GlobalStaffing

LectureDrAndrewJenkinsProgramme1.Introduction2.StructuralChangeandStaffing3.StaffingPhilosophy4.ConvergenceandDivergence5.QuestionsandAnswersStructuralChangeandStaffing“Alternativestructuresandobservedtrendsinorganisingforinternationalbusinessprovidethestartingpointformostaccountsofhumanresourceissues.Attheheartofthisisthetensionbetweencentralisationanddecentralisationinmanagingorganisations”(Hendry,1994)InternationalbusinessesareattemptingtocombinethebenefitsofcentralisationanddecentralisationStructuralChangeandStaffingHarris,BrewsterandSparrow(2004)proposedthatthedegreeofinternationalisationofafirmcouldbeestimatedbythementalityandorientationofitsexecutives.1.EthnocentricStaffingStrategicdecisionsaremadeatHQ.Subsidiarieshavelimitedautonomy.KeyjobsathomeandabroadarefilledbyemployeesfromHQ.Nationalsfromtheparentcountryrulethefirmathomeandabroad.StructuralChangeandStaffingAccordingtoDanielsandRadebaugh(1995),“Ethnocentristsoverlooknationaldifferencesandignoreimportantfactors,believehome-countryobjectivesshouldprevailandthinkchangeiseasilyintroduced”2.PolycentricStaffingEachsubsidiaryistreatedasadistinctentity.OperationsarecontrolledlocallybutHQcontrolskeyinvestmentdecisionsandfinancialtargets.ManagedbylocalsbutkeyHQjobsaretakenbystafffromparentcompany.AccordingtoHarris,BrewsterandSparrow(2004),thistypologyrelatestothemultinationaltypeoforganisationStructuralChangeandStaffing3.RegiocentricStaffingStaffflowismanagedonaregionalbasiswithregionalmanagershavingagreaterdiscretionindecision-making.Generally,themovementofstaffisrestrictedtoageographicregion.Thetopjobsaredominatedbymanagersfromtheparentcompany.4.GeocentricStaffingBusinessstrategyisglobal.Staffpromotionisbasedonability.Compositionoftopjobsistrulyinternational.StructuralChangeandStaffingSincecompaniesusuallyincreasetheirforeignoperationsovertime,thedegreeof“culturalawareness”afirmhas,orshouldhave,willdependonitsneed.Thiscanbedemonstratedasaseriesofconcentriccircles(DanielsandRadebaugh,1995)Otherauthors,suchasFatehi(1996)givedifferentlabelstothesameframework(Ethnocentric,Polycentric,CentrocentricandGeocentric).StructuralChangeandStaffingAccordingtoAdlerandGhader(1990)(statedinBeardenandHolden,2001),ascompaniesexpandtheiractivitiesfromdomestictooverseasmarketstheymovethrough4phases:Phase1:DomesticUseofexpatriates:little/nonePhase2:InternationalUseofexpatriates:placedinoverseassubsidiariesandbringmanagerial,technicalandfinancialexpertisePhase3:MultinationalUseofexpatriates:stafffromHCNs,PCNsandTCNs.SomeexpatriatesPhase4:GlobalUseofexpatriates:Creatingalearningandknowledgeorganisation.FocusondevelopingamanagementcadrewithaninternationaloutlookStaffingPhilosophy“Theextentofthefirm’sinternationalisationanditsdegreeofcentralisationanddecentralisationaffects(andisaffectedby)itsphilosophyregardingthenationalityofitsinternationalmanagers”(GriffinandPustay,1998)Basically,companiescandeploystafffromthreegroups(Nickson,2007):1.ParentCountryNationals(PCNs)Theseareresidentsoftheinternationalfirm’shomecountry(e.g.Thistle->UK;Novotel->France)StaffingPhilosophyAdvantages:-typicallysharecommoncultureandbackgroundwithHQ.Facilitatescommunication.-goodtechniquewhenwishingtousehomeknowledge(e.g.technological/managerial)inanoverseasmarket.Disadvantages:-typicallylackknowledgeofthehostcountry’slaws,language,economy,cultureetc.-oftenexpensivetorelocateandmaintainmanagersinoverseaslocations.StaffingPhilosophy-highrateoffailure.-restrictionsonexpatriatelabourimposedbythehostcountrygovernment.2.HostCountryNationals(HCNs)ResidentsoftheHostCountry.Advantages:-HCNsalreadyunderstandthelocallaws,economy,customsetc.StaffingPhilosophy-lowercosts(norelocation,housing,schoolingetc.required)Disadvantages:-HNCsmaybeunfamiliarwiththecompany’sculture-Trainingrequired3.Third-CountryNationals(TCNs)Notcitizensofthefirm’shomecountryorofthehostcountryStaffingPhilosophyUses:PCNs:

mostlikelytobeusedinupper-leveland/ortechnicalpositionsinhostcountriesHCNs:commonlyusedbyinternationalbusinessestofillmiddle-levelandlower-leveljobsbuttheyalsooftenappearinmanagerialandprofessionalpositionsTCNs:mostlikelytobeinupper-leveland/ortechnicalpositionsSource:Nickson(2007)Convergence&DivergenceTheConvergencetheory(Bloisi,2007)arguesthat,asorganisationsreachacertainsize,functionalspecialisationtakesplaceInordertoeffectivelycontrolworkprocesses,rules,regulationsandhierarchiesarerequiredThiswouldaccountforglobalsimilaritiesinpracticesforindustriesthatusethesameproductionsystemsandtechnologyTheCulturalapproach(Bloisi,2007)seesnoconvergenceofdifferentculturesRather,asestablishedbyHofstede(1980)andTrompenaars(1997),therearemajorculturaldifferencesbetweencountriesConvergence&DivergenceRosenzweigandNohria(1993),havinginvestigatedtheHRMpracticesofMNCs,havestatedthatthereisbothapressureforinternalconsistencyandpressurefromthelocalenvironmenttoconformtoitsHRMpoliciesandpractices.Therefore,therearepressuresfromwithinthecompanytotakeaconvergent/ethnocentricapproachtoHRMpracticesbuttherearealsohostcountrypressurestoemployadivergent/polycentricapproach.ThelocalpressureswhichcanimpactonaMNCsHRMpracticeshavebeentermed“isomorphicpressures”Convergence&DivergenceIsomorphismrefersto:“Thedegreeofsimilarityinorganisationalpracticeproducedbypressurestoconform”(MarchingtonandWilkinson,2005)RosenzweigandNohria(1994)haveidentified3pressures:1.CoerciveIsomorphismThecompanyisforcedtoadapttocertainpracticese.g.locallaws.Convergence&Divergence2.MimeticIsomorphismFirmscopyothercompanies’successfulstrategies3.NormativeIsomorphismFirmsindirectlycopyotherfirms’strategiesThesepressurescaninfluenceaMNCsHRMpractices.ThequestioniswhetherafirmcanfollowaconvergentHRMstrategyoryieldtothepressuresandadoptamoredivergentstrategy.Convergence&DivergenceSomelocalpressuresareimpossibletoignore,suchastheminimumwage,holidays,hiringexpatriatestaffetc.ThiswouldmeanthattheMNCwouldhavetodivergefromitsHRMstrategyifitwasfollowingaconvergentstrategy.AccordingtoRosenzweigandNohria(1994),somesubsidiariesmayexperiencegreaterisomorphicpressuresinsomeculturesandlessinothers.ThefactorsthatinfluencetheMNCsinternalconsistencyorisomorphicadaptationarerelatedto:-thelocalenvironment-theparentcompany-thenatureoftheindustryConvergence&DivergenceFernerandQuintanilla(1998)alsodiscussisomorphismTheydistinguishbetweenfourdifferentisomorphicpressures:1.

LocalisomorphismThesubsidiarybehaveslikeanyotherorganisationinthehost-countryenvironmentItadoptspoliciesandpracticesappropriatetothatenvironmentTheemployerfitsinwithlocalnormsandvaluesConvergence&Divergence2.Cross-nationalisomorphismThesubsidiaryisexpectedtoconformwithhome-countryHRpracticesHRpoliciesandpracticesresemblesimilarfirmsinthehostcountry3.CorporateisomorphismTheMNChasastrongandessentiallyuniversalapproachtoHRMHRMpracticesessentialtothefirm’sculturearetransportedandimplementedindifferentcountriesConvergence&Divergence4.GlobalintercorporateisomorphismAmimeticresponseHRMpoliciesarebasedonsimilarpracticesofmajorinternationalcompetitorsQuintanillaandFerner(2003)arguesthat,inreality,thesituationisnotalwaysclearOften,bothelementsofconvergenceanddivergencearedisplayedInadditiontothehostandhomecountry,thesectoralsoneedstobeconsidered,aswellasmanagers’strategicchoicesThisoftenresultsinconflictingisomorphicpullsThismayalsovarybetweenunitsinthesamecompanySource:FernerandQuintanilla(1998)ReadingfornextweekFerner,A.andQuintanilla,J.(1998)“Multinational,nationalbusinesssystemsandHRM:theenduringinfluenceofnationalidentityoraprocessofAnglo-Saxonisation”,InternationalJournalofHumanResourceManagement,Volume9,Number4,pp.711-731Rosenzweig,P.M.andNohria,N(1994),“InfluencesonHRMPracticesinMultinationalCorporations”,JournalofInternationalBusinessStudies,Vol.25,Number2,pp.229-251.ReadingfornextweekTayeb,M.(2004),Chapter2:International