Lindsey Darlington, Gabriela Medvedec, Valarie Reinig, Annie Weiss, Jay Zhang

Home vs. Host Country Effects on HR Policy

Why Conduct This Methodology?

Country of Origin Effects

Elements of the behavior of MNC traced back to the characteristics of the national business system from which the MNC originates

Dominance Effects

The idea that dominant or hegemonic states are able to exert organizational, political, and technological influences that invite dissemination and adoption across the global capitalist system

Why Conduct This Methodology?

Pressure for International Integration

This may be attributed to reduced cross-national differences in consumer tastes, the deregulation of product markets and the reduction of tariff barriers

Host Business Systems

The scope for home country based innovation may be related to the degree and embeddedness of national regulation

Methodology ●  Historically, welfare capitalist approach=> pay/performance

& attitudes toward collective representation, on which HQ is expected to exert significant influence.

●  Now, challenged by internationalization=> dynamic relationship between host country, home country, and globalizing pressures.

●  Cross-nationally examines part of ITco’s stratified operations that has the most significance within Germany, Spain, the United Kingdom & Ireland where the UK & Ireland are more deregulated in employment representation than Germany & Spain.

●  In-depth interviews: to collect data, covering HR decision-making locally and cross-nationally, & to improve compatibility of the data across countries.

Q1- ITco’s Overall HR Strategy & Structure in International Operations

•  HR Processes & Structure ○  Shifts in control until early 90’s ○  Matrix structure consisting of geographical regions

implemented to coordinate HR policies across nations

○  Overall centralized tendency ○  National HR directors hold less influence on policy ○  Shift to a regional European structure, divided by

function

Q1- ITco’s Overall HR Strategy & Structure in International Operations

○  Staff reduction at national level due to technological advancements

○  Influence of European HQ in creation of policy limited

○  Some evidence that national subsidiaries may develop strategies independent of HQ

Q1- ITco’s Overall HR Strategy & Structure in International Operations

●  Industrial Relations ○  “Impact of home country shows up very clearly in the

area of employee representation” ○  ITco’s paternalistic company believes in no collective

bargaining ○  Subsidiary make adjustments as necessary but tend to

stay on the side of no collective bargaining ○  Spain-didn’t want to engage in collective bargaining ○  UK-fought for none saying that there was no need for

outside influence ○  Ireland-have minimal terms and conditions ○  Germany- budget wars-->unions to settle dispute

Q1- ITco’s Overall HR Strategy & Structure in International Operations

●  Pay and Performance Management ○  Extremely tight control over this HR area ○  Extreme uniformity ○  Use pay grades and merit to distinguish pay to

performance measures per employee ○  Spain- consequence in being lowest grade of merit

pay is detrimental and didn’t want to deal with unions ○  UK- salary increase measures translated easily ○  Ireland-salary increase measures translated easily ○  Germany- similar to Spain, introduction of variable pay

was detrimental to employees but used unions to sort issues

Q2- Influence of “home” vs. “host” country effects

●  HR Processes & Structure: host country effects shifted with time ○  Strong effects during the 90’s ○  Model based off French subsidiary that later become global

policy ○  Shifted back to strong central control through a global area

structure •  Because its based on region, hard to determine national

country effects vs. home country ○  Service center model based on earlier version in the U.S.,

but regional managers decided the specifics of the design and operations

Q2- Influence of “home” vs. “host” country effects

●  Industrial Relations: Strong host country effects ○  Approach to unions varies based on country

•  Germany works with the works councils - Union avoidance is not an option here

•  Spain largely ignores works councils •  UK campaigned against union recognition and won.

Went with a union-substitution approach ●  Pay and Performance Management: strong home country

effects and tight central control ○  Over-riding aim for uniformity ○  These policies have been legally challenged in more than

one country

Conclusion

●  The key element underpinning globalization is internationalization.

●  From welfare capitalist to internationalization, multinationals like ITco tightens collaboration & competition between the HQ in the home country, such as the United States, and divisions in host countries, such as Germany, Spain, the United Kingdom, and Ireland.

●  MNC behaviors are influenced by country of origin effects, dominance effects, pressure for international integration, and host country effects.

Conclusion

●  Regionalization is now a new form of centralization; intraregional differences between local HR managers create greater flexibility & intensify competitions.

●  Different from European HQ, US corporate HQ prefer “uniformity” internationally and does not stand collective bargaining.

●  Finally, “It is important that research programs are developed in which fieldwork investigates all levels of the firm with an influence on the practice of HR, from the workplace to the corporate headquarters.”