BUS401 CASE, SLP and TD

Module 1 - Home

Culture and Human Resource Management

Modular Learning Outcomes

Upon successful completion of this module, the student will be able to satisfy the following outcomes:

•Case ◦Explain the importance of cross-cultural awareness in international management situations.

◦Develop an awareness of the strategic importance, as well as challenges of global/international human resource management.

◦Discuss the main policies and practices associated with global/international human resource management.

•SLP ◦Analyze and identify the main national culture attributes of a given country.

◦Examine the potential impact on culture on doing business within a given country.

•Discussion ◦Examine the concept of culture, cultural differences, cultural awareness and their importance with regard to managing and preventing cultural mistakes.

Module Overview

In this module we will be looking at the human aspect of international business. At the “big picture” level we will be looking at national culture differences and how this impacts your dealings with individuals from other cultures when doing business or managing employees. At the more practical level, we will be looking at international human resource management.

National Culture

Culture is one of the most complex and dynamic topics which multinational firms need to understand if they are to succeed in doing business in both developing and developed nations around the world. Values, customs, common practices, beliefs, and indeed perceptions vary within the numerous subcultures of a nation, making the study and understanding of culture critical to market expansion and other international business activities. In short, it is the cultural differences that make a difference.

Everything from the desire to help, respect for authority, expectations of management and control, and differing definitions of truth telling and honesty change from culture to culture. Commitment to gender equality is likely one of the most dramatically different values held in various cultures. Understanding these differences, and accounting for them, is rapidly becoming of the utmost importance.

•Power Distance addresses the equality or inequality characterizing a culture as it is reflected in approaches to management. More "power distance" implies a more autocratic system where a great deal of respect is given to rank and authority, such as in China, Indonesia, and Russia. By contrast, in the US, the power distance is small, reflecting equality and "participative management".

•Individualism refers to whether individuals prefer to function as individuals (United States) or as groups (Asia).

•Masculinity versus Femininity denotes the degree to which a culture is more aggressive and competitive (masculinity) or more nurturing (femininity). This also depends on the percentage of women in management.

•Uncertainty Avoidance focuses on people's preference for structured environments versus ability to manage uncertainty. The former have a harder time dealing with change (Japan, France, Russia). The latter are more open to change and more entrepreneurial (Hong Kong, United States).

International Human Resource Management

International human resource management is a very critical function of an international company. While HRM functions generally remain the same as for domestic companies, the challenges become much more complex, due to various cultural differences and international factors such as values and laws.

As a result of such variations, different countries have different perceptions of Human Resource (HR) policies and functions. While some local offices perceive HR as a strategic partner, others see it as a stereotypical "personnel department" that handles routine paperwork. HR in the United States emphasizes payroll and other transactions. In the United Kingdom, payroll is often outsourced; HR focuses on personnel planning, training and other non-transactional processes. Hence, the vision of what HR is will vary from country to country and from company to company.

International employees fall into three categories:

•expatriates,

•host-country (local) nationals;

•third-country nationals.

An expatriate is an employee who is a citizen of the country where the headquarters of the company are located but not a citizen of the country where his/her subsidiary or unit is located.

A host-country or local national is a citizen of the country where the subsidiary or the unit is located, but not a citizen of the country where the headquarters are located.

A third-country national is a citizen of a country, who is neither a citizen of the country where the company is headquartered, nor of the country where the subsidiary/subunit is located, and who works for the subsidiary.

HR management must create the individual capabilities and behavior required by that environment. Examples of such capabilities include experience with and knowledge of the conduct of business across national borders. Examples of such behavior include interpersonal effectiveness in general and the display of cultural sensitivity in particular. Knowledge of local laws and business practices may call for hiring local nationals. Whereas, if the language of international clients with whom a firm is doing business is English, then local personnel will need to be bi-lingual or the USA firm will need expatriates.

Capabilities adaptive for the global environment may be assured by actively looking for them during the recruitment, selection, and assignment process. Behaviors useful for the international environment may be nurtured through the design and implementation of suitable performance evaluation and reward systems. In short, all aspects of HRM from selection of personnel to evaluation and pay are influenced by the cultures and places where a firm does business.