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Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37
Human Resource Management refers to the activities an organization carries out to use itshuman resources effectively
◦ Four major tasks of HRM
◦ Staffing policy
◦ Management training and development
◦ Performance appraisal
◦ Compensation policy
International Human Resource Management :
Strategic role: HRM policies should be congruent with the firm’s strategy and it’s formal andinformal structure and controls
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Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37
Right People, Right Place, Right Time
Basic Steps in International HRM :
International businesses have choices of hiring three categories of employees :
◦PCNs – Parent Country nationals
The employees working in the country of the company belonging to some other countries.
◦HCNs- Host country Nationals
Employees of same country where the company belongs to.
◦TCNs- Third country Nationals
Employees working in a country other than their home country with the headquarters of the
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Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37
company in some third country.
Strategy, Structure and Control systems :
Staffing policy :
- Staffing policy - Selecting individuals with requisite skills to do a particular job - Tool for developing and promoting corporate culture - View People as Resource ($in profit out)
Ethnocentric policy ;
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Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37
Key management positions filled by parent-country nationals
Advantages:
◦ Overcomes lack of qualified managers in host nation
◦ Unified culture
◦ Helps transfer core competencies (and skills back)
Disadvantages:
◦ Produces resentment in host country
◦ Can lead to cultural myopia
Polycentric policy :
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Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37
Host-country nationals manage subsidiaries
Advantages:
◦ Alleviates cultural myopia.
◦ Inexpensive to implement
◦ Helps transfer core competencies
Disadvantages:
◦ Limits opportunity to gain experience of host-country nationals outside their own country.
◦ Can create gap between home-and host-country operations
Geocentric policy :
Seek best people, regardless of nationality
◦ not always possible
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Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37
Best suited to Global and trans-national businesses
Advantages:
◦ Enables the firm to make best use of its human resources
◦ Equips executives to work in a number of cultures
Disadvantages:
◦ National immigration policies may limit implementation
◦ Expensive to implement due to training and relocation
◦ Compensation structure can be a problem.
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Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37
Comparison of staffing approaches :
The Expatriate problem :
Expatriate: citizens of one country working in another
◦ Expatriate failure: premature return of the expatriate manager to his/her home country
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Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37
◦ Cost of failure is high: estimate = 3X the expatriate’s annual salary plus the cost ofrelocation (impacted by currency exchange rates and assignment location)
Inpatriates: expatriates who are citizens of a foreign country working in the home country oftheir multinational employer
Expatriate failure rates :
Reasons for Expatriate failure :
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Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37
Expatriate selection :
◦ Reduce expatriate failure rates by improving selection procedures
◦ An executive’s domestic performance does not (necessarily) equate his/her overseasperformance potential
◦ Employees need to be selected not solely on technical expertise but also on cross-culturalfluency.
Four attributes that predict success :
◦ Self-Orientation
◦ Possessing high self-esteem, self-confidence and mental well-being
◦ Perceptual Ability
◦ The ability to understand why people of other countries behave the way they do
◦ Being nonjudgmental and being flexible in management style
◦ Cultural Toughness
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Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37
◦ Relationship between country of assignment and the expatriate’s adjustment to it.
Training and Management Development :
Training: Obtaining skills for a particular foreign posting
◦ Cultural training : Seeks to foster an appreciation of the host-country’s culture
◦ Language training : Can improve expatriate’s effectiveness, aids in relating more easily toforeign culture and fosters a better firm image.
◦ Development: Broader concept involving developing manager’s skills over his or her careerwith the firm
◦ Several foreign postings over a number of years
◦ Attend management education programs at regular intervals
Repatriation of Expatriates :
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Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37
Management Development & Strategy : Development programs designed to increase the overall skill levels of managers through: ◦ On going management education ◦ Rotation of managers through a number of jobs within the firm to give broad range ofexperiences Used as a strategic tool to build a strong unifying culture and informal management network Above techniques support transnational and global strategies Performance appraisal : Problems : Unintentional bias � Host-nation biased by cultural frame of reference � Home-country biased by distance and lack of experience working abroad Expatriate managers believe that headquarters unfairly evaluates and under appreciates them Compensation : Two issues: ◦ Pay executives in different countries according to the standards in each country? or Equalize pay on a global basis? ◦ Method of payment Compensation for 4 positions in 26 countries :
National differences in Corporate-Compensation :
National differences in CEO pay for Midsized Companies :
Compensation issues :
Expatriate pay Typically use balance sheet approach ◦ Equalizes purchasing power to maintain same standard of living across countries ◦ Provides financial incentives to offset qualitative differences between assignmentlocations. . Components of Expatriate pay : ◦Base Salary : Same range as a similar position in the home country ◦Foreign service premium : Extra pay for work outside country of origin The Balance Sheet :
Some Theories of the Labour Market : - The Cost of Labour varies inversely to the Unemployment Rate and directly tothe Quality of Labour .
Data on hourly wages in USA
Data on hourly wages in Europe
Data on hourly wages in Japan
Section 2 : Industrial and Business Policies Introduction Industrial Relations:IR is concerned with the relationship between management & workers andthe role of regulatory mechanism in resolving any industrial dispute through:-
Importance of IR Key Approaches to Industrial Relations:
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Globalization: Is Labor Market falling behind the Global Consumer MarketThursday, 20 October 2011 10:37
3 Major Parties to Industrial Relation
Workers and their associations: The personal characteristics of workers, their culture, educational attainments, qualifications,skills, attitude towards work, etc. play an important role in industrial relations. It is also calledTrade Union IR Strategy : It is necessary to have an unambiguous strategy for IR .Generally employer- employeerelations are usually presumed to be satisfactory until they get out of hand, managers, rarely,feel the need to act before the trouble breaks out. Internal Factors : - Attitudes between management ,employee and unions. - using absolute authority management enforce decisions to the employee and unions. - Difference in opinion between management and union. - Present and future strength of the unions. - Technological changes, expanding and running down also affect the employment andopportunities . External Factors : - Authority and Effectiveness of the employers association. - To carried out bargaining at national, local or plant level. - Employment and pay situation –Nationally and locally. - Legal frame work with in which IR exists. Role of HRM : - To keep the workforce motivated, competent and trouble-free. - Ensure better recruitment and hiring, induction, training and development, safety andhealth, remuneration, welfare etc. - Contribute to the quality of work life (QWL) of the employees. Trade Union : - In India as per Trade Unions Act, 1926, Trade Unions are voluntary organisations ofworkers or employers formed to promote and protect their interests through collective action. - To regulate among workmen, between workmen and employers or among employersthemselves. Reasons for joining unions : DISSATISFACTION ◦ Unsatisfied personalities, interests and preferences. ◦ Unrealistic job previews given creating expectations ◦ Poor day-to-day management and supervisory practices LACK OF POWER ◦ Instrument to influence the management UNION INSTRUMENTALITY ◦ Instrument of removing dissatisfaction Strategic Choices before Unions : - Bread and Butter vs Political Objectives : Economic issues and Political participation - Adversarial vs Co-operative Role : Challenge Management or Co-operate withmanagement - Traditional Issues vs New Services : Stick to old issues or accommodate changes insocial attitude. Union Tactics : STRIKE ◦ Temporary suspension of funtions POLITICAL PATRONAGE ◦ Making recognition and patronage to a political party for direction and influencinggovernment BLACKMAIL ◦ Threat of discontinuing operations and non-cooperation with the management. Trends in Trade Union Movement : - Change in attitude of union towards management, industry, and government - Depoliticisation of unions taking place - Formation of union on basis of religion and caste - Associations are highly fragmented thus multiplicity of unions - Phenomenon of outside leadership Personnel Research Range of research areas include: - Wage surveys : They reveal the level of employee satisfaction among other factors. - Effectiveness of various recruitment sources - Test validation : In a dynamic labor market, tests tend to get outdated frequently, sovalidating is imperative before applying any test. - Effectiveness of training efforts : Essential for ensuring efficiency in employeeperforrmance - Supervisor’s effectiveness survey : Another key factor in deciding employeesatisfaction. - Job analysis : Specific approaches such as result oriented, contextual or potential basedapproach need to be adopted as per the specific work environment. - Performance appraisal validation : Most critical aspect of any modern PerformanceManagement System - Turnover analysis : Reveals the success or failure of the Industrial relation policy. This article has been authored by Sayantan Banerjee from PGDM IMT
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