UNIT-I

Human and Cultural Variables in Global Organisations, Cross-cultural differences and

managerial implications. Cross Cultural Research Methodologies and Hofstede Hermes Study.
Structure in International Firms. Global Issues and Challenges.

What is International Human Resource Management?

• IHRM can be defined as set of activities aimed managing organizational human
resources at international level to achieve organizational objectives and achieve
competitive advantage over competitors at national and international level.
• IHRM includes typical HRM functions such as recruitment, selection, training and
development, performance appraisal and dismissal done at international level and
additional activities such as global skills management, expatriate management and so
on.
Meaning of international Human Resource Management:
International Human resource management is the process of procuring allocating and
effectively utilizing the human resources in a multinational corporation. While HR Managers
in these organization have to integrate HR policies and practices across a number of
subsidiaries spread in several countries so that the organization goals can be achieve at the
same time they have to make these policies and practices sufficiently flexible to allow
significant differences in these policies in different countries.
International HRM is concerned with identifying and understanding how the MNC’s manage
their geographically dispersed worked force in order to leverage their HR resources for
obtaining local as well as global competitive advantage.
Definition of international Human Resource Management:

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 IHRM can be defined as set of activities aimed managing organizational human
resources at international level to achieve organizational objectives and achieve competitive
advantage over competitors at national and international level. IHRM includes typical HRM
functions such as recruitment, selection, training and development, performance appraisal and
dismissal done at international level and additional activities such as global skills management,
expatriate management and so on.
In simple terms, IHRM is concerned about managing human resources at Multinational
Companies (MNC) and it involves managing 03 types of employees namely,
• Home country employees- Employees belonging to home country of the firm
where the corporate head quarter is situated.
• Host country employees- Employees belonging to the nation in which the
subsidiary is situated.
• Third country employees- These are the employees who are not from home
country/host country but are employed at subsidiary or corporate headquarters. As
an example a American MNC which has a subsidiary at India may employ a French
person as the CEO to the subsidiary. The Frenchman employed is a third
country employee.

Differences between domestic and International HRM:

• Domestic HRM is done at national level and IHRM is done at international level.
• Domestic HRM is concerned with managing employees belonging to one nation and
IHRM is concerned with managing employees belonging to many nations (Home
country, host country and third country employees)
• Domestic HRM is concerned with managing limited number of HRM activities at
national level and IHRM has concerned with managing additional activities such as
expatriate management.
• Domestic HRM is less complicated due to less influence from the
external environment. IHRM is very complicated as it is affected heavily by external
factors such as cultural distance and institutional factors..
Objectives of IHRM:
• Create a local appeal without compromising upon the global identity.
• Generating awareness of cross cultural sensitivities among managers globally and
hiring of staff across geographic boundaries.
• Training upon cultures and sensitivities of the host country.

Need of IHRM:
• Create a local appeal without compromising upon the global identity.
• Generating awareness of cross cultural sensitivities among managers globally and
hiring of staff across geographic boundaries.
• Training upon cultures and sensitivities of the host country.

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Characteristics of IHRM:

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IHRM approaches:

• Ethnocentric: key positions filled by nationals of parent company

• Polycentric: host country nationals recruited to manage subsidiary in their own country
• Geocentric: best people recruited, whatever their national it
• Regiocentric: best people recruited within region in which the subsidiary operates (e.g.
EU, USA).
Issues in IHRM:
• Managing International Assignments
• Employee and Family Adjustments
• Selecting the right person for foreign assignments
• Culture and Gauge
• Language and Communication

Functions of IHRM:

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International Human Resource Management Process:

Model of IHRM:

CULTURE:
“Culture is a set of beliefs and values about what is desirable and undesirable in a
community of people, and a set of formal or informal practices to support the values” Culture
is a subtle but pervasive force.
Culture – refers to the attitudes, values, customs, and behavior patterns that characterize
a social group - the ways in which a particular group of people lives, including their shared
knowledge, values, customs and physical objects
Importance of cultural sensitivity for global business:
• To communicate effectively with customers, suppliers, foreign employees, business
partners etc.
• Conduct negotiations
• Predict trends in social behaviour likely to affect foreign operations

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• Predict Impact of cultural differences on advertisements and promotion
• Understand ethical standards and social responsibility
• Conduct efficient meetings
• Understand how people interpret market research and other information
Characteristics of Culture:
• Culture is Shared – by group of people
• Culture is Learned – ideals which shape Life
• No culture remains in an Isolation

Cultural Predispositions:
Strategic Predispositions Four distinct predispositions toward doing things in a particular
way:
• Ethnocentric
• Polycentric
• Regio-centric
• Geocentric
Ethnocentric predisposition: A nationalistic philosophy of management whereby the values
and interests of the parent company guide strategic decisions.
Polycentric predisposition: A philosophy of management whereby strategic decisions are
tailored to suit the cultures of the countries where the MNC operates
Regio-centric predisposition: A philosophy of management whereby the firm tries to blend
its own interests with those of its subsidiaries on a regional basis.
Geocentric predisposition: A philosophy of management whereby the company tries to
integrate a global systems approach to decision making.
Meeting the challenge in cultural predisposition:
The Globalization perspective
1) Belief that one worldwide approach to doing business is key to efficiency and effectiveness
2) Many factors facilitate the need to develop unique strategies for different cultures:
• Diversify the world wide standards
• Continual demand by local customers for differentiated products
• Importance of being insider as in case of customer who prefers to “buy local”

Dimensions and Hofstede’s Model:

Geert Hofstede, (born 2October 1928 in Haarlem, Netherlands) is an influential Dutch

researcher in the fields of organisational studies, organisational culture, cultural economics and
management. He is a well-known pioneer in his research of cross-cultural groups and
organisations
Hofstede’s cultural dimensions:
• High vs. Low context cultures
• Power distance
• Collectivism vs. Individualism
• Masculinity vs. Femininity
• Uncertainty avoidance
• Long vs. Short term orientation
High vs. Low context cultures: This division, which stems from E. T. Hall’s research, applies
to the reliance on the immediate physical context in communication.

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Power distance: This dimension applies to the perception of power and authority by the less
influential members of a given community. It is the extent to which the less powerful members
of organisations and institutions accept and expect that power is distributed unequally.

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Individualism vs. Collectivism: It is the degree to which individuals are integrated into
groups. In individualistic societies, the stress is put on personal achievements and individual
rights. In collectivist societies, individuals act predominantly as members of a lifelong and
cohesive group.

Masculinity vs. Femininity:

• Masculine cultures value success, money and material possessions, whereas feminine
cultures place more value on relationships and quality of life. In masculine cultures, the
differences between gender roles are more rigid and less fluid than in feminine cultures.
• Interestingly, masculine cultures are those that used to be at war often, while feminine
cultures are those in which men and women had to support each other in order to
persevere in harsh life conditions

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Uncertainty Avoidance: High uncertainty avoidance stems from striving for truth and
the belief that it is in fact cognizable. This conviction is important in the Western
rationalistic tradition. It can be juxtaposed with the Eastern pursuit of virtues stemming
from Confucius philosophy.

Long vs. Short Term Orientation:•This distinction was added as the last one to
Hofstedes typology. It describes societies’ time perspective. Long term oriented
societies attach more importance to the future. In short term oriented societies, the past
and the present are more valued.

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Managing Across Cultures:
Involves the ability to recognize and embrace similarities and differences among
nations and cultures and then approach key organizational and strategic issues with an open
and curious mind
Culture - The dominant pattern of living, thinking, and believing that is developed and
transmitted by people, consciously or unconsciously, to subsequent generations.
Cultural values - Those consciously and subconsciously deeply held beliefs that specify general
preferences, behaviors, and define what is right and wrong.
Characteristics of culture:
• Innovations & risk taking
• Attention to detail
• Outcome orientation
• People Orientation
• Team orientation
• Aggressiveness
• Stability
How organizational culture starts :
• Develop a new idea.
• Bring key people together & share a common vision
• Act of creation of an organization
• Collaborate
• Take accountability
Core abilities of the managing across cultures:
• Understand
• Appreciate and
• use cultural factors
• motivate the employee
• Global mind-set
• Strong culture -> Employee behavior -> reduced turnover
Strategy for managing across cultures:
• MNC strategies must address the cultural similarities and differences in their varied
markets
• Globalization
• National responsiveness
• Need to understand the difference consumer taste
• Regional market -> response -> national standards & regulations by government

Organizational Structures
very international business firm has to face various issues related to organizational policies.
These organizational issues are to be addressed carefully in order to keep the business healthy
and profitable. Although there are numerous issues, both small and big, we will primarily
concentrate only on the major issues that need to be addressed.
Centralization vs. Decentralization
Centralization is the systematic and consistent reservation of authority at central points in the
organization. In centralization, the decision-making capability lies with a few selected
employees. The implications of centralization are
• Decision making power is reserved at the top level.

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 • Operating authority lies with the mid-level managers.
• Operation at lower level is directed by the top level.
Almost every important decision and operational activities at the lower level are taken by the
top management.
Decentralization is a systematic distribution of authority at all levels of management. In a
decentralized entity, major decisions are taken by the top management to build the policies
concerning the entire organization. Remaining authority is delegated to the mid- and lower-
level managers.
Use of Subsidiary Board of Directors
International firms, especially the fully-owned ones, usually have a board of directors to
oversee and direct the top-level management. The major responsibilities of board-members are
to −
• Advice, approve, and appraise local management.
• Help the management unit in providing response to local conditions.
• Assist the top management in strategic planning.
• Supervise the firm’s ethical issues.
Organizational Structures
Any international business organization, depending on its requirements and operations, would
have an organization structure to streamline all its processes. In this section, we will try to
understand some of the major types of organizational structures.

Initial Division Structures

Initial division structures are common in subsidiaries, export firms, and on-site
manufacturers. Subsidiaries that follow this kind of organization structure include firms where
the main export is expertise, for example, consultants and financial firms. Export
firms include those having technologically advanced products and manufacturing units.
Companies having on-site manufacturing operations follow this structure to cut down their
costs.

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International Division Structure
This structure is built to handle all international operations by a division created for control. It
is often adopted by firms that are still in the development stages of international business
operations.
Advantages
• International attitude gets the attention of top management
• United approach to international operations
Disadvantages
• Separates domestic managers from their international counterparts
• Difficulty in ideating and acting strategically and in allocating resources
globally

Global Product Division

Global product divisions include domestic divisions that are allowed to take global
responsibility for product groups. These divisions operate as profit centers.
Advantages
• Helps manage product, technology, customer diversity
• Ability to cater to local needs
• Marketing, production, and finance gets a coordinated approach on a product-
by-product, global basis
Disadvantages
• Duplication of facilities and staff personnel within divisions

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 • Division manager gets attracted to geographic prospects and neglects long-term
goals
• Division managers spending huge to tap local, not international markets

Global Area Division

Global area division structure is used for operations that are controlled on a geographic rather
than a product basis. Firms in mature businesses with select product lines use it.
Advantages
• International operations and domestic operations remain at the same level
• Global division managers manage business operations in selected geographic
area
• Ability to reduce cost per unit and price competitively
Disadvantages
• Difficult to align product emphasis in a geographically oriented manner.
• New R&D efforts are often ignored, as sale in mature market is where the focus
is.

Global Functional Division

This structure is to primarily organize global operations based on function; product orientation
is secondary for firms using global function division structure.
Advantages

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 • It emphasizes on functional leadership, centralized-control, and leaner
managerial staff
• Favorable for firms that require a tight, centralized coordination and control over
integrated production mechanisms
• Helps those firms that need to transport products and raw materials between
geographic areas
Disadvantages
• Not suitable for all types of businesses. Applicable to only oil and mining firms
• Difficult to coordinate manufacturing and marketing processes
• Managing multiple product lines can be challenging, as production and
marketing are not integrated.

Mixed Matrix
This structure combines global product, area, and functional arrangements and it has a cross-
cutting committee structure.
Advantages
• Can be designed to meet individual needs
• Promotes an integrated strategic approach tailored to local needs and priorities
Disadvantages
• Complex structure, coordinating and getting everyone to work toward common
goals becomes difficult.
• Too many independent groups in the structure

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TOP CHALLENGES WITH A GLOBAL WORKFORCE
Effective Communication
It is a challenge to work closely within the team when your teams are across the globe. Handling
the virtual workforce is quite a big task to accomplish. There is a big difference between
physical office spaces and virtual office spaces. Teams have to put extra efforts to maintain a
professional relation virtual and make sure the communication is effective.

Managing Talent Diversity

When your organization has a presence at different places, the cultures also differ. Due to
globalization, the workforce has become more diverse. Human resource leaders face a
challenge when dealing with a heterogeneous team. Having a diverse workforce will have
implications for management.

Managers should understand the differences between in-office and remote resources and make
decisions accordingly. HR managers should implement practices that unite the workforce to
enhance creativity, productivity, and efficiency.

Managing the workforce effectively with HR software will help organizations have
transparency, better communication, and positive work culture.

Abiding by Local Laws

Legal implications harm your organization’s brand image and also can incur high costs when
ignored. Many labor laws change with state and country boundaries. The organization must
ensure that they abide by the local laws and regulations. If the company breaks any rules, it
may need to stop operations in that area.

Talent Gaps
One of the biggest challenges of the HR department is to attract, hire, develop, and retain
employees that have the skillset to execute a skilled job. It is an additional challenge to find
someone that is skilled who knows the local and international market.

The HR teams need to acquaint themselves with immigration laws to hire resources from other
countries. HR software solutions reduce the gap between the talent and the talent system.

Conflicts of Interest
When your organization has a global presence, integration of different markets will be a
challenge. The local market also changes and differs from state to state. When it comes to the
world market, resources belonging to different nations will have their interest that impacts your
business goals.

Challenges for HR Managers

1) Adapting to Change
Organizations are adapting to the transformation of the global village. The technology is also
evolving, which comes out as a challenge to adapt and implement change. All your workforce
must acquaint with the changes as well.

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2) Work Culture and Environment
When your business is on the path of expansion, it will acquire and merge with different people,
governments, and businesses. During all of this hustle and bustle, it is a challenge to
concentrate on setting up a high work culture and sustain a positive work environment.

3) Setting up the Right Ethics and Values

Ethics and value play a fundamental role in business success. Having a diverse workforce gets
people from different backgrounds together. It is a challenge to align your workforce with your
organization’s goals. The best way they can achieve this is to set the best practices to increase
longevity.

4) Maintaining a Low Attrition Rate

Any organization invests a lot of time and money to hire and train the right people that are fit
for the job. Globalization has increased the number of opportunities in the market. Resources
change for better opportunities or financial growth. The organization will have to start again
from scratch to hire and train. It is a big challenge for HR managers to keep a low attrition rate.

5) Work-life Balance
Having a balance in professional and personal life is crucial for happiness and stability. HR
managers have a huge responsibility to create a perfect balance between work and personal
life. Perfect balance helps to boost productivity and retention rate.

6) Stress and Conflict

Globalization has fueled competitiveness and made things faster. It also has increased the
number of working hours, higher targets, and competition. It is the responsibility of the HR
department to reduce stress and solve conflicts if any arise. It is a challenge for them to keep
the tension and conflicts between the teams minimum.

7) Needed Organization Restructures

The world is moving at high pace organizations need to adapt to the pace and restructure the
workforce effectively. It is a challenge for managers to restructure their processes.

How to Overcome the HR Challenges of a Global Workforce

Mentor Programs
Mentor programs are one of the most effective ways to manage a diverse workforce. Business
leaders can choose managers from different departments for the mentor program to train and
give feedback to employees from different backgrounds.

Strategic Deployment of Talent

More organizations are entering the global market. That increases the necessity of strategic
deployment of diverse talents to analyze and succeed in niche markets. Be sure to allocate a
good spread of talent across all your departments, so every pod has the experts they need to
keep things running smoothly.

Analyze the Results

An HR manager needs to regularly assess issues like payroll, development, and work
environment. It benefits to understand their longevity and growth. It also helps to understand
the changes required in the work process.

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Motivated Workforce
Workforce motivation is a critical key to success. It helps inspire your workforce to achieve
business goals. If your team is content, that can motivate them to be overachievers.

Tip: Ensure motivated employees by making sure they’re placed in the right roles.

Monetary Benefits
Monetary benefits can motivate employees like nothing else. Organizations should appreciate
the top performers and reward them gifts, incentives, vouchers, and travel internationally to
other offices to learn more about them.

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 UNIT-II

Structural Evolution of Global Organisations -- Cross cultural leadership and decision

making, Cross-cultural communication and negotiation. Managing across Cultures.
Religious and Economic Implications.

International Organizational Structures: Type # 1.

Expo-documents against acceptancert Department:
Exports are often looked after by a company’s marketing or sales department in the initial
stages when the volume of exports sales is low. However, with increase in exports turnover, an
independent exports department is often setup and separated from domestic marketing, as
shown in Fig. 17.2.

Exports activities are controlled by a company’s home-based office through a designated head
of export department, i.e. Vice President, Director, or Manager (Exports). The role of the HR
department is primarily confined to planning and recruiting staff for exports, training and
development, and compensation.

Sometimes, some HR activities, such as recruiting foreign sales or agency personnel are carried
out by the exports or marketing department with or without consultation with the HR
department.

International Organizational Structures: Type # 2.

International division structure:
As the foreign operations of a company grow, businesses often realize the overseas growth
opportunities and an independent international division is created which handles all of a
company’s international operations (Fig. 17.3). The head of international division, who directly
reports to the chief executive officer, coordinates and monitors all foreign activities.

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The in-charge of subsidiaries reports to the head of the international division. Some parallel
but less formal reporting also takes place directly to various functional heads at the corporate
headquarters.

The corporate human resource department coordinates and implements staffing, expatriate
management, and training and development at the corporate level for international assignments.
Further, it also interacts with the HR divisions of individual subsidiaries.

The international structure ensures the attention of the top management towards developing a
holistic and unified approach to international operations. Such a structure facilitates cross-
product and cross-geographic co-ordination, and reduces resource duplication.

Although an international structure provides much greater autonomy in decision-making, it is

often used during the early stages of internationalization with relatively low ratio of foreign to
domestic sales, and limited foreign product and geographic diversity.

International Organizational Structures: Type # 3.

Global Organizational Structures:
Rise in a company’s overseas operations necessitates integration of its activities across the
world and building up a worldwide organizational structure.

While conceptualizing organizational structure, the internationalizing firm often has to

resolve the following conflicting issues:
i. Extent or type of control exerted by the parent company headquarters over subsidiaries

ii. Extent of autonomy in making key decisions to be provided by the parent company
headquarters to subsidiaries (centralization vs. decentralization)

It leads to re-organization and amalgamation of hitherto fragmented organizational interests

into a globally integrated organizational structure which may either be based on functional,
geographic, or product divisions. Depending upon the firm strategy and demands of the
external business environment, it may further be graduated to a global matrix or trans-national
network structure.

Global functional division structure:

It aims to focus the attention of key functions of a firm, as shown in Fig. 17.4, wherein each
functional department or division is responsible for its activities around the world. For instance,
the operations department controls and monitors all production and operational activities;
similarly, marketing, finance, and human resource divisions co-ordinate and control their
respective activities across the world.

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Such an organizational structure takes advantage of the expertise of each functional division
and facilitates centralized control. MNEs with narrow and integrated product lines, such as
Caterpillar, usually adopt the functional organizational structure.

Such organizational structures were also adopted by automobile MNEs but have now been
replaced by geographic and product structures during recent years due to their global
expansion.

The major advantages of global functional division structure include:

i. Greater emphasis on functional expertise

ii. Relatively lean managerial staff

iii. High level of centralized control

iv. Higher international orientation of all functional managers

The disadvantages of such divisional structure include:

i. Difficulty in cross-functional coordination

ii. Challenge in managing multiple product lines due to separation of operations and marketing
in different departments

iii. Since only the chief executive officer is responsible for profits, such a structure is favoured
only when centralized coordination and control of various activities is required.

Global product structure:

Under global product structure, the corporate product division, as depicted in Fig. 17.5, is given
worldwide responsibility for the product growth.

The heads of product divisions do receive internal functional support associated with the
product from all other divisions, such as operations, finance, marketing, and human resources.
They also enjoy considerable autonomy with authority to take important decisions and operate
as profit centres.

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The global product structure is effective in managing diversified product lines.

Such a structure is extremely effective in carrying out product modifications so as to meet

rapidly changing customer needs in diverse markets. It enables close coordination between the
technological and marketing aspects of various markets in view of the differences in product
life cycles in these markets, for instance, in case of consumer electronics, such as TV, music
players, etc.

However, creating exclusive product divisions tends to replicate various functional activities
and multiplicity of staff. Besides, little attention is paid to worldwide market demand and
strategy. Lack of cooperation among various product lines may also result into sales loss.
Product managers often pursue currently attractive markets neglecting those with better long-
term potential.

Global geographic structure:

Under the global geographic structure, a firm’s global operations are organized on the basis of
geographic regions, as depicted in Fig. 17.6. It is generally used by companies with mature
businesses and narrow product lines. It allows the independent heads of various geographical
subsidiaries to focus on the local market requirements, monitor environmental changes, and
respond quickly and effectively.

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The corporate headquarter is responsible for transferring excess resources from one country to
another, as and when required. The corporate human resource division also coordinates and
provides synergy to achieve company’s overall strategic goals between various subsidiaries
based in different countries.

Such structure is effective when the product lines are not too diverse and resources can be
shared. Under such organizational structure, subsidiaries in each country are deeply embedded
with nationalistic biases that prohibit them from cooperating among each other.

Global matrix structure:

It is an integrated organizational structure, which super-imposes on each other more than one
dimension. The global matrix structure might consist of product divisions intersecting with
various geographical areas or functional divisions (Fig. 17.7). Unlike functional, geographical,
or product division structures, the matrix structure shares joint control over firm’s various
functional activities.

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Such an integrated organizational structure facilitates greater interaction and flow of
information throughout the organization. Since the matrix structure has an in-built concept of
interaction between intersecting perspectives, it tends to balance the MNE’s prospective, taking
cross-functional aspects into consideration.

It facilitates ease of technology transfer to foreign operations and of new products to different
markets leading to higher economies of scale and better foreign sales performance. Matrix
structure is used successfully by a large number of MNEs, such as Royal Dutch/Shell, Dow
Chemical, etc.

In an effort to bring together divergent perspectives within the organization, the matrix
structure may also lead to conflicting situations. It inhibits a firm’s ability to respond quickly
to environmental changes in case an effective conflict resolution mechanism is not in place.

Since the structure requires most managers to report to two or multiple bosses, Fayol’s basic
principle of unity of command is violated and conflicting directives from multiple authorities
may compel employees to compromise with sub-optimal alternatives so as to avoid conflict
which may not be the most appropriate strategy for an organization as a whole.

Transnational network structure:

Such a globally integrated structure represents the ultimate form of an earth-spanning
organization, which eliminates the meaning of two or three matrix dimensions. It encompasses
elements of function, product, and geographic designs while relying upon a network
arrangement to link worldwide subsidiaries (Fig. 17.8).

This form of organization is not defined by its formal structure but by how its processes are
linked with each other, which may be characterized by an overall integrated system of various
inter-related sub-systems.

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The trans-national network structure is designed around ‘nodes’, which are the units
responsible for coordinating with product, functional and geographic aspects of an MNE. Thus,
trans-national network structures build-up multidimensional organizations which are fully
networked.

The conceptual framework of a trans-national network structure primarily consists of

three components:
Disperse sub-units:
These are subsidiaries located anywhere in the world where they can benefit the organization
either to take advantage of low-factor costs or provide information on new technologies or
market trends

Specialized operations:
These are the activities carried out by sub-units focusing upon particular product lines, research
areas, and marketing areas design to tap specialized expertise or other resources in the
company’s worldwide subsidiaries.

Inter-dependent relationships:
It is used to share information and resources throughout the dispersed and specialized
subsidiaries.

Organizational structure of N.V. Philips which operates in more than 50 countries with diverse
range of product lines provides a good illustration of a trans-national network structure.

International Organizational Structures: Type # 4.

Evolution of Global Organizational Structures:
Organizational structures often exhibit evolutionary patterns, as shown in Fig. 17.9, depending
upon their strategic globalization. The historical evolution of organizational patterns indicates
that in the early phase of internationalization, most firms separate their exports departments
from domestic marketing or have separate international divisions.

Companies with emphasis on global business strategies move towards global product structures
whereas those with emphasis on location base strategies move towards global geographic
structures.

Subsequently, a large number of companies graduate to a matrix or trans-national network

structure due to dual demands of local adaptations pressures and globalization. In practice,

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most companies hardly adopt either pure matrix or trans-national structures; rather they opt for
hybrid structures incorporating both.

Cross-Cultural Leadership?

Cross-cultural psychology attempts to understand how individuals of different cultures interact

with each other. Cross-cultural leadership is the way to understand leaders who work in the
newly globalized market. Cross-cultural leadership involves the ability to influence and
motivate people’s attitudes and behaviors in the global community to reach a common
organizational goal.

GLOBE authors describe organizational leadership as “the ability of an individual to influence,

motivate, and enable others to contribute toward the effectiveness and success of the
organizations of which they are members” and their definition for culture includes “shared
motives, values, beliefs, identities, and interpretations or meanings of significant events that
result from common experiences of members of collectives and are transmitted across age
generations.”

Theories on Cross-Cultural Leadership:

Implicit Leadership Theory (ILT):

This theory asserts that people’s underlying assumptions, stereotypes, beliefs, and schemas
influence the extent to which they view someone as a good leader. Since people across cultures
tend to hold different implicit beliefs, schemas and stereotypes, it would seem only natural that
their underlying beliefs in what makes a good leader differ across cultures.

Hofstede’s Cultural Dimensions:

This is one of the most prominent and influential studies to date regarding leadership in a
globalized world. The study reveals similarities as well as differences across cultures and
emphasizes the need to be open-minded to understand the differences in other cultures. As per
this theory, there are five dimensions of culture to compare cultures, to help leaders with an
understanding of how to adjust their leadership styles accordingly; Individualism/Collectivism,
Feminine/Masculine, Power Distance, Uncertainty Avoidance, and Long Term/ Short Term
orientation.

GLOBE - The Global Leadership and Organizational Behavior Effectiveness Research

Project:

The GLOBE study extended the ILT to include individuals of a common culture maintaining
a relatively stable common belief about leaders, which varies from culture to culture. They
labeled this the Culturally Endorsed Implicit Leadership Theory (CLT). The GLOBE study
expanded Hofstede's dimensions to include Uncertainty Avoidance, Power Distance,

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Collectivism I: Societal Collectivism, Collectivism II: In-Group Collectivism, Gender
Egalitarianism, Assertiveness, Future Orientation, Performance Orientation, and Humane
Orientation.

Traits for Cross-Cultural Leader:

Given below is a list of traits found to be associated with successful international executive by
different researchers:

• General Intelligence
• Business Knowledge
• Interpersonal Skills
• Commitment
• Courage
• Ease in dealing with cross-cultural issues
• Open Personality
• Flexibility
• Drive
• Language Skills
• Multicultural Perspective Taking
• Knowledge and cognition
• Cultural Awareness
• Cross-cultural Schema
• Cognitive Complexity

An effective cross-cultural leader must have a well-rounded skillset and understanding of the
differences that exist among people from different backgrounds.

1. Cultural differences Cultural differences can become most apparent when people
from different cultures interact socially or in circumstances involving business.
Personal space, demeanor, time, forms of address and gestures are possible areas where
cross-cultural differences can come into play. For example, norms surrounding personal
space can vary from culture to culture. Personal space has to do with the acceptable
distance that exists between one person and another during conversational exchanges.
While an American may have a one- to two-foot comfort zone, someone of a different
culture may consider six inches to be an acceptable personal area
2. CROSS CULTURE DECISION MAKING Every aspect of management comes
along with some form of decision making. When it comes to cross- cultural decision
making, a lot of difficult obstacles must be addressed. A decision in one culture is often
ineffective in another.
3. Two types of decision making processes  Programmed  Non programmed process.
4. Programmed The programmed decision making process is the most commonly used
style. This entails making decisions based on precedent, custom, policies and
procedures, and training and development. This style reduces risk and stress for
decision makers because a basis for a decision can be pretested for efficiency. A
disadvantage is that when an organization's environment changes, the programmed
bases for decision making become obsolete.

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 5. Non programmed process. With non programmed decision making, this entails
analyzing current data and information, obtained through a systematic investigation of
the current environment, for the purpose of identifying and solving a problem.
6. Steps of decsion making in wetern culture (1) Through investigation, define the
problem. (2) Identify a minimum criteria on which to base the decision. (3) Identify
multiple viable choices. (4) Quantitatively evaluate each viable choice on the basis of
each criterion. (5) Select the optimum choice. (6) Implement the choice.
7. problems  One of the problems is reconciling the conflicting demands of a situation.
 Another problem is defining the level of all individuals' motivation

CROSS-CULTURAL NEGOTIATIONS AND COMMMUNICATION

In cross-cultural negotiations, above and beyond the issues of personal negotiation styles and
techniques, one must consider the impact of cultural difference. This impact will often be tied
to communication issues, increasing the possibilities of misunderstanding. Things that are said,
left unsaid, or unclearly said can all create an extra layer of difficulty on top of the substantive
issues to be discussed.
In cross-cultural negotiations, we also often bring a certain amount of baggage to the table
based on our personal and group history, with all of the stereotypes and assumptions that may
go along with that history. What makes it particularly challenging is that cultural difference is
a two-way street, potentially making both sides of the table feel awkward. In a potentially
adversarial negotiation, that awkwardness could easily become distrust and fear.
One of the challenges in dealing with cultural difference is the nature of culture itself. While
the concept of culture applies to a body of people, and their history, we negotiate with
individuals, not a “culture”. In a sense, we are all the product of a variety of micro-cultures;
based on our family, gender, race, religion, age, education, geographic history, peer groups,
occupation, etc. Generalizing based on one’s culture is not only challenging but dangerous.
To maximize the chances of success in the cross-cultural setting, one should consider a number
of factors, including:
1. Etiquette/Protocol Issues
Simple issues we take for granted can make a difference in cross-cultural settings. How do you
greet someone; with what level of formality? First name jocularity may work wonderfully in
Los Angeles, but fall flat in Beijing where formality is more the norm (at least in the absence
of longstanding relations). How should you dress to meet a senior government official in the
heat of a Trinidadian summer? Are there gender issues to consider that may impact on how to
behave?
Are gifts appropriate? Required? Have we considered the impact of some of the issues set out
below, such as personal space norms? Are certain topics acceptable, and if so when can they
be raised comfortably?
There may even be protocols that we will never be aware of. For example, in Saudi Arabia,
showing the sole of your shoe to your host would be considered a breach of etiquette, but they
would rarely point it out to you. In Belgium, failing to properly introduce everyone might ruffle
feathers.
Lack of understanding of etiquette can lead to tension, discomfort, and mistrust. In Saudi
Arabia, it would be quite normal for a visitor to be greeted by their male host with a very soft
handshake and a kiss, then taken by the hand and walked hand in hand around a party being
introduced to everyone. Such an activity would make many North American males a tad
uncomfortable, but understanding the nature of the cultural norms can make the experience far
less daunting.

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Try to inform yourself and understand the protocol and etiquette norms in advance, but keep
your senses open for any signs that you have stepped into inappropriate territory.
2. Body Language Issues
While in Western (North American and European) cultures, eye contact is often seen as a good
thing (a sign of confidence, honesty, etc.), even in those cultures, it can be misinterpreted. In
other cultures, such as some aboriginal cultures and Japanese culture, eye contact can be seen
as rude or inappropriate or uncomfortable.
One must be careful in reading too much or too little into body language signals, as they can
be so easy to misinterpret and so dependant on personal history. As individuals, we are the
product of many micro-cultures, all of which play a role in our interactions with others. A
Japanese businessperson, for example, is the product of his family upbringing, his education,
his gender, his religion, his work experience, his geographic history, his age, etc.
Working among the Inuit for example, we have been told by Southerners that Inuit are
uncomfortable with eye contact. The truth is much more complex. Our Inuit participants in
workshops have told us that eye contact may be uncomfortable in some settings (in discussions
with elders, in discussions with a power imbalance, and in discussions that are uncomfortable
by their nature), but that eye contact is not inherently bad at all. Indeed much communication
in Inuit culture takes place with the eyes (‘Yes’ and ‘No’ are often communicated by a mere
facial expression – what you might see as raised eyebrows and a grimace respectively). The
comfort level with eye contact also depends very much on the background of the Inuk in
question. Are they a 60 year old who was raised on the land or a 14 year old raised on MTV?
Other issues of body language commonly worth considering are the aspects of “personal space”
and physical contact. Typically, to be comfortable, members of Western cultures desire a
couple of feet of personal space. In some Asian cultures, more space may be desired. In Middle
Eastern culture and some others, there may be much more physical contact as a norm,
particularly between males. Contact between different genders however may be more limited
in the Middle East than in Western norms. All of these norms however, are subject to significant
variation dependent on the individuals in question and their exact relationship with one another.
What works for good friends for example, may not work with strangers.
With all aspects of body language, try to keep your radar open for signs that discomfort is being
created.
3. Language Issues
In certain circumstances, language differences will require interpretative services on one or all
sides. It is worth exploring the degree of language issues early on to prepare accordingly, before
substantive discussions begin. Will there be a similar standard for verbal and written
communications?
Recognize that, when translation is required, you will need to at least double the time required
to accomplish a goal.
In using translation, you will want to ensure that you are getting accurate and timely translation,
so set clear ground-rules for your interpreters. Are they to summarize or to repeat word for
word? Nothing is more disturbing than to hear a three minute speech translated with one short
sentence.
Technical language is much harder to understand and translate and acronyms can be easily
misunderstood. An acronym (PMO) may simply sound like an unknown word. Avoid
acronyms where possible. Speaking slowly and enunciating can help.
In negotiations with people from another language group, rather than caucus in private, some
people may simply start talking in their own language. One should be careful of such actions
as you never know what language proficiency is on the other side of the table. In one case, a
group had a conversation in Flemish that was largely insulting to the other side. Unbeknownst

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to them, a Flemish speaker on the North American side understood every word, and was not
amused.
4. Relationship Issues
In Western culture, there may be varying degrees of comfort with personal relationships in a
negotiation. Some people are inherently relationship builders by nature and want to get to know
the other party before getting down to business. Others are more rational and “cut to the chase”
by nature, and may see personal relationships as external to or even dangerous in a business
deal.
Other cultures can approach relationships in different ways. South Americans, for example, are
more likely to want to get to know you as a person before getting down to business. The same
would be true of many Asian cultures.
Americans often see contracts as the answer to all questions in a business relationship, whereas
Europeans, particularly from the south, may be more likely to see a contract merely as the
starting point of the larger relationship.
In the Caribbean, personal ‘respect’ is a crucial value. The way you deal with people will be
remembered for a long time, and reputation can be very important to doing business effectively.
Ask yourself what role relationships should have in this negotiation. Is there a place for
building relationships, and how can that be done effectively without disadvantaging oneself?
5. Timing Issues
Different cultures deal with time in very different ways. In Western cultures, punctuality is
generally seen as a positive, though in the extreme it can actually be seen as nitpicky behaviour.
In Japan and China, a failure to appear on time may be a serious breach of etiquette. In the
Caribbean, the Arctic, South America or the Middle East, however, time is often seen as more
fluid. Many a conflict at a hotel desk in the Bahamas has arisen because, “I am getting to it” in
Nassau does not mean the same as it does in New York City.
In Toronto, cutting to the chase may be quite acceptable, whereas in Tokyo, more time may
need to be set aside for negotiations, to lay the groundwork for the relationships. Time might
also be used as a weapon. In a Chinese negotiation, for example, the substantive discussions
were delayed and delayed until two hours before the known departure time of a Canadian
negotiator, putting added pressure on that negotiator to make concessions before leaving.
Whereas many North Americans see a “one issue at a time” approach as a rational one, a Saudi
negotiating team may jump all over the map on the issues. Is it a strategy or a cultural trait?
We often infer negative intention from actions that have a negative impact on us, but we need
to be careful about such knee jerk reactions. By clarifying the process in advance, we are less
likely to be surprised in a negative way.
It is worth exploring timing issues explicitly with all parties so everyone understands what is
meant by a timetable. When the other side says “We’ll get it to you soon”, what does that really
mean?
Be prepared for surprises nonetheless.
6. Trust and Information Issues
North American culture generally values a rational, analytical, straight-forward approach to
information, but at the same time, many North Americans typically keep their cards close to
their chests and are reluctant to disclose. The adage of “I’ll show you mine, if you show me
yours first” would not be uncommon. The approach to information often varies with the parties’
personalities and their relationship at the time, as well as other factors. The greater the level of
trust, the more likely that fuller disclosure will occur.
Other cultures may approach information and trust in different ways. Some cultures are more
risk averse than others, though typically, our training suggests that most cultures world-wide
have a broad component of risk-averse individuals and a small subset of risk-takers. What kinds
of personalities are you dealing with? Which are you?

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7. Legal Issues
Where foreign law is an issue, advice from counsel adept in the appropriate jurisdiction is a
must. The parties will need to determine what law is to apply to any contract, both procedurally
and substantively. Be aware that legislation in one or more countries may trump what is written
in the contract if there is a conflict. As a result, it is imperative to have someone who knows
the legal framework in the relevant jurisdictions. If contracts are drafted in more than one
language, what will happen in the event of a conflict?
What level of commitment is necessary to finalize an agreement? A written contract is the norm
in most cultures, but the power of the handshake and verbal agreement varies from place to
place and person to person. Ensure you are on the same page about the level of commitment
and have the appropriate protections in place to ensure compliance.
8. Authority Issues
Depending on the culture (and other issues), true authority for decision-making may rest in
various hands. In North America, it would be normal for a representative to attend with
authority to make decisions, but there may be practical or strategic reasons for them to attend
with limited or no authority to commit their principal. The boss may be out of country, or
unwilling to make a final decision, for example.
In Japan, decisions may be made by consensus or by a senior representative of the company.
Again, this may well depend on the people and companies involved. In Saudi Arabia, simply
trying to determine who has the real authority may be a challenge.
There can be confusion and distrust when authority is spread in a horizontal manner on one
side of the table but hierarchically on the other. How can you deal with decision-making to
make both sides comfortable? Does a backroom democratic style, with a single point of contact
to the client, make more sense than having all decision-makers participate equally with the
client?
It is worth clarifying who has authority early on, modeling by your own example.
9. Political/Procedural Issues
When dealing with a foreign culture, you need to educate yourself and be aware of the political
and practical realities of getting what you want in the applicable environment. Are there
channels that must be followed? If so, what are they, and what is the best route through them
that is compatible with the ethical issues in both cultures. Gift giving (and receiving), for
example, may be the norm in China, but may run afoul of Government of Canada or company
regulations on conflict of interest. This is a political issue. On the practical and procedural side,
if giving a gift, what would be appropriate, and how should it be done?
10. Gender Issues
One of the most common and deeply felt value clashes that can occur between cultures is
triggered by gender issues. In Saudi Arabia, for example, most Western companies will use
male personnel in negotiations, out of concern that female negotiators will not be heard and
respected in the same way by the Saudi Negotiators. Companies do this despite (at least in
some cases) having their own internal codes of conduct which rule against gender
discrimination. Important values and traditions on either side of the negotiation come head to
head with stressful results on both sides.
Many aspects of gender relations crop up under some of the other categories set out above,
such as etiquette and relationship building. It is worth spending time to consider the impact of
gender dynamics on either side of the table, before plowing ahead into unknown territory.
11. Expectation Issues
It may help to clarify the expectations of the parties early on. What one side sees as the logical
goal of a negotiation (getting a contract) may not be the goal of the other side (getting to know
you/making contacts for future business). It never hurts to have a shared understanding of the
goals. Clarify the shared purpose of the negotiation early on.

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Effects of Religion on the Economy

Religious practice is an efficient and effective catalyst of socio-economic growth.1) In the

United States religious organizations produce substantial economic revenue, provide
substantial social capital through its civic and social networks, and foster human capital growth
in its citizens.2) According to a 2016 estimate, faith-based organizations in the U.S. had a
greater revenue than that of Apple and Microsoft combined. 3) However, as government
hostility toward organized religion has increased,4) religious affiliation has simultaneously
decreased.5) This decline in religious practice will have significant negative repercussions for
the U.S. economic framework.

1. Religious Liberty
Religious liberty contributes to better business and economic outcomes. According to Brian
Grim of Georgetown University and Greg Clark and Robert Edward Snyder of Bringham
Young University, countries with lower levels of religious hostilities and government
restrictions on religion ranked stronger in global competitiveness.6) Religious freedom also
contributed to peace and stability7) and helped lower corruption8)—two important ingredients
for economic development. Research on Muslim-majority countries have shown that high
religious restrictions deter young entrepreneurs9) and allow business competitors to cite
religious laws to attack their rivals.10)

2. Social and Individual Norms that Boost Economic Growth

Religion affects economic decision-making by establishing social standards and shaping
individual personalities. Firms located in communities with higher religiosity tend to adhere to
ethical norms that are conducive to a stable economy. A 2015 study by Jeffrey Callen and
Xiaohua Fang of the University of Washington found that companies headquartered in counties
with higher religiosity had fewer instances of manager bad-news-holding and, correspondingly,
significantly lower levels of future stock price crash risk.11) Banks headquartered in areas with
high religiosity also took less risk and experienced less value destruction in times of
crisis.12) Researchers at Rice University reported that companies headquartered in highly
religious areas had fewer instances of “misbehavior” than those in less religious communities,
as measured by securities fraud lawsuits filed against the firm, aggressive earnings
manipulation, option back-dating, and excessive executive compensation.13) High religious
adherence was also linked to a lower likelihood of financial restatement, less risk that financial
statements were misrepresented, a lower likelihood of participating in tax sheltering, and more
honesty in voluntary disclosures.14) Similarly, firms headquartered in religious areas had higher
credit ratings and lower cost of debt.15)
Religious practice also naturally and efficiently cultivates the human capital necessary for a
thriving economy. Religiously involved students tend to spend more time on their homework,
work harder in school,16) and have higher educational aspirations.17) Religious practice is
particularly powerful in helping disadvantaged youth in poor neighborhoods stay on-track in
school and improve their educational status.18)

3. Revenue of Religious Organizations

In addition to instilling ethical norms and standards in employees and managers, religious
organizations accrue significant revenue for the U.S. economy. In their 2016 analysis published
in the Interdisciplinary Journal of Research on Religion, Brian and Melissa Grim calculated

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that faith-based organizations contributed $378 billion19) annually to the U.S. economy (based
on revenue in education, healthcare, congregational activities, charities, media, and food).
Education: Based on school enrollment and tuition rates, Brian and Melissa Grim estimated
that in 2011-2012 faith-based elementary schools made $15 billion, secondary schools made
$12 billion, and higher education institutions made $46.8 billion.20)
Healthcare: Religious organization partner with public health institutions and provide health-
related services and resources that promote physical and mental well-being.21) According to a
2014 report by Peter J. Brown of Emory University, the “Catholic Church—one of the largest
health care providers—operated 5,246 hospitals, 17,530 dispensaries, 577 leprosy clinics, and
15,208 houses for the chronically ill and handicapped world-wide.”22) The 2014 annual revenue
of U.S. faith-based hospitals and health systems with an active religious affiliation was $161
billion, according to Brian and Melissa Grimm’s calculations of the 100 top-grossing U.S.
hospitals and the 100 top integrated health systems.23)
Congregational Activities: Based on data from the National Congregations Study cumulative
dataset (1998, 2006-07, 2012) and 2010 Religious Congregations and Membership Study,
Brian and Melissa Grim estimated that the average congregation spent $26,781 on social
programs in 2012 (totaling $9 billion across the 344,894 congregations measured).24)
Charities: Of the fifty largest U.S. charities cited by Forbes magazine in 2014, twenty were
faith-based. On the aggregate, these twenty charities made an annual revenue of $45.3 billion,
reported Brian and Melissa Grim.25) Arthur Brooks of the American Enterprise Institute found
that religious people were 25 percent more likely than their secular counterparts to donate
money and 23 percent more likely to volunteer time. Even when it came to nonreligious causes,
religious people were more generous.26)
Media: Revenue of faith-based media—including religious books, religious television
networks (CBN and EWTN), and Christian/ Gospel music—was estimated at $0.9 billion,
according to Brian and Melissa Grim’s calculations.27)
Food: Kosher (Jewish) and Halal (Muslim) food sales had a combined revenue of $14.4 billion
(in 2014 and 2011, respectively). Food sales for various religious holidays also significantly
impacts the economy.28) According to a 2013 estimate, Christmas purchases amounted to more
than $3 trillion and led to the hiring of 768,000 additional employees.29)

4. Fair Market Value of Social Services of Religious Organizations

A more accurate valuation of the economic contribution of religious organizations is $1,159.2
billion, according to Brian and Melissa Grim’s 2016 study published in the Interdisciplinary
Journal of Research on Religion. In addition to the hard-dollar revenue of religious
organizations, this estimate factors in the fair market value of faith-based social services, the
positive “halo effect” religious organizations have on a community by providing centers for
education childcare, etc., and the economic contribution of businesses with religious
roots.30) Dr. Ram A. Cnaan of the University of Pennsylvania has published a robust body of
research examining the civic contribution of religious institutions to society.31) For example, in
addition to worship services, congregations frequently provide adult and youth religious
education, recruit volunteers, sponsor musical and artistic performances, host support groups
for those struggling with drugs, alcohol, or abuse, provide marriage enrichment classes,
sponsor groups for those with mental disabilities, deliver programs for the homeless, senior
citizens, and immigrants, and fund disaster relief efforts.32)

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In addition, a number of large for-profit businesses have a faith-based founding, even if the
company does not overtly identify as religious. Businesses like Walmart, Tyson Foods, Tom's
of Maine, and Whole Foods Market have religious roots that shape the company's managerial
practices or operational conduct.33) (The table below summarizes the revenue derived from
each sector studied.)

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UNIT-III
Human Resource Management in Global Organisations – Recruitment, Selection,
Training, and Development. Career and Family Balancing Issues.

International Human Resource Planning:

Human resource planning, or HRP, is the on-going, continuous process of systematic
planning to achieve optimum use of an organization's most valuable asset — its human
resources. The objective of human resource planning is to ensure the best fit between
employees and jobs while avoiding manpower shortages or surpluses. The four key steps of
the human resources planning process are analysing present labour supply, forecasting labour
demand, balancing projected labour demand with supply and supporting organizational goals.
Breaking down 'Human Resource Planning – HRP:
The human resources plan needs to be flexible enough to meet short-term staffing
challenges while adapting to changing conditions in the business environment over the longer
term. Human resource planning starts by assessing and auditing the current capacity of human
resources.
Analysing Present Conditions:
The first step of human resource planning is to identify the company's strengths and
weaknesses in the current labour pool. This is when a company performs a comprehensive
audit of the skills, demographics, qualifications, experience and compensation of every worker.
HR then has to determine if these statistics fit in line with the company's goals. Does the firm
need to hire more staff to compete in a future marketplace, or are more automated tools
necessary to capture more market share from competitors? Is the status quo acceptable, or
should the company reorganize its staff so that it can make more money?
Forecasting Demand:
HR forecasts demand based on the strategic goals of the company. HR managers may
examine market trends, industry analyses and technological improvements to try to come up
with ways to meet the company's goals. Forecasting possible retirements is also one major facet
that needs to be considered when businesses assess future staffing levels. Do retired employees
need to be replaced, or can new technology do the job? Does a company need more full-time
workers, part-time help or outsourced labour?
Striking a Balance:

The next step involves striking a balance between supply and demand. At this point,
HR creates a gap analysis that lays out specific needs to narrow the supply of the company's
labour versus future demand. Should employees learn new skills in the future? Does the
company need more managers? Do all employees play to their strengths in their current roles?
Integrating the Plan:

The answers to these questions let HR determine how to proceed, which is the final
phase of the human resources planning process. HR must now take practical steps to integrate
its plan with the rest of the company. The department needs a budget, the ability to implement
the plan and a collaborative effort with all departments to make the plan happen.

The overall goal of HR planning is to have the optimal amount of staff to make the most money
for the company. Because the goals and strategies of the company change over time, human
resource planning is a regular occurrence.

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Recruitment:

While recruiting people for international operations, the international HR managers

must identify the global competitiveness of the potential applicants at the time of the recruiting
process. It is essential that the workforce of an international organization is aware of the
nuances of international business. Understandably, the company must keep international
knowledge and experience as criteria in the recruitment and selection process.12 besides, the
international HR department must have a fairly good idea about the skills and availability of
human resources in different labour markets in the world. The HR department must have the
capacity to foresee the changes in these markets and exploit those changes productively. A
truly international HR department would insist on hiring people from all over the world and
place them throughout the international business operations of the organization.

Approaches to Recruitment in IHRM Though the general aim of any recruitment policy is to
select the right people for the right task at the right time, the HR department of international
companies may adopt one of the following three specific approaches available for recruiting
employees for global operations.

The Immigration Reform and Control Act of 1986 (IRCA) bars employers from hiring
individuals who are not legally entitled to work in the U.S. Employers must verify work
eligibility by completing Form I-9 along with required supporting documents. IRCA also
prohibits employers from discriminating in hiring, firing, recruiting, or referring on the basis
of national origin or citizenship status.
H-1B workers may be employed temporarily in a specialty occupation or as a fashion
model of distinguished ability. A specialty occupation requires theoretical and practical
application of a body of specialized knowledge along with at least a bachelor’s degree or its
equivalent. An H-1B alien may work for any petitioning U.S. employer for a maximum period
of six years.
International recruitment methods:

Ethnocentric approach:
Countries with branches in foreign countries have to decide how to select management
level employees. Ethnocentric staffing means to hire management that is of same nationality
of parent company.

When a company follows the strategy of choosing only from the citizens of the parent country
to work in host nations, it is called an ethnocentric approach. Normally, higher-level foreign
positions are filled with expatriate employees from the parent country. The general rationale
behind the ethnocentric approach is that the staff from the parent country would represent the
interests of the headquarters effectively and link well with the parent country. The recruitment
process in this method involves four stages: self-selection, creating a candidate pool, technical
skills assessment, and making a mutual decision. Self-selection involves the decision by the
employee about his future course of action in the international arena. In the next stage, the
employee database is prepared according to the manpower requirement of the company for
international operations. Then the database is analysed for choosing the best and most suitable
persons for global assignments and this process is called technical skills assessment. Finally,
the best candidate is identified for foreign assignment and sent abroad with his consent. The
ethnocentric approach places natives of the home country of a business in key positions at home
and abroad. In this example, the U.S. parent company places natives from the United States in
key positions in both the United States and Mexico.

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 Polycentric approach:
When a company adopts the strategy of limiting recruitment to the nationals of the host
country (local people), it is called a polycentric approach. The purpose of adopting this
approach is to reduce the cost of foreign operations gradually. Even those organizations which
initially adopt the ethnocentric approach may eventually switch over lo the polycentric
approach. The primary purpose of handing over the management to the local people is to ensure
that the company understands the local market conditions, political scenario, cultural and legal
requirements better. The companies that adopt this method normally have a localized HR
department, which manages the human resources of the company in that country. Many
international companies operating their branches in advanced countries like Britain and Japan
predominantly adopt this approach for recruiting executives lo manage the branches." The
polycenlric approach uses natives of the host country to manage operations in their country and
natives of the parent country to manage in the home office. In this example, the Australian
parent company uses natives of India to manage operations at the Indian subsidiary. Natives of
Australia manage the home office.

Geocentric approach:
When a company adopts the strategy of recruiting the most suitable persons for the
positions available in it, irrespective of their nationalities, it is called a geocentric approach.
Companies that are truly global in nature adopt this approach since it utilizes a globally
integrated business strategy. Since the HR operations are constrained by several factors like
political and ethnical factors and government laws, it is difficult to adopt this approach.
However, large international companies generally adopt the geocentric strategy with
considerable success.
For international recruitment, especially on foreign soil, organizations generally use manpower
agencies or consultants with international connections and repute to source candidates, in
addition to the conventional sources. For an effective utilization of the internal source of
recruitment, global companies need to develop an internal database of employees and an
effective tracking system to identify the most suitable persons for global postings. The
geocentric approach uses Ihe best available managers for a business without regard for their
country of origin. In this example, the UK parent company uses natives of many countries at
company headquarters and at the U.S. subsidiary.

Regiocentric Approach:
The Geocentric Approach is one of the methods of international recruitment where
the Multi-National Companies recruit the most suitable employee for the job irrespective of
their Nationality.
The regiocentric approach uses managers from various countries within the geographic
regions of business. Although the managers operate relatively independently in the region, they
are not normally moved to the company headquarters.
The regiocentric approach is adaptable to the company and product strategies. When
regional expertise is needed, natives of the region are hired. If product knowledge is crucial,
then parent-country nationals, who have ready access to corporate sources of information, can
be brought in.
One shortcoming of the regiocentric approach is that managers from the region may not
understand the view of the managers at headquarters. Also, corporate headquarters may not
employ enough managers with international experience.

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Selection:

International Selection Even though cultural differences influence the selection procedure to
some extent, organizations tend to follow similar criteria and methods worldwide. This is due
to the fact that the end objective of any selection process is to choose the most capable persons
for the job. The selection criteria for international jobs usually revolve around the five core
areas of behaviour, attitudes, skills, motivation and personality. More specifically, the focus of
selection for international operations normally includes cultural adaptability, strong
communication skills, technical competence, professional or technical expertise, global
experience, country-specific experience, interpersonal skills, language skills, and family
flexibility. Employers around the world usually rank personal interviews, technical
competency and work experience in similar jobs as important criteria for selection.
International firms, while choosing employees for overseas operations, usually prefer people
with
highly developed technical skills
good language and communication skills
tolerance towards other culture, race, creed, colour, habits, and values
high level of motivation

stress resistance
goal-oriented behaviour
Finally, at the time of selection for international assignments, an organization should consider
the previous overseas experience, family circumstances and cultural-adaptability level of the
candidates aspiring for the global jobs.
28% employees In India willing to relocate overseas: Survey

NEW DELHI: More than a quarter (28%) of employees in India are willing to take up a full-
time job opportunity overseas for two to three years with at least a 10% increase in pay increase,
said a study conducted by research company Ipsos.
Asked about their willingness to relocate within India, about three in ten Indian employees
expressed that they are very likely to relocate to another city in India if they were offered a
full-time job opportunity in the near future, for a minimum of two years with at least a 10%
pay raise and all moving expenses covered, while another 48% said they are somewhat likely
to consider the option. Globally, two in ten (19%) employees across 24 countries said they are
very likely to take a full-time job in another country for two to three years with a minimum
10% pay rise. Those most likely to say they would relocate internationally were from Mexico
(34%), Brazil (32%), Russia (31%), Turkey (31%) and India (28%)."
Employees from developing economies like Mexico, Brazil, Russia, Turkey and India are
willing to relocate to developed countries," said Biswarup Banerjee, head of marketing
communications, Ipsos in India. On the other hand, employees from developed countries like
Sweden (6%), USA (9%), Australia (10%), Canada (10%), Belgium (11%), Germany (11%)
and Japan (11%) are less likely to relocate overseas.

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Training and development in IHRM:
Meaning of Training: After recruiting and placing the employees in the right place the next
step is to train and develop the Human Resources collected recently. It is vital part of every
employee and manager. “Training and Development means changing what employees know,
how they work, their attitudes toward their work, or their interaction with their co-workers or
supervisors
Definitions of Training:
1. Jack Halloran: Training is the process of transmitting and receiving information
related to problem solving.
2. Mathis and Jackson:- Training is a learning process whereby people learn skills,
concept, attitudes and knowledge to aid in the achievement of goals.
3. Gary Dessler: - Training is the process of teaching new employees the basic
skills they need to perform their jobs.
4. Decenzo & Robbins: - programs that are more present day oriented, focuses on
individual’s current jobs, enhancing specific skills and abilities to immediately
perform their job called Training.
5. Ricky W. Griffin:- Training usually refers to the teaching operational or
technical employees how to do the job for which they were hired
6. Dale S.Beach:- Training is the organised procedure by which people learn
knowledge and improve skills for a definite purpose
7. Michael J.Jucius:- Training is a process by which the aptitudes, skills and abilities
of employees to perform specific jobs are increased
8. Edwin B.Flippo:- Training is the act of increasing the knowledge and skill of an
employee for doing a particular job
9. Dale Yoder:- Training is the process by which manpower is filled for the particular
job it has to perform
Need for T&D:
• MNCs increasingly use expatriates on short-term and long-term international job
assignments for a variety of purposes, such as
• to acquire and transfer knowledge
• to manage a foreign subsidiary
• to fill a staffing need
• to maintain communication
• coordination and control between subsidiaries and corporate headquarters
• and to develop global leadership competence
• An expatriate’s success in the host country is largely determined by his or her cross-
cultural adjustment to the host country
• Expatriates who are not prepared to confront the challenges (e.g., to cope with culture
shock) find it difficult to adjust and hence, perform poorly.
• Thus, improving cross-cultural adjustment has been the focus of many international
HR interventions.
• Since cross-cultural adjustment can be facilitated if the expatriate has an awareness of
the norms and behaviors that are appropriate in the host country, many MNCs offer
cross-cultural training (CCT) to teach their expatriates the host country’s appropriate
norms and behaviors.
Cross-Cultural Training:
• Cross-cultural training is defined as any planned intervention designed to increase the
knowledge and skills of expatriates to live and work effectively and achieve general
life satisfaction in an unfamiliar host culture

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 • CCT has been advocated as a means of facilitating effective cross- cultural interactions
and cross-cultural adjustment
• In the early 1980s, only 32% of MNCs offered CCT. Almost 20 years later, the 1998
Global Relocation Trends Survey Report indicates that 70% of the 177 MNCs surveyed
provide CCT of at least one day’s duration
• Cross-cultural training effectiveness is reflected by the cognitive, affective, and
behavioural changes that occur during the CCT event.
• In order to improve the effectiveness of CCT programs, or to maximize the change that
occurs during training, it is important to follow a systematic approach to designing
effective CCT programs.
• The process for designing effective CCT programs consists of five distinct phases:
1. Identify the type of global assignment for which CCT is needed.
2. Determine the specific cross-cultural training needs.
3. Establish the goals and measures for determining training effectiveness.
4. Develop and deliver the CCT program.
5. Evaluate whether the CCT program was effective.
Phase 1 – identify the type of global assignment: Caligiuri describes a classification of global
assignments into four categories:
• Technical
• Functional/tactical
• Developmental/high potential
• Strategic/executive
Phase 2 – conduct a cross-cultural training needs analysis: A cross-cultural training needs
analysis is conducted across three levels:
• The organizational level, to determine the organizational context for CCT
• The individual (or expatriate) level, to determine any special needs that have to be
addressed in CCT for a given person; and
• The assignment level, to determine the cross-cultural knowledge and skills required to
effectively complete the given assignment.
Phase 3 – establish cct goals and measures:
• Cross-cultural training goals should be stated in detailed and measurable terms.
• Detailed and measurable training goals help develop appropriate outcomes for training
evaluation.
• Short-term CCT goals can bring about cognitive, affective, and behavioral changes
• The long-term goal of many CCT programs is to improve the rate of cross-cultural
adjustment.
• Improving cross-cultural adjustment is important for all expatriates and would
generalize across assignments.
• Likewise, improved success on the global assignment may be another generalized long-
term goal with the specific dimensions, of course, being job specific.
Phase 4 – develop and deliver the cct program:
• This phase involves determining the specific instructional content needed in order to
achieve the stated goal, the methods to deliver the instructional content, and the
sequencing of the training sessions.
Phase 5 – evaluate cross-cultural training:
• The evaluation process involves establishing measures of effectiveness (criteria), and
developing research designs to determine what changes (e.g. cognitive, affective, and
behavioural) have occurred during the training.
• Criteria must be established for both evaluations of short-term, and long-term goals.

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• The appropriate evaluation criteria should also be assessed prior to the delivery of CCT
to provide some type of comparison bases for post-training assessment. In addition
evaluation strategies need to be developed during phase 3, that is, the decision on how
to evaluate CCT’s short-term and long-term goals needs to be made at the same time as
these goals are established.
Re-entry and career issues:

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UNIT-IV

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Compensation and Appraisal in Global Perspective. International Industrial Relations.

International Compensation Management:

Designing and developing a better compensation package for HR professionals for
the international assignments requires knowledge of taxation, employment laws, and foreign
currency fluctuation by the HR professionals. Moreover, the socio-economic conditions of the
country have to be taken into consideration while developing a compensation package. It is
easy to develop the compensation package for the parent country national but difficult to
manage the host and third country nationals. When a firm develops international compensation
policies, it tries to fulfil some broad objectives:
• The compensation policy should be in line with the structure, business needs and overall
strategy of the organization.
• The policy should aim at attracting and retaining the best talent.
• It should enhance employee satisfaction.
• It should be clear in terms of understanding of the employees and also convenient to
administer.
The employee also has a number of objectives that he wishes to achieve from the compensation
policy of the firm
• He expects proper compensation against his competency and performance level.
• He expects substantial financial gain for his own comfort and for his family also.
• He expects his present and future needs to be taken care of including children’s
education, medical protection and housing facilities.
• The policy should be progressive in nature.
Major Components in an International Compensation Package:
International Compensation is an internal rate of return (monetary or non-monetary rewards /
package) including base salary, benefits, perquisites and long term & short term incentives that
valued by employee’s in accordance with their relative contributions to performance towards
achieving the desired goal of an organization.

The following are the major components of an international compensation package.

1. Base Salary: This term has a slightly different meaning in an international context than
in a domestic one. In the latter case, it denotes the amount of cash compensation that
serves as a benchmark for other compensation elements like bonus, social benefits. For
the expatriate, it denotes the main component of a package of allowances directly

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 related to the base salary and the basis for in-service benefits and pension contributions.
Base salary actually forms the foundation block of the international compensation.
2. Foreign Service Inducement Premium: This is a component of the total
compensation package given to employees to encourage them to take up foreign
assignments. This is with the aim to compensate them for the possible hardships they
may face while being overseas. In this context, the definition of hardship, the eligibility
criteria for premium and the amount and timing of this payment are to be carefully
considered. Such payments are normally made in the form of a percentage of the salary
and they vary depending upon the tenure and content of the assignment. In addition,
sometimes other differentials may be considered. For instance: if a host country’s work
week is longer that of the home country, a differential payment may be made in lieu of
overtime.
3. Allowances: One of the most common kinds of allowance internationally is the Cost
of Living Allowance (COLA). It typically involves a payment to compensate for the
differences in the cost of living between the two countries resulting in an eventual
difference in the expenditure made. A typical example is to compensate for the inflation
differential. COLA also includes payments for housing and other utilities, and also
personal income tax. Other major allowances that are often made are:
• Home leave allowance
• Education allowance
• Relocation allowance
• Spouse assistance (compensates for the loss of income due to spouse losing their
job)
Thus, multinationals normally pay these allowances to encourage employees to take up
international assignments to make sure that they are comfortable in the host country in
comparison to the parent country.
4. Benefits: The aspect of benefits is often very complicated to deal with. For instance, pension
plans normally differ from country to country due to difference in national practices. Thus all
these and other benefits (medical coverage, social security) are difficult to imitate across
countries.
Thus, firms need to address a number of issues when considering what benefits to give and
how to give them. However, the crucial issue that remains to be dealt with is whether the
expatriates should be covered under the home country benefit programmes or the ones of the
host country. As a matter of fact, most US officials are covered by their home country benefit
programmes. Other kinds of benefits that are offered are:
• Vacation and special leaves
• Rest and rehabilitation leaves
• Emergency provisions like death or illness in the family
These benefits, however, depend on the host country regulations.
5. Incentives: In recent years some MNC have been designing special incentives programmes
for keeping expatriate motivated. In the process a growing number of firms have dropped the
on-going premium for overseas assignment and replaced it with on time lump-sum premium.
The lump-sum payment has at least three advantages. First expatriates realize that they are paid
this only once and that too when they accept an overseas assignment. So the payment tends to
retain its motivational value. Second, costs to the company are less because there is only one
payment and no future financial commitment. This is so because incentive is separate payment,
distinguishable for a regular pay and it is more readily for saving or spending.
6. Taxes: The final component of the expatriate’s compensation relates to taxes. MNCs
generally select one of the following approaches to handle international taxation.

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 • Tax equalization: Firm withhold an amount equal to the home country tax obligation
of the expatriate and pay all taxes in the host country.
• Tax Protection: The employee pays up to the amount of taxes he or she would pay
on remuneration in the home country. In such a situation, The employee is entitled
to any windfall received if total taxes are less in the foreign country then in the home
country.
7. Long Term Benefits or Stock Benefits: The most common long term benefits offered to
employees of MNCs are Employee Stock Option Schemes (ESOS). Traditionally ESOS were
used as means to reward top management or key people of the MNCs. Some of the commonly
used stock option schemes are:

• Employee Stock Option Plan (ESOP)-A certain nos. of shares are reserved for purchase and
issuance to key employees. Such shares serve as incentive for employees to build long term
value for the company.
• Restricted Stock Unit (RSU) – This is a plan established by a company, wherein units of
stocks are provided with restrictions on when they can be exercised. It is usually issued as
partial compensation for employees. The restrictions generally lifts in 3-5 years when the
stock vests.
• Employee Stock Purchase Plan (ESPP) – This is a plan wherein the company sells shares to
its employees usually, at a discount. Importantly, the company deducts the purchase price of
these shares every month from the employee’s salary.
Hence, the primary objective for providing stock options is to reward and improve employee’s
performance and /or attract / retain critical talent in the Organization.
Performance Management:

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International Industrial Relations:
Industrial relations refers to a set of phenomena, both inside and outside the workplace,
worried about identifying and managing the employment relationship. International Industrial
Relations (IIR) handles the complicated associations between employers employing foreign
nationals, employees of various nationalities, home and host country governing bodies and
trade unions of the organizations functioning in different nations around the world in addition
to their national & international federations.
Globalization and international trade has put stress on organizations to standardize practices
and policies. Globalization’s influences on Human Resource Management come through the
opening and penetration of economic systems to outside forces. This is certainly a two-way
procedure, with both local organizations and multinational corporations embrace one another’s
HRM practice.
What are the Key Issues in International Industrial Relations (IIR)?
Issue 1: Who should handle Labour Relations – Headquarter or the subsidiary in the
concerned country?
The national dissimilarities in economics, political, and legal systems create diverse labour-
relations system across countries, MNCs HQs typically delegate the control over labour
relations to their foreign subsidiaries. Having said that, the participation of the MNC
headquarters in host-country labour relations is impacted by 4 key elements:
1. In case there is a high level of inter-subsidiary production integration, the labour relations
function is centralised and is coordinated by the head quarter.
2. The nationality of ownership of the subsidiary has an influence on who should take care of
employee relations.
3. Furthermore, subsidiary character has a bearing on who should deal with employee relations.
4. Finally, where a subsidiary is dependent more on its parent company for resources, you will
see a greater corporate involvement in labour relations.
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Issue 2: Trade Union Tactics
Trade Unions make use of a number of tactics to deal with international business:
1. The most common one is ‘strike’. A strike is a concerted and temporary suspension of work,
intended to put pressure. Unions should be cautions prior to resorting to a strike in international
scenario because the bargaining power of a union could possibly be threatened or weakened by
the financial resources of an MNC. This is specially evident where a multinational firm uses
transnational sourcing and cross subsidization of its products or parts across different
international locations.
2. Form International Trade Secretariats (ITSs): There are Fifteen ITSs who help the exchange
of information. Main objective of ITSs is to accomplish transactional bargaining with the
MNCs.
3. lobbing for limited national legislations – Trade unions have for several years lobbied for
restrictive national legislation in the U.S. and Europe. Trade unions pursue restrictive national
legislation to avoid the export of jobs via multinational investment policies.
4. Intervention from the global body like ILO, UNCTAD, EU, OECD: ILO has issued
guidelines which cover disclosure of information, competition, financing, employment,
industrial relations, taxation, science and technology.
Issue 3: Political
There is little doubt that national industrial relations (IR) systems continue to be greatly
different. There are 3 faces of industrial relations which the international union movement
encounters in the international environment, specifically social democracy, neo-liberal and
authoritarian. The dissimilarities in national industrial relations systems are also mirrored in
the structure, power and status of individual actors in the system. For example trade unions
maintain a comparatively strong position within the Scandinavian IR model while their role is
a lot more limited in the US context. The international labour movement is usually prohibited
direct access to robust intergovernmental establishments like the WTO. So they have to depend
on national government to represent their interests to these institutions. Significantly, the
interests of government might not always be directly in-line with the union movement.
Issue 4: Social and Identity
A key problem with the international labour movement and specifically international collective
bargaining is the absence of identity that individual workers have with their international
associates. Additionally they see these peak associations to be a lot more conservative than
activists at the local level. Associated with this point, there is a common lack of solidarity
between actors at a national level. Additionally, there are endemic cultural, social and language
differences among individuals in different countries resulting in lowering the degree of a shared
identity between workers on an international level.
Issue 5: Power and knowledge
While labour’s power continues to be local in scope, capital has grown to become more global
in nature and decisions effecting workers are increasingly being made at a supra-national
level. The locus of Multinationals decision making stretches beyond national borders and key
facts are seldom transparent or accessible to trade unions. Additionally the well-rehearsed point
that multinational organizations can counter the strength of local unions by threatening to move
manufacturing to another place so that they can outmanoeuvre trade unions or following threats
of industrial action is significant.

UNIT-V

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MNCs and Compensation System across Countries. People Management in USA, Asia,
Europe, and Africa. Trends, and Future Challenges. Diversity – Norms, Benefits, and
Challenges.

International Compensation Management

Compensation management can be defined as the provisions of monetary and non-monetary
rewards, including base salary, benefits, perquisites, long and short-term incentives, valued by
employees in accordance with their relative contributions to MNC performance. Its broad HRM
purpose is to attract, retain and motivate that personnel required throughout the MNC currently
and in the future. Job evaluation is the means by which internal relatives and compensable
factors, those elements an individual's work role in the MNC and contribute to its performance
are determined.

Objectives of International Compensation Management

The objectives of compensation package of MNCs are presented in Figure below MNCS
manage the compensation and benefits with the following objectives.
1. Recruitment and Retention of suitable Employees
MNCs design and practice compensation and benefits in order to attract, and retain suitable
employees in terms of job efficiency and cultural adaptability.
2. Consistency and Equity
MNCs design the salary and benefits package to secure consistency between pay and
performance and equity among employees of different nationalities and categories, and
employees of subsidiaries and parent company.
3. Facilitate Mobility

MNCs design pay package in order to enable the employees to move from the parent company
to foreign subsidiaries and from one foreign subsidiary to another foreign subsidiar
4. Adaptability to Foreign Cultures and Environment
MNCs design pay package that motivates employees and his/her family members to willingly
adapt to the cultures and environment of the foreign countries. For example, providing
comfortable housing, highly reliable medical facilities, security facilities against odds and
international standards schooling facilities encourage employee's family members to adapt to
the foreign country cultures and environment and allow the employee to concentrate on the
job.
5. Organisational performance

MNCs pay package should work as motivator to enhance employee job performance, learning
latest skills and contribute to the enhancement of organisational performance. In fact,
performance based pay package enhances organizational performance.

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Importance of International Compensations
1. Attracting and Retaining Personnel
Most to attract and retain staff in the areas where the multinational has the greatest needs and
opportunities, hence must be competitive and recognize factors such as the incentive for
Foreign Services, tax equalization, and reimbursement for reasonable costs.
2. Optimizing Cost of Compensation
It is to facilitate the transfer of International employees in the most cost-effective manner for
the firm. Compensation management aims at optimizing the cost of compensation by
establishing some kind of linkage with performance and compensation. It is not necessary that
a higher level of wages and salaries will bring higher performance automatically but depends
on the kind of linkage that is established between performance and wages and salaries:
3. Consistency in Compensation
It means to be consistent with the overall strategy, structure and business needs of the
multinational. Compensation management tries to achieve consistency-both internal and
external in compensating employees. Internal consistency involves payment of the basis of
criticality of jobs and employees' performance on jobs. Thus higher compensation is attached
to higher-level jobs. Similarly, higher compensation attached to higher performers in the same
job. External consistency involves similar compensation for a job in all organizations. Though
there are many factors involved in the determination of wage and salary structure for a job in
an organization which may result into some kind of disparity in the compensation of a particular
job as compared to other organization, compensation management tries to reduce this disparity
4. Motivating Personnel
Compensation management aims at motivating personnel for higher productivity. Monetary
compensation has its own limitations in motivating people for superior performance.

Major Components in an International Compensation Package International Compensation is

an internal rate of return (monetary or non monetary rewards / package) including base salary,
benefits, perquisites and long term & short term incentives that valued by employee's in
accordance with their relative contributions to performance towards achieving the desired goal
of an organization.

The following are the major components of an international compensation package.

1. Base Salary
This term has a slightly different meaning in an international context than in a domestic one.
In the latter case, it denotes the amount of cash compensation that serves as a benchmark for
other compensation elements like bonus, social benefits. For the expatriate, it denotes the main
component of a package of allowances directly related to the base salary and the basis for in-
service benefits and pensioncontributions. Base salary actually forms the foundation block of
the international compensation.
2. Foreign Service Inducement Premium
This is a component of the total compensation package given to employees to encourage them
to take up foreign assignments. This is with the aim to compensate them for the possible

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hardships they may face while being overseas. In this context, the definition of hardship, the
eligibility criteria for premium and the amount and timing of this payment are to be carefully
considered. Such payments are normally made in the form of a percentage of the salary and
they vary depending upon the tenure and content of the assignment. In addition, sometimes
other differentials may be considered. For instance: if a host country's work week is longer that
of the home country, a differential payment may be made in lieu of overtime

People Management:
Your employees are the biggest asset you have. Their performance and attitude can
result in the success or failure of your business. The most difficult part of any manager's job is
people management. He or she is required to lead, motivate, train, inspire, and encourage. On
the other hand, he or she is also responsible for hiring, firing, disciplining, training and
evaluating. These functions seem to be at odds, but a successful manager can integrate both the
positive and negative aspects of these tasks to create a positive, productive work force.

People management, also known as human resource management (HRM), encompasses the
tasks of recruitment, management, and providing ongoing support and direction for the
employees of an organization. These tasks can include the following: compensation, hiring,
performance management, organization development, safety, wellness, benefits, employee
motivation, communication, administration, and training.

When managing the people within an organization, a manager must focus on both hiring the
right people and then getting the most out of these people. New personnel must provide the
organization with the best talent available that meets the needs of the business. The
organization must look ahead to how a new employee can be used to their fullest. Getting the
most out of an employee means a business has consistent policies and practices in place to
provide its people with appropriate training and development. Employees are involved as
"partners" in the business.

Probably the most important task a manager will face when dealing with the people under his
direction is that of bringing out the best in them. Unlocking people potential is often seen as
the key to any business's success. When an employee's talents are not channeled correctly, their
behavior can seriously compromise the success of an organization. Some of the roles that an
employee who is not being used to his potential can take on are as follows: procrastinator,
martyr, gossip, manipulator, backstabber, and narcissist, a deer in the headlights, black hole,
stonewalled, curmudgeon, bully, and predator.

Instead of dealing with employees that develop defense mechanisms to mask their
dissatisfaction with their work situation, let's look as some ways to encourage effective
behavior at work. After a problem behavior has been identified, address the employee
immediately. Discuss taking responsibility for the ineffective behavior, how the behavior
manifests itself, and the effect the behavior is having on the organization. Next, give the
employee alternatives to his current behavior. In other words, teach him or her how the
principles of achievement

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* cooperation * respect * self-motivation * trust * self-discipline
Now that the employee has alternatives to their current behavior, draw up a performance
improvement contract in which he or she agrees to specific actions to change his or her
ineffective behavior. After the contract is signed, a manager needs to stay involved and
committed to the process of change. He or she cannot assume that the problem will be
automatically fixed now that it has been brought to light. The employee will require praise and
reinforcement of any progress that they are able to make. If positive change is to occur, it will
be evident soon after the initial confrontation. If this does not occur, a termination meeting
must be scheduled quickly. One employee's toxic behavior can quickly spread throughout an
organization if it is not dealt with quickly and efficiently.

When evaluating an organization's workforce, there are several areas that must be addressed.
First, the staff must have the tools and resources that they need to do their jobs effectively.
Employees cannot be blamed for an organization's inefficiency if they are not provided with
the equipment necessary to perform adequately. Next, get to know each employee as an
individual and make sure that they are aware of their specific role within the organization.
Clarify their responsibilities and goals. Also, involve each employee in making decisions which
affect their area of expertise. This will result in the employee feeling that they "have a say" in
what goes on in the organization and he or she will feel a sense of ownership. Finally, make
sure that employees have an opportunity to have fun with their co-workers at appropriate times.

People Empowerment can be a very effective tool within the field of people management. This
technique can be used to involve employees in any improvement program within an
organization. Authority, accountability, and responsibility are delegated to the employees for
improving the processes which are under their control without first having to obtain permission
from management before making changes. This can be successful only when employees are
recognized, congratulated, and rewarded for their commitment to problem solving.
International human resources management trends:
International HRM places greater emphasis on a number of responsibilities and
functions such as relocation, orientation and translation services to help employees adapt to a
new and different environment outside their own country.
Selection of employees requires careful evaluation of the personal characteristics of the
candidate and his/her spouse.
Training and development extends beyond information and orientation training to include
sensitivity training and field experiences that will enable the manager to understand cultural
differences better. Managers need to be protected from career development risks, re-entry
problems and culture shock.

To balance the pros and cons of home country and host country evaluations, performance
evaluations should combine the two sources of appraisal information.

Compensation systems should support the overall strategic intent of the organization but should
be customized for local conditions.
In many European countries - Germany for one, law establishes representation. Organizations
typically negotiate the agreement with the unions at a national level. In Europe it is more likely
for salaried employees and managers to be unionized.

HR Managers should do the following things to ensure success-

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Use workforce skills and abilities in order to exploit environmental opportunities and neutralize
threats.

Employ innovative reward plans that recognize employee contributions and grant
enhancements.

Indulge in continuous quality improvement through TQM and HR contributions like training,
development, counselling, etc.

Utilize people with distinctive capabilities to create unsurpassed competence in an area, e.g.
Xerox in photocopiers, 3M in adhesives, Telco in trucks etc.
Decentralize operations and rely on self-managed teams to deliver goods in difficult times e.g.
Motorola is famous for short product development cycles. It has quickly commercialized ideas
from its research labs.

Lay off workers in a smooth way explaining facts to unions, workers and other affected groups
e.g. IBM, Kodak, Xerox, etc.

HR Managers today are focusing attention on the following:

• Policies- HR policies based on trust, openness, equity and consensus.

• Motivation- Create conditions in which people are willing to work with zeal, initiative
and enthusiasm; make people feel like winners.

• Relations- Fair treatment of people and prompt redress of grievances would pave the
way for healthy work-place relations.

• Change agent- Prepare workers to accept technological changes by clarifying doubts.

• Quality Consciousness- Commitment to quality in all aspects of personnel

administration will ensure success.

Due to the new trends in HR, in a nutshell the HR manager should treat people as resources,
reward them equitably, and integrate their aspirations with corporate goals through suitable HR
policies.

International human resources management future challenges:

• Different labour laws
• Different political climate
• Different stage(s) of technological advancement
• Different values and attitudes e.g. time, achievement, risk taking
• Roles of religion e.g. sacred objectives, prayer, taboos, holidays, etc
• Educational level attained
• Social organisations e.g. Social institutions, authority structures, interest groups, status
systems.

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Diversity defined

Diversity in the workplace is one of the most discussed issues in HR circles nowadays. It is
often the focus of the strategy and KPIs of HR and Talent Acquisition teams worldwide. But
what does it mean exactly? What does “diversity in the workplace” encompass?

Diversity can be defined as “the spectrum of infinite dissimilarities that distinguish individuals
from one another”. Diversity can mean variety or multiformity and refers to biological or
genetic predispositions (“nature” factors, often referred to as inherent diversity) as well as to
experiences gained throughout one’s life (“nurture” factors, often referred to as acquired
diversity).

Let’s see now how this translates in the workplace. Organizations strive for diversity by
recruiting and hiring employees of different backgrounds, comprising a diverse team of people
that reflects the diverse society in which it exists and operates.

As our society evolves and becomes more social aware, more and more types of diversity
emerge. These are the main types of diversity in the workplace:

• Cultural diversity

• Racial diversity

• Religious diversity

• Age diversity

• Sex / Gender diversity

• Sexual orientation

• Disability

However, there are more than 34 different factors connected with diversity, including cognitive
abilities, education, gender expression, income, language, political beliefs, socio-economic
status and many more. For those curious, a more extensive list can be found here.

At this point it is important to highlight that hiring and building diverse teams doesn't mean
hiring someone because of their skin color, their gender etc., or showing preferential treatment
to underrepresented groups. As Workable very accurately puts it, “diversity in the workplace
is about providing equal opportunities so that employers can discover and work with
talented people from all walks of life—not just those who attended the best universities, have
the most prestigious connections, or are most likely to be your drinking buddies after work”.

The importance & benefits of workplace diversity

Of course this all sounds great, but what are the actual benefits of building a diverse team?

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To start with, diversity is an integral part of our society. As social awareness increases day by
day, it is important to accept and promote the values of diversity, inclusion and equality and
hold organizations -and each other- accountable.

However, diversity is not just a "sign of the times" that makes companies look more likable. It
is actually good for business. That is what IBM has realized by embracing diversity for “good
business, not good philanthropy”. The many advantages of workplace diversity
include increased productivity, more efficient problem-solving abilities and financial
growth.

Need proof? Here are a few figures showcasing the benefits of a diverse workplace:

Revenues and profits: Diversity is linked with higher revenues and profits. More specifically,
for ethnically-diverse companies there is a 35% higher likelihood and for gender-diverse
companies there is a 15% higher likelihood to produce higher revenue. In addition, racially and
ethnically diverse senior boards are linked with a 0.8% increase in profits in the US and 3.5%
increase in the UK.

Corporate innovation: There is a scientifically proven positive relationship between diversity

and corporate innovation. More specifically, diverse organizations are almost twice as likely
to be innovation leaders, due to the constant exchange of ideas and experiences of their
multicultural employees.

Recruitment and retention: More than half of employees and job seekers take diversity of
their workplace into consideration, which affects recruitment and retention. Two-thirds of
candidates also report that diversity is a decisive factor in evaluating job offers while
employees appear 80% more likely to rank their employer as high performing when their
organization is diverse and inclusive. Not to mention the connection of a diverse workplace
with higher work satisfaction, employee morale and engagement. This helps organizations
build a good reputation, which, in turn, helps attract and retain more talent.

Lower turnover: Taking into consideration that turnover rates are higher in women and
minorities, especially in mostly homogenous companies, investing in diversity can result in

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lower turnover. Simply put, employees who feel appreciated and are given equal opportunities
in their workplace will be more loyal and less likely to resign.

Product development: Diversity can also positively affect product development. That’s
because a diverse team reflects the real world more accurately and is more aligned with a
broader market and global customer base. L’Oréal, for example, is able to successfully launch
several new and culturally relevant products on a regular basis, by having a multicultural team
in charge of product development.

Facing the challenges of workplace diversity

As convincing as these arguments may sound, there is of course always a challenge. Building
a diverse organization doesn’t stop at hiring multicultural and diverse employees. Obstacles
and conflicts will inevitably arise, in the form of the following:

Communication: Communication issues are of course the first that come to mind. Not only
are there language barriers within multicultural teams, but there is also the case of gender or
generation gaps when it comes to communicating and working together.

Too many opinions: As good as many different opinions may be for an organization’s
innovation, there is such a thing as choice overload. Too many voices can hamper reaching a
consensus and many innovative solutions are in risk of going unnoticed amongst the plethora
of different ideas.

Diversity implementation challenges: Building a diverse team and culture may sound
intuitive, but the implementation might not be as easy. For example, 41% of managers,
including CEOs, appear to be “too busy” to focus on diversity initiatives. When management
itself doesn't dedicate the desired or needed attention to diversity plans, then the
implementation of those plans can become problematic. Frustration can come from every side
-management and employees- when the process is not smooth, especially when that process
requires them to change their habits.

Retain bad talent: Trying to build and retain a multicultural team can backfire when an
organization potentially holds on to poor performers due to their diverse background. In such
cases, diversity figures might stay high for the organization, but productivity, morale and
innovation decrease.

In order for a diverse team to succeed, these challenges need to be acknowledged and dealt
with. If not, diverse team members will not have the resources and support in order to contribute
as expected. As a result, they may ultimately become disengaged and resign.

To avoid these issues and overcome the challenges of workplace diversity, an inclusive
culture within which the team members can thrive is necessary. Be careful not to confuse
diversity with inclusion: Diversity refers to the traits that render an individual unique, while
inclusion refers to the behaviors and social norms that ensure people feel welcome. In
short, “diversity is what you have; inclusion is what you do with it”. Building an inclusive
work environment means that all employees will need to actively work towards understanding
and altering their unconscious biases, stereotypes and attitudes towards others.

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One way that diversity and inclusion can be more efficiently achieved, is to establish specific
people or teams (e.g. a D&I Manager) dedicated to designing and maintaining anti-
discrimination policies, as well as to ensuring equal treatment of all employees.

Examples of such policies could be agreeing on and utilizing a common, inclusive language in
the workplace, offering diversity and awareness training to all employees -and especially
managers- and even highlighting inclusion as part of the company’s values. It is also important
to communicate all processes and changes with employees and don’t rush the diversity plans
to ensure that the transition goes as smoothly as possible.

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