CROSS CULTURAL HRM

 More HR activities: taxation, culture orientation,

administrative services orientation, administrative
services
 The need for a broader perspective: Pay policy, admin
policy, cultural factor
 More involvement in employees’ personal lives:
adjustment, spouses, children lives
 Changes in emphasis as the workforce mix
of expatriates and locals : cross cultural training, pre
departure training
 Risk exposure: unfair hiring practices, expatriate
failure, terrorism
 Broader external influences: type of government,
state of economy, government regulations.
 Cultural dynamics or cultural change can be of two
types:
 change from within (“internal change” or
“independent origin”)
 change from outside(cultural borrowing (“change
from outside”)
 The sources of change can be attributed either to
◦ Innovation
◦ discovery
◦ invention
 Understand the current culture
 Decide on new culture
 Make individuals understand
 While an organization strives to attain its
business objectives and meet its corporate
goals, it must assess whether its culture is
appropriate to take the actions necessary to
achieve these goals.
 Enables a company to determine the gap
between its current culture and the culture it
needs to succeed.
 This gap analysis can be used to
◦ Design tools
◦ interventions
◦ processes to create and guide cultural change
 Kim S. Cameron & Robert E. Quinn Model -Competing
Values Framework
 Four dominant culture types (i.e., clan,adhocracy,
market, and hierarchy)
 Clan: It focuses on internal issues and values flexibility
and discretion rather than seeking stability and control.
 Hierarchy: An organization that focuses on internal
maintenance with a need for stability and control.
 Adhocracy: The focus is on external issues and values
flexibility and discretion rather than seeking stability
and control;
 Market: An organization that focuses on external
maintenance with a need for stability and control.
 A. Cooke & J. C. Lafferty Model -The Organizational
Culture Inventory (OCI)
 12 sets of normative beliefs refer to 12 different
cultural styles.
 Humanistic-Encouraging: Members are expected to
be supportive, constructive, and open to influence
in their dealings with one another.
 Affiliative: Members are expected to be sensitive to
the satisfaction of their work group
 Approval: Members are expected to be friendly,
and cooperative to the satisfaction of their work
group.
 Conventional: Members are expected to conform,
follow the rules and make a good impression.
 Dependent: Members are expected to do what
they’re told and clear all decisions with superiors
 Avoidance: Members are expected to shift
responsibilities to others and avoid any possibility
of being blamed for a problem.
 Oppositional: Members are expected to be critical,
oppose the ideas of others, and make safe (but
ineffectual) decisions.
 Power: Members are expected to take charge,
control subordinates, and yield to the demands of
superiors.
 Competitive: Members are expected to operate in a
“win-lose” framework, out- perform others, and
work against (rather than with) their peers.
 Perfectionistic: Members are expected to appear
competent, keep track of everything, and work
long hours to attain narrowly-defined objectives.
 Achievement: Members are expected to set
challenging but realistic goals, establish plans to
reach those goals, and pursue them with
enthusiasm.
 Self-Actualizing: Members are expected to enjoy
their work, develop themselves, and take on new
and interesting tasks.
 12 types of norms and expectations are
associated with and organized into three general
types of cultures
 Constructive - members are encouraged to
interact with people and approach tasks in ways
that will help them to meet their higher order
satisfaction needs
 Passive-Defensive - members believe that they
must interact with people in ways that will not
threaten their own security
 Aggressive-Defensive - members are expected
to approach tasks in forceful ways to protect
their status and security
 Hofstede’s Cultural Dimensions
 four value dimensions
 Power Distance
 Measures how comfortable individuals in a
culture are with inequality in the power structure.
 Individualism versus Collectivism
 Measures group cohesiveness.
 Masculinity versus Femininity
 Measures how much assertiveness and competition
are highly valued. In feminine cultures values of
caring and modesty are more highly valued.
 Uncertainty Avoidance
 Measures how much individuals feel threatened by
uncertain situations.
 International Workforce Subsidiary staffing
composition in subsidiaries of MNCs is
defined as the distribution of expatriates also
referred to as parent-country nationals
(PCNs), host country nationals (HCNs) and
third country nationals (TCNs), and the
composition varies along the dimension of
nationality heterogeneity.
 Pre-field or Preparatory Training for
Expatriates
 Post-Arrival Training for Expatriates
 Training for HCNs and TCNs
 To ensure that the expatriate has the essential
skills and knowledge for the assignment
 Recommendations to the expatriates are
◦ Visit the foreign location with the spouse and family
beforehand
◦ Make clear of what is expected of the expatriate manager
◦ Provide a domestic mentor, who serves as the chief liaison
and a proponent during the employee’s absence.
 Cultural Awareness Programs
 Language Training
 Training for culture shock prevention
 To make the expatriate feel comfortable with
the local environment.
 Take care of the expatriate and his/her
family.
 Culture awareness program, culture shock
prevention program have to be extended in
the host country.
 Orientation of the new environment
 To smoothen the understanding of corporate
strategy, culture and socialization.
 The most attention is given to preparatory
training, focusing on the area of expatriate
failure.
 The pre-departure training can be divided into
two parts:
◦ Cultural awareness training, which broadens the
sensitivity to other cultures
◦ Regional or country specific training which informs the
expatriate about the historical, religious, and economic
factors affecting the people in the region.
 Leadership is a complex and controversial
process that can be defined as influencing
people to direct their efforts toward the
achievement of some particular goal or goals.
 Two comparative areas provide a foundation
for understanding leadership in the
international arena:
◦ The philosophical grounding of how leaders view
their subordinates
◦ Leadership approaches as reflected through use of
autocratic – participative characteristics and
behaviors of leaders.
• Both Chinese and US managers support theory Y
• European managers tend to use a highly participative
leadership approach
• French and the Germans who prefer a more work-centered,
authoritarian approach.
• Scandinavian countries make wide use of participative
leadership approaches
• Japan is well known for its paternalistic approach to
leadership.
• India’s long affiliation with Great Britain, leadership style
seems to be more participative than many developing
nations.
• Most effective leadership style -Transformational
 Idealized Influence:
◦ Source of charisma and enjoy the admiration of their followers.
◦ Enhance pride, loyalty, and confidence in their people
◦ Align these followers by providing a common purpose or vision that the
latter willingly accept.
 Inspirational Motivation:
◦ Extremely effective in articulating their vision, mission, and beliefs in clear
cut ways,
◦ Easy to understand sense of purpose regarding what needs to be done.
 Intellectual Simulation:
◦ Able to get their followers to question old paradigms
◦ To accept new views of the world regarding how things now need to be
done.
 Individualized Consideration:
◦ Able to diagnose and elevate the needs of each of their followers through
individualized consideration, thus furthering the development of these
people.
 Managing relationship
 Managing process
 Self Identity
 Vendor Selection
 Change management
 Structuring of Contract
 The top seven obstacles to achieving success
with a merger or acquisition are:
◦ An inability to sustain financial performance
◦ Loss of productivity
◦ Incompatible cultures
◦ Loss of key talent
◦ A clash of management styles/egos
◦ An inability to manage/implement change
◦ Objectives/synergies not being well understood
 Restructuring
 Change Agent
 Creating Culture
 Communication
 Winning hearts and minds
 Framing policies and practices
 Bigger work force
 The pre-planning phase
 Quick Reaction
 Setting key priorities
 Repatriation means return to one’s home
country from an overseas management
assignment.
 Preparation
 Physical Relocation
 Transition
 Readjustment
 Financial and Psychological Shock
 Lack of Repatriation Training:
 Lack of Career Development
 Lack of Positive Related Corporate Values:
 Status Problems
 Devaluing the International Experience
 Coping With New Role Demands
 An organization that operates effectively in
utilizing its diverse work force can be
described as a multicultural organization.
 To capitalize on the advantages of its diversity- rather than
attempting to stifle or ignore the diversity
 To minimize the barriers that can develop as a result of
people having different backgrounds, attitudes, values,
behavior styles, and concerns.
 Organizational resources (key jobs, income, perquisites,
access to information, etc.) are distributed equitably
 The ability to influence decisions and the way they are carried
out is shared widely
 The organizational culture acknowledges both the need for
“being the same” and the need for “being different”
 Institutional policies, practices, and procedures are flexible
 Heterogeneity
 People as individuals and as group members
 Shared responsibility Problem definition
 Problem analysis
 Self-interest
 Accountability
 For multinational firms, successful management
of compensation and benefits requires
◦ Knowledge of the employment
◦ Taxation laws
◦ Customs
◦ Environment
◦ Employment practices of many foreign countries.
◦ Familiarity with currency fluctuations
◦ The effect of inflation on compensation
◦ An understanding of why and when special allowances
must be supplied
◦ Which allowances are necessary in what countries.
 Consistent with the overall strategy, structure, and business
needs of the multinational.
 Work to attract and retain staff in the areas where the
multinational has the greatest needs and opportunities.
 Competitive and recognize factors such as incentive for Foreign
Service, tax equalization, and reimbursement for reasonable
costs.
 Facilitate the transfer of international employees in the most
cost-effective manner for the firm.
 Equity and ease of administration.
 Offers financial protection in terms of benefits, social security,
and living costs in the foreign location.
 Opportunities for financial advancement through income and/or
savings.
 Issues such as housing, education of children, and recreation will
be addressed in the policy.
 Base Salary
 The amount of money that an expatriate
normally receives in the home country.
 Major differences can occur in the
employee’s package depending on
◦ Whether the base salary is linked to the home
country of the PCN orTCN
◦ Whether an international rate is paid.
 Foreign Service Inducement / Hardship
Premium
 Parent country nationals often receive a salary
premium as an inducement to accept a
foreign assignment
 As compensation for any hardship caused by
the transfer.
 Allowances
 The cost-of-living allowance (COLA)involves
a payment to compensate for differences in
expenditures between the home country and
the foreign country
 The COLA may also include payments for
housing and utilities, personal income tax, or
discretionary items.
 Benefits
 Approximately one-third of compensation for regular employees
is benefits.
 These benefits compose a similar, or even larger, portion of
expat compensation.
 issues surround compensation for expatriates,
 Whether MNCs should maintain expatriates in home-country
benefit programs or option of enrolling expatriates in host-
country benefit programs or making up any difference in
coverage.
 Whether host-country legislation regarding termination of
employment affects employee benefits entitlement.
 Whether the home or host country is responsible for the
expatriates’ social security benefits
 Whether benefits should be subject to the requirements of the
home or host country
 Which country should pay for the benefits.
 Incentives
 special incentive programs for keeping expatriates
motivated.
 lump-sum premium.
 Expatriates realize that they will be given this
payment just once – when they move to the
international locale. So the payment tends to retain
its value as an incentive.
 The costs to the company are less because there is
only one time payment and the company has no
future financial commitment.
 Because it is a separate payment, distinguishable
from regular pay, it is more readily available for
saving or spending.
 Taxes
 Taxes on this income then are computed and
compared with taxes due on the expatriate’s
income.
 Any taxes that exceed what would have been
imposed in the home country are paid by the
MNC
