factors

467 PART 5 Meeting Other HR Goals

t*2 ldentify the factors that most strongly influence HRM in internationai ma rkets.

work together ro improve the quality of decision making. The participants from vari- ous counrries and cultures contribute ideas from a position ofequality, rather than the parent country's culture dominating.

Faetsrs Affeeting hlR,lt in Interr:aticnal |*tarkets Whatever their level of globai participation, organizations that operate in more than one country must recognize that the countries are not identical and differ in terrns of many factors. To simplify this discussion, we focus on four major factors:

r culture r education o econornic systems . political-1egal systems

Culture By far the most important influence on international HRM is the culture of the coun- try rn rvhich a faciliry is located. Cultwe is a cornmunity's set of shared assumptions abour how the world works and u,hat ideals are rvorth striving for.7 Cultural influ- ences may be expressed through custolns, languages, religions, and so on.

Culture is important to HRM for tu'o reasons. First, it often determines the other three international influences. Culture can greatly affect a country's larvs, because iarvs often are based on the culture's definitions of right and wr,rng. Culture aiso influ- ences whar people value, so it affects peoplet economic systelns and efforts to invest in education.

Even more important for understanding human resource management, culture often deterrnines the effectiver-ress of various HRM practices. Practices that are effec- rir.e in the United States, for example, rnay fail or even backfire in a country with different beliefs and values.s Cor-rsider the five dirnensions of culture that Geert Hofstede identified in his classic study of culture,e

l.Indiuidtnlismlcollectiyism describes the strength of the relation betr.r'een an indi- vidual and other individuals ilr the society. In cultures that are high in individuai- ism, such as the United States, Great Britain, and the Netherlands, people tend to think and act as individuals rather than as members of a group. People in these countries are expected to stand on their own two feet, rather than be pro. tected by the group. In cukures that are high in collectivism, such as Colombia, Pakistan, and Thiwan, people think of themselves mainly as group members. They are expected to devote themseives to the interests of the comrnunity, and the community is expected to protect thern when they are in trouble.

T.Powet'distance concems the way the cukure deals with unequal distribution of power and defines the amount of inequality that is normal. ln countries with large power disrances, including india and the Philippines, the culture defines it as normal to maintain large differences in porver. ln countries with srnall power disrances, such as Denmark and Israel, peopie try to eliminate inequalities. One way to see differences in power distance is in the way people talk to one another. In the high.power-disrance countries of Mexico and Japan, people address one another rvirh titles (Seflor Srnith, Smirh-san). At the otfier extreme, in the United States, in most situations people use one another's first names-behavior that would be disrespectful in other cultures'

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3. L|ncertaintl avoidance describes how cultures handle the

fact that the future is unpredictable' High uncertainly avoidance refers to a strong cultural preference for struc- tured situations. In countries such as Greece and Portugal, people tend to rely heavily on religion,,larv, and technology

io giu" them a degree of security and clear rules aboul how

to behar,.. In countries with low uncertainty avoidance' including Singapore and Jamaica, people seem to take each

day 25 i1 comes.

4. Masculinitylfemininity is the emphasis a cuiture places on pnctices oi qu"liti"t thar have ttaditionally been consid- ired mascuiine or feminine' A "ntasculine" culture is a cul-

ture that values achievement, money making, assertiveness'

,U ."-p"tition. A "felninine" culture is orle rhat places

""f'rrgi-, trft" on relationships, service' care for the rveak'

u.a"pr"r.rt'ing the environment' ln this model' Germany

l,.,Ji;;;";.?*u*ptt' of *u"ttii'-'" cultures' and sweden and

ln Taiwan, a country that is high in collectivism'

co-rvorkers consider themselves more as group

nrernbers instead of individuals'

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n ll

ples of feminine cultures'

5. Long-termlrtrorurrr^"oiiunr4tion suggesrs rvhether the focus of cu1t,rral r'alnes is on

the future (lor-rg ,"r*i o", iir" p*r??,a present (short term). cultures u'ith a long'

rerm orientation value saving ancl persistence, rvhich tend to pay off in tl-re future'

Many Asiar-r countries, incluling Japan and China' have a long'terrn orientation'

Short_terrn ori.r-rrurior-rr, ^, i" ir-r. .irrtures of the United states, Russia, and west

Africa, promore ;;;; f..p"r, tradition and for fuifilling sociai obligatio^s ir-r

the present.

Such cultural characterrstics as tl-rese influence the ways members of an organization

behave toward orr" "r-ro,h.r,

as weil as their attitudes totvard vafious HRM practices'

For insrance, cultures differ strongly in their opinions about how managels sl-rould

leacl, how decisions ,f-r."iJU. f-t""?i"d, and what motivates employees' In Germany'

managers achieve their status by dernonstrating technical.skills,-and employees look

ro managers to assign asks and resolve re.h"r-ri."l problems- In the Netherlands'

;r;;;;."i;;*." ritittg "e""tt"1;,^txchanging 'iervs' and baiancing the interests

of the people affected ;;; #;;;;.fr Cl.urly, iiffl."r-'.., like.these 'r'ould affect l'rorv

^" .rg""""rion selects and trains its nanagers and measures their performance'

Cultures strongly influence the appropriateness of HRM practices' For example'

the exrenr to .,r,hich " ."tr"r" o inditrdlalisr or collecrivist will affect the success

of a compensarion program. Compensation tied to individual performance may be

seen as fairer ar-rd ,no.""*oit.,uJ"g Uy *"-lers of an i.dividualist cuiture; a culture

favoring individualism wili be ,]roi=" u.."p.ing of grbat differences in pay between the

organizario.r,r l-,igh.rt- il f;;;;rid "*plly."i. Collecti'ist cultr'rres tend to have

much flatter PaY structllres'

Job design aimed at employee efrlpowerment can be problematic in cultures with

higfi,,pou,er distance.,' In a Mexican ,lipp".-*ur-rrrfacturing plant, an effort to expand

the decision-making ""ifr..iiv .i p.od.r.rior', workers stumbled when the workers

balkeil ar doing rvhar they saw as the supervisor's proper -re-sponsibility'i1 Realizing

they hacl mo'ed too quickiy, the plant's nra'ug"* tu"-u"*h"-,::"p" of the workers'

decision.makir-rg uuthJrJv it'ri't"v ."rfa adapi ro rhe role. On the other hanc{' a fac-

tor in favor of "*po*".-ent at ti-iat plant was the Mexican culture's high collectiv-

isrn. The ,,vorkers iit.Jdir.',"ri'g team-related information and using the infortnalior-r il

4

*

464 PART 5 Meeting Other HR Goals

cuitural differences

organlzatlon.

to benefit the entire tean. As in this example, a culture does not nece$sariiy rule out a particuiar HRM practice, such as employee empowerment, but it sholrld be a consid'

"r"tion in deciding ho* io carry out ih.'p.*.tice.

Finally, cultural differences can affect horv people communicate and holr, rhey coordinare their activities. In collectivist cr-rltures, people tend to v{lue grotrp deci- sion making, as in rhe previous example. When a person raised in an individualis- tic culture must work closely with people from a collectivist culture, dommunication problems and conflicrs often occur. People from the collectivist cultlrre tend to col- iaborate heavily and may evaluate the individualistic person as unwilling to cooperate and share information with them. Cr-rltural differences in communicalion affected the $,ay a Norrh American agricultural company embarked on e*pioye{ elnpowerment at irs facilities in t he United States and Brazil.lz Empowerment reqr-ri]res information sharing, but in Brazil, high power distance leads ernpioyees to exp€ict managers to make decisions, so they do not desire information that is appropriate[y held by man- agers. Empowering the Brazilian employees required invoiving *"r't{g"tt directly in giving and sharing information to show that this practice was in keepifrg with rhe tra- ditional chain of command. Also, because uncertainty avoidance is airother aspect of Brazilian culture, managers explained that greater information sharir{g would reduce uncertainry abour their work. Ar the same tirne, greater coliectivisrr] in Brazil made employees cornfortable with the day-to-day cornmunication of tearnr]vork. The indi- vidualistic U.S. employees needed to be sold more on this aspect of empowetment. The "HR Oops!" box describes another example of miscommunicatiotr resulting from

Em sior wer res( con sian senl and hear matt the turn(

A: empl lem.' unde busin off ee risks

Because of these challenges, organizations must prepare managErs to recognize and handle cultural differences. They may recruit managers wi*1 knowledge of other cultures or provide trainir-rg, as described later in the chapt{r. For expatri- ate assignments, organizations may need to conduct an extensive sdlection process

to idenlify individuals who can adapt to new environmenls. At thp sarne time' it is important to be wary of stereotypes and avoid exaggerating the importance of cult,,,ial differences. Recent research ti-rat examined Hofstede's rnQdel of cultural differer-ices found that differences among organizations within a pafticular culture were sometimes larger than differences from country to country.ls Tfris finding sug' gests that it is importanr for an organization to match its HR pracriqes to its vaiues; i*ndivlduals *ho

'ha'" those valu-es are likely to be interested in t]'orklttg for the

prlmar withor is sign

Cor able er and th, educat, In cont countrj

Econr A corrnt involver activirie

As lv are likel developi opportur students for incre their edu

The i oped cor shor.v up

Education and Skitl Levets Counrries also differ in the degree to which their'labor markets lnclilde people u'ith education and skills of value to employers. As discussed in Chaptet 1, the Unired States suffers from a shortage of skilied rvorkers in many occupationN, and the prob- lem is expected to increase. For example, the need for knowledge wor|<ers (engineers,

te:rchers, scientists, health .ur" *ork"rr) is expected to grow almost twice as fast as rhe or.erali rate of job growth in the United Stut.s.14 On the other l,rand, the labor narkers in rnany countries are very attractive because they offer higfr skills and low \\'ages.

E.lucational opportunities aiso vary from one country to another. In general, spend-

ing on education is greater per pupii in high-income countries than in pooref coun- t.i,.r.15 Poverry, diseases such as AIDS, and political turmoil keep children away frorn

scfiool in some areas. A concerted international effort to provide universal access to

rule out a a consid-

hou' the), :oup cleci- lividualis- runication r-rd to col- coopetate {ected the o\vefmenI formation 1llagers to d by rnan- -lirectiy ir-r rh the tra- r aspect of rui.l reduce rir.-il made T1're indi-

-)\\'e r1TIe11t.

ritir-rg froin

recognizc

'ii'ledge of rl expa[li- Jl-r process 1e ti1ne, it rrtance of rf cr,rltr-rral lar cr.rltr,rre ncling sug- its valnes; ng for the

eople rvith he UrLited I the prob- .engineers, : as fast as , the labor ls ancl low

ral, spend- Oref colrll- au'ay frclm rl access to

Employees in the British divi- sion of an oil and gas company were frustrated. TheY carefullY researched ideas for where to conduct exploration in the Per- sian Gulf.TheY wrote rePorts Pre- senting their recommendations and sent them to the company's headquarters in Texas- But no rnatter what theY recommended, the British division's ideas were turned down.

As it turned out. the British employees had a cultural Prob- lem. TheY were using the careful, understated language of their business culture' TheY started off each report bY identifYing the risks of the Proposal. Next, theY

laid out historical background' Finally, at the end of the report. the writers presented the possible opportunities.

Back in Texas, management had the optimistic, can-do sPirit typical of U.S. business culture' Theywere looking forthe positives

and exPected ProPosal writers to actively sell them on exPloration ideas. Without that message, the managers at headquarters con- cluded that the ProPosals must not be verY attractive' When the British team learned to reorganize

and rePhrase their reports for an American audience, theY started winning aPProvals.

Source:Based on Jill Rose, "Cioba:

Mindset, " Ame rican Executive, Ja:"=-' 2010, pp. 7-9.

Ouestions

1. ln this examPle, who made a mistake-the writers of the proPosal or the readers of the proPosal? WhY?

2. lmagine You are involved in recruiting a manager for a British facilitY of Your companY. Based on the

examPle given here, what

cultural differences in

communication might You expect, and how might theY

aff'ect Your search for qualifiei candidates in Britain?

prifirary education has dramatically reducetl the ni-nnber and proportionof children

without access ro ,.nooti'ri.-fto*"u"r, ,1-r",prob1"t',t persists in s'-rb'saharan Africa and

is sigrrilicant brrr dcclining in South Asia'" l .l ..-- r;- I ..;. Cornpanies witl-r foreig"n operariolls io.nt. irt .o.,nt.i"s rui-r"r" ih"y aan find Siiii-

able "mployees.

The .d.r".ntfor', and skill levels of a countty's iabor force affect horv

a1d rhe extent to which companies \vant to operate there. In countries with a poorly

eclucated population, .o*pu,]i., rvill lirnir their activities to lorv-skili, low-wage jobs'

lr-, .or-rtrurt, ir-rdiu', large pool of well-trainecl technical workers is one teason that the

coLlntry has becone u-pop'-,|r. location for outsottrcing colllptlter programming jobs'

Economic SYstem A co6ntry's economic system, rv|ether capitalisr or socialist, as wcll as the governrnent's

involvernent in the economy throltgh ,u*", o. cornpensatiotl, price controls, and other

ul,r,,i,i"r, influeirces hurnan resource lnanagement practices in a number of r'r'ays'

As lvith all aspects of a region's ot country's life, the economic system and c'-rlture

u." i,t lLy tc, b. closely ried, pror,iding many of the incenri'es or disincentives for

.1..,.1npir-rg the value of the'i"bo. for.". Socialist economic systems provide ample

.pp"t-ir"iii"s for edr-rcational development because the education system is free to

stlrcients. Ar the same tilne, socialisrn may not provide economic rewards (higher pay).

for ir-icreasing one's "at't"'io^' ln capitalist ')"t"'.',t'

str-rdents-bear more of the cost of

their ed.rcatiln, br-rt employers rer'vard those q'ho invest in edtrcation'

The healtir ,-,,r *r-r ".Jr.Io*o systerrr affects humar1 resource lnallagement' in devel-

op*l -.orr'rries

rvith gr"u, ru"ulrh, labor costs are relatively high' Such differences

shoi.v up in compensat;on systems and in recrtriri'g ar-rd selection clecisions'

A AC,

466 PART 5 Meeting Other HR Goals

Students at the University of Warsaw in Poland are provided with a government-supported educatior. in general, former Soviet bloc countries tend to be generous in funding education, so they tend to have highly educated and skilled labor forces. Capitalist countries such as the United States generally leave higier education up to individual students to pay for, but the labor market rewards students who eam a college degree.

In general, socialist systems take a higher per- centage of each worker's income as the worker's income increases. Capitalist systems tend to let workers keep more of their earnings. In this way, socialism redisffibures wealth from high earners to the poor, while capitaiism apparently rewards individual accomplishments. In any case, since the amount of take-home pay a worker receives after taxes may thus differ from country to country, in an organization that pays two managers in two coun- tries $100,000 each, the manager in one country might take home more than the manager in the other country. Such differences make pay structures more complicated when they cross national bound- aries, and they can affect recruiting of candidates from more than one country.

Political-Legal System A countryt political-legal system-its government, laws, and regulations-strongly impinges on human resource management. The country's laws often dic- tate the requirements for certain HRM practices, such as training, compensation, hiring, firing, and layoffs. As we noted in the discussion of culture, the political-legal system arises [o a large degree from

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the culture in which it exists, so laws and regulations reflect cultural values. For example, the United States has led the world in eliminating discrimination in

the workplace. Because this value is important in U.S. culture, the nation has legal safeguards such as the equal employment opportunity laws discussed in Chapter 3, which affect hiring and other HRM decisions. As a society, the United Sutes also has strong beliefs regarding the fairness of pay systems. Thus, the Fair Labor Standards Act (discussed in Chapter 11), among other iaws and regulations, sets a minimum wage for a variety of 1obs. Other iaws and regulations dictate much of the process of negotiation between unions and management. All these are examples of laws and regulations that affect the practice of HRM in the United States.

Similarly, laws and regulations in other countries reflect the norrns of their cul- tures. In Westem Europe, where many counlries have had strong socialist parties, some iaws have been aimed at protecting the rights and benefits of workers. Until recently, workers in Germany and France had 35-hour workweeks, but under grow- ing pressure to adopt the "Anglo-Saxon model" emphasizing productivity, many have made concessions. The European Union's standard permits workweeks of up to 48 hours.17

An organization that expands internationally must gain expertise in the host country's legal requirements and ways of dealing with its legal systgm, often iead- ing organizations to hire one or more host-country nationals to help in the process. Some countries have iaws requiring that a certain percentage of the ernployees of any foreign-owned subsidiary be host-country nationals, and in the context of our discus- sion here, this legal challenge to an organization's HRM may hold an advantage if handled creatively.

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