcoordination mechanismsprovide global
integration
INTERNATIONAL
Domestic firm that usesexisting capabilities to expandinto foreign market
MULTINATIONAL
Several subsidiariesoperating as stand-alonebusiness units in multiple
countries
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International Corporation
International corporation is essentially a domestic firm that builds
on its existing capabilities to penetrate overseas markets.Companies Honda, General Electric, & Procter & Gamble
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A Multinational Corporation :
MNC is a more complex form that usually has fully
autonomous units operating in multiple countries.Companies Shell, Philips, ITT
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The Global Corporation :
The Global Corporation on the other hand can be
viewed as a multinational firm that maintains controlof operations back in the home office.
Companies Matsushita and NEC
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A Transactional Corporation
A Transactional Corporation attempts to achieve thelocal responsiveness of an MNC while also achieving
the effectiveness of a global world.
Companies such as Ford, Unilever, & British Petroleum.
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Define International HRM :
HRM refers to those activities undertaken by anorganization to utilize its human resourceseffectively
The following are the activities would include atleast the following :
I. Human resource planning
II. Staffing (recruitment, selection, placement)
III. Performance managementIV. Training & development
V. Compensation (remuneration) & benefits
VI. Industrial relations
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Model developed by MORGAN
: There are 3 dimensions on IHRM :
I. The broad human resource activities of
procurement, allocation & utilization
II. The national or country categories involved in
HRM activities:
A. The host country where a subsidiary may be located
B. The home country where the firm is headquartered&
C. Other countries that may be the source of labour,
finance & other inputs
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A Model of IHRM :
HUMAN RESOURCE ACTIVITIES
ST-COUNTRY
NATIONALS
(HCNS)
PARENT
COUNTRY NATIONALS
(PCNS)
THIRD-
COUNTRY NATIONAL
(TCNS)
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CONTD >>>>>>>>>>>>>
The three categories of employees of an internationalfirm :
I. Host-country nationals (HCNS)II. Parent-country nationals (PCNS)
III. Third-country nationals (TCNS)
Thus an example : The US multinational IBM employsAustralian citizens in its Australian operations
(HCNS) often sends US citizens (PCNS) to Asia-Pacific countries on assignment & may send some ofits Singaporean employees on an assignment to on itsJapanese operations (as TCNS). The nationality ofthe employee is a major factor in determining the
persons category
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Define an Expatriate:
One obvious difference between domestic &
international HRM is that staff are moved across
national boundaries into various roles within the
international firms foreign operations these
employees have traditionally been called expatriates
An expatriate is an employee who is working &
temporarily residing in a foreign country.
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Difference between domestic
& international HRM :
There are 6 factors on which International can be divided
such as :
More HR activities
The need for a broader perspective
More involvement in employees personal lives
Changes in emphasis as the workforce mix ofexpatriates & locals varies
Risk exposure
Broader external influences
V i bl h d diff
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Variables that moderate differences
between domestic & international
HRM :
There are 4 moderators :
The cultural environment The industry (or industries) with which the
multinational is primarily involved
The extent of reliance of the multinational on its home-country domestic market
The attitudes of senior management
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Diagram
The cultural environment
Extent of reliance of the
Multinational on its home-country
Or domestic market
Attitudes of
Senior management
Complexity involved inOperating in different countries
& employing different rational categories of employees
The Industry (or industries within
Which the multinational is
Primarily involved
Domestic & International activities
Of the HRM function
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The Cultural environment :
Define : Culture >>>>>>> the term is usually used todescribe a shaping process. That is, members of a
group or society share a distinct way of life with
common values, attitudes & behaviors that are
transmitted over time in a gradual, yet dynamic,
process.
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Contd
A person is not born with a given culture:rather, she or he acquires it through thesocialization process that begins at birth : anAmerican is born with a liking for hot dogs, ora German with a natural preference for beer:these behavioral attributes are culturallytransmitted.:
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Define Culture Shock :
A phenomenon experienced by people who move acrosscultures. They experience a shock reaction (or
psychological disorientation) when exposed to new
cultural experiences, because they misunderstand or do
not recognize important cues.
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The cultural environment:
the convergence hypothesis
The hypothesis that management practices around theworld would converge, based on two assumptions:
That the principles of sound managementwould hold, regardless of national environment.
That the universality of sound managementpractices would lead to societies becomingmore and more alike in the future.
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The cultural environment:
the divergence hypothesis
In opposition to the convergence hypothesis,
the notion that societies and managementpractices around the world will remain, orbecome more, dissimilar.
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Industry type
Multidomestic industry:
An industry in which competition in eachcountry is essentially independent ofcompetition in other countries.
Global industry:
An industry in which a firms competitiveposition in one country is significantlyinfluenced by its position in other countries.
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Reliance of the MNE on its
home-country domestic market
The top ten MNEs on the UNCTAD index oftransnationality
Rio Tinto (United Kingdom/Australia)
Thomson Corporation (Canada) ABB (Switzerland)
Nestl (Switzerland)
British American Tobacco (United Kingdom)
Electrolux (Sweden)
Interbrew (Belgium)
Anglo American (United Kingdom)
Astrazeneca (United Kingdom)
Philips Electronics (Netherlands)
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Attitudes of senior management to
international operations
Ethnocentrism
The assumption that ones own cultural approach is
superior to any other.
An ethnocentric approach to international staffingtypically results in all key management positionsbeing held by PCNs.
Also, international HRM activities are typicallydeveloped and administered by PCNs.
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A model of strategic HRM inmultinational enterprises
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Aspects of culture you can see
Dress
Food
Climate
Housing
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Aspects of culture you cant see:
Communication style
What motivates people
Role expectations
Negotiation styles
Non-verbal communication
Tempo of work How tasks are assigned
Attitude toward authority
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Cross-cultural differencesin Workplace :
How interviews should be conducted How managers should act with their subordinates
How negotiations should be conducted
How training should be delivered
How people should be paid for work
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Cross Cultural Differences in
Communications :
Cross-cultural communication is becoming
increasingly important as organizations expandtheir business operations beyond their national
boundaries
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4problems relating to language:
There are barriers caused by word connotations There are barriers caused by semantics
There are barriers caused by tone differences
There are barriers caused by differences among
perceptions
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Communication: Telephonic
Conversations
Criterion America Japan RussiaMiddle-east
Objective Action-
orientationinformation
Information Information Personal
relationships;Commitment
Opening Full name;
Purpose of
call
Company
nameFull
introduction;
Purpose of
the call
Personal
Greeting
Process Task-
oriented;
Direct
questions
Information
gathering by
listening
Indirect;
Small general
talk
Indirect
approach;
Inquire first
about
self/family,
then get on to
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International Recruitment &
Selection :
In the recruitment process, three points require to be
decided:
From what countries to recruit ? Whether home, host
or any other
Techniques to be used when recruitment is planned
outside home country
Whether to centralize recruitment activities in home
country or decentralize in foreign subsidiaries.
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Four approaches used for
recruitment by the MNCS are :
Ethno-centric :
Here primary positions are held by citizens of home
country. Three factors are to be considered in the staff:
Should be able to adjust in family, culture &
personality problems to avoid failure
To succeed, should enjoy local entertainment, develop
local relationships & communicate with locals
To achieve success, expatriates to have open attitude &
take training toward host country
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Poly-centric :
Here primary positions are filled by nationals from hostcountry. Advantages of this are :
Better local knowledge
Reduces personal problems
Host country manager can protect a MNC from hostiletreatment by host government
Top people are limited to subsidiary & not forcorporate positions
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Regio-centric
Here primary positions are by people from countries withsimilar cultures, experiences & management practices.
For example, posting in srilanka, Indians can be
considered.
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Geo-centric :
Under this the best qualified individuals are hired at
home & abroad regardless of nationality. Whole world
is treated as market to implement global approach
In designing staffing policies
First determine its needs
Then identify approach to hiring ------- who, how &
from where
Finally recruits are trained for living in a foreign land.
Selection criteria are based on wide range of skills,
family factors, business knowledge & experience
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Recruitment for Overseas
Assignments:
1. Recruit from home office or country. These are calledexpatriates or home country nationals. Some
advantages are: Familiar with goals, policies & practices of home
office.
More technically & managerially competent as they
are tried persons Can keep effective liaison with home office personnel
It is easier to exercise control over operations ofsubsidiary
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Contd >>>>>>>>>>.
o Recruit native of host country or local nationals forforeign subsidiary
o Third country national is another approach. It is toemploy manager from England to manage United Statesoperations in France.
o An another recruiting approach is having an internationalgrade at a higher salary, by his agreeing to accept atransfer anywhere in the world
o Last recruiting approach in transferring a manager forspecific duties/assignment for fixed period.
o For example : , when opening a new manufacturing unitsthere is an increased demand for specialists, so a managerfrom existing cadre is transferred
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Incentives or Attractions for
Managers To Go Abroad :
To gain job experience
Better compensation
Sense of obligation to company Possibility of advancement upon return
Improved life style abroad
Exposure to new culture
To shoulder greater professional responsibility Desire to escape from personal problems at home
Restricted career possibilities within parent company
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Expatriate selection criteria :
Should have technical & managerial skills & to able to
do his job as he is at distance from headquarters &
cannot consult readily
Motive & desire of manager interested to go overseas
assignment such as interest in host country, financial
incentives, gain self-confidence
Has social skills to interact & understand people
norms. Mixing in social activities such as sports, eatinglanguage. Ability to deal effectively with superiors,
peers & clients, etc.
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Contd >>>>>>>>
Diplomatic skills is ability to interact with business
associates, govt officials, leaders abroad.
Maturity & Stability to deal with situations, logically,
adaptability, resourcefulness & initiative
Ability to cope up with environmental variables such as
political, legal, & socio-economic structures in host
country.
Attitude towards company & performance
E t i t P f
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Expatriate Performance
Appraisal :
Performance management aims at creating alignment
of individual goals with those of company & enables an
individual to effectively manage performance for
himself & his team
Performance management embraces both planning &
executing
It is the process of managing your strategy
Strategy is of paramount importance & is senior
managements primary responsibility.
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Performance management has
3 key goals :
Creating a workplace where top performers want to
stay
Transforming people who are not stars into top
performers
Aligning behavior & actions toward the goals of thebusiness enterprise
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Benefits of Performance
Management :
Help people reach their potential
Encourage people to take risk to accept change
Build confidence
Align behavior with company goals, principles, &
values
Even the playing field Stimulate action
Create new habits
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Criteria for Performance Appraisal of
Expatriates :
Influencing factors for expatriates performance :
I. Compensation package on Foreign Assignment
II. The task & responsibilities of Expatriate
III. Support from the head office
IV. Work environment in Host Country
V. Cultural Adjustment of Expatriate & his family
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Criteria to be used for Appraisal of
Expatriates Or International Staff :
Person to evaluate
Performance appraisal forms
Frequency of the appraisal should be such that it is
possible to provide feedback for mid-course correction,
regular feedbackis important for meeting targets &
revising goals & consequent involvement & motivation.
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Who Should Appraise the
Expatriate:
2 Experts make five suggestions for improving theexpatriate appraisal process:
Stipulate the assignments difficulty level. For example,
being an expatriate manager in china is generallyconsidered more difficult than working in England, &the appraisal should take such difficulty leveldifferences into account
Weight the evaluation more toward the one-side
managers appraisal than toward the home-sitemanagers distant perceptions of the employeesperformance
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Characteristics to be evaluated :
Cross-cultural interpersonal skills, sensitivity foreign
norms, values & case of adjustment to unfamiliar
environments are some common characteristics
considered for evaluation of international managers
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Criteria for Appraisal of
Performance :
Strategic thinking
Initiating change
Relationship Management
C i i f f l
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Criteria for successful
performance for managers :
Flexibility ------ capacity to change structures to
implement changed strategies
Inter-personal understanding & respect
Empowermentto share information, delegate
responsibilities & motivate employees to feel more
capable
Team support cause employees to cooperate &
Versatilitycapacity to adjust in new environment
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International Training &Development :
T i i f E i f
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Training of Expatriates for
Assignments Abroad:
As companies go global, there arises the need fortraining employees for international assignments
As is well-known, habits & practices relating to workmotivation, profit motivation, negotiating skills, giftgiving customs, eating & dressing, body gestures, hedelaying, interpretation of co lour & numbers varyacross countries.
Some countries such as Japan, are more committed tothe importance of training for internationalassignments
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Diagram :
Analysis of
Training needs
Determination of
Training goals
Content training
Material Method Media Sequence
Implementation
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Contd >>>>>>>>>>>
Profiles in terms of competencies needed for success on
international assignments may form an important basis
for development of effective training for international
staff, continuous research required.
An ideal people which summarizes the competencies
needed for international success can be drawn.
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Contd>>>>>>>>>>
Six competencies that were perceived, in one study are as
follows:
Leadership skills
Initiative
Emotional stability
Motivation
Ability to handle responsibility Cultural sensitivity
To handle stress
Flexibility
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Contd>>>>>>>
Training & Development of international staff should
be approached as process & not as a one-time event
just prior to departure.
The goals of cross-cultural training : goals is statement
of intent. Whereas objectives are very specific
statements what candidate should be able to do at the
end of learning session.
Personally adjusted ie: he feels happy & satisfied withsituation abroad.
Professionally effective if he performs his tasks, duties,
& responsibilities on-the-job competently.
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Contd>>>>>>>
Inter-personally adjusted & effective if
he takes interest in interacting withlocals capably.
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Contd>>>>>>>>>.
Cross-cultural training is seen as short duration one-short remedy
First phase of training & development soon afterselection & joining company with internationalprospects
Second phase: after selection for international career.Focus on fulfillment, of an international assignment.
Third phase: training is for specific skills needed for hisassignment & knowledge of specific cultural issues inhost country, logistical information & businesspractices & procedures is imparted.
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Contd>>>>>
Inclusion of the partner of host country in cross-
cultural training is vital as inability of the partner to
adapt to different environment is cause for failure of
international assignment.
Inclusion of HCNS in cross-cultural training as
ultimate success of an expatriate assignment depends
not only on the expatriate himself but also upon the
local people with whom he has to work.
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Designs of Training:
First level training> focuses on learning about hostcountrys--- culture, language, politics, business,geography, religious values & history.
Second level training> deals about assignment itself.Requirements of the position---- technical, managerialknowledge needed company officials can do that beforeleaving.
Third level training > deals with preparing him for new
job at new location to be done by whom he is replacing.
Fourth level training> how he adjusts & adapts to newenvironments, by providing assistance.
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Contd>>>>>>>
Fifth level>training addresses re-entry back home &
contact with people at home & visit home during
vacation.
T i i & D l t f
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Training & Development of
international Staff:
3 aspects to be considered for training & development of
international staff:
The Deployment cycle for international assignments.
Preparatory training for foreign assignments &
Design of training overseas assignment, i.e. during the
assignment itself & training during the re-entry phase.
Th D l t C l f
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The Deployment Cycle for
International Assignments:
The employee is accepted into a position in the home organization
that offers him international prospects.
Once he has shown that he possesses the basic abilities &
motivation needed for international career he is selected &
receives further training.
After selection for a specific assignment, country specific
preparation follows both for the future expatriate & his partner.
On the assignment he receive onsite orientation & briefing, as well
as support & monitoring from home organization. Upon completion of the assignment, he is given support during the
re-entry process.
Finally, he resumes a position in the home organization.
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P t T i i f F i
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Preparatory Training for Foreign
Assignment:
Training is not to be thought as effective
The period of time selection & expatriates departure is
short leaving little time for in-depth training prior to
departure
Temporary nature of most assignments does not
warrant expenditure for training.
There is a belief that technical skills are main success
factors on assignment abroad. Relational skills &international cultural competencies are not seen as
being of importance for success
Design of training for o erseas
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Design of training for overseas
assignment:
First level training to focus on learning about host countries-----culture, language, politics, business, geography, religious values &history through seminars, meetings with citizens of the country
Second level training deals about assignment itself. Requirementsof the position & technical, managerial knowledge needed.
Third level deals with preparing him for new job at new locationto be done by whom he is replacing.
Fourth level training--- how we adjust & adapts to new
environments , by providing assistance. Fifth level training addresses re-entry back home & contact with
people at home. A visit home during vacation can be beneficial
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Performance
Management in MNCS
Meaning of Performance
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Meaning of Performance
Management:
Performance management aims at creating alignment of
individual goals with those of the company & enables
an individual to effectively manage performance forhimself & his team.
3 goals of performance
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3 goals of performance
management:
Creating a workplace where top performers want to
stay
Transforming people who are not stars into top
performers.
Aligning behaviour & actions toward the goals of the
business enterprise
Benefits of Performance
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Benefits of Performance
Management :
Help reach people reach their potential
Encourage people to take risks to accept change.
Build confidence
Align behaviour with company goals, principles, &
values
Even then playing field Stimulate action
Create new habits
Performance Management
C l
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Cycle
Corporate Budget
Unit/business sector draft budget end
February
Offline performance
Planning
On-line performance
Planning
Mid- year
review
Final review
And feedback
Normalization
And score
Criteria for Performance
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Criteria for Performance
Appraisal of expatriates :
Factors influencing Expatriates Performance :
Compensation package on foreign assignment
The task & responsibilities of Expatriate
Support from the head office
Work environment in Host Office
Cultural Adjustment of Expatriate & his family
Criteria for Appraisal of
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Criteria for Appraisal of
Performance :
Flexibility
Inter-personal understanding & respect
Empowerment---- to share information, delegateresponsibilities & motivate employees to more capable.
Team support cause employees to cooperate
Versatility------ capacity to adjust in new environment.
Comparative summary off i & ti
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performance review & compensation
practices of some countries :Criteria America Japan Russia Middle-East
Objective Periodic review based on
present goals;
Identify personal strengths& weakness
Find out why the
performance is not
in harmony with the
group
Periodic
review based
on present
goals;
Identify
personal
strengths &
weakness
Set employee on
the track;
reprimand for bad
performance
Structure Formal procedure; every
6/12 months; in managers
office
Informal ;
Ad hoc with
employee; frequent
reporting to
administration;
In office, coffee
shop, bar
Formal
Annual;
In mangers
office
Informal, ad-hoc;
recorded in
managers office
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Compensation in International
Perspective & Practices in
Countries :
Purposes or objectives of International
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Purposes or objectives of International
Compensation :
Compensation serves several purposes:
Should enable organization to attract potentialcandidates, should match local & regional standards.
Internally equitable, externally competitive in order to
retain, & system should have ease of administration.
Stimulate performance/ behavior for organizationsuccess
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Contd >>>>>>>>>>
Programme should be in line with existing status
hierarchy in the organization.
Enable the organization to optimize its total wage level,
Compensate for inconveniences, &
Facilitate the transfer of international employees
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Miscellaneous
Non- work Award
(vacations, pension)
Sacrifice Reward
(overtime, shift allowance)
Seniority Increase (Increments)
Adjustment cost of living ---DA
Basic Pay
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Four systems contribute something
to economic reward : Basic pay, motivates for higher responsibility,
Performance incentive to improve performance,
Profit sharing bonus motivates toward team work inthe organization
Reward for extended service & encourages him toremain with organization.
Factors for compensation- differences
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Factors for compensation- differences
between countries :
First these differences are result of differences inprosperity & spending power of the company.
Secondly, the institutional frameworks within which
wage bargaining takes place are quite different incountries. In Germany & Switzerland bargaining takesplace at the national or industry level.
Thirdly, cultural differences between countries have animportant impact. These differences do not so much
influence the rates of pay as the total apportioning ofthe total sum between wages, incentives & benefits &due to appraisal methods
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Contd >>>>>>>>>
Fourthly, there may be considerable differences
between organizations & industries. This may result of
a deliberate policy, or differences in productivity,labour- capital ratios & situations on the relevant
labour market.
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