Danger and Risk as Challenges for HRM

Managing People in Hostile Environments

Benjamin Bader, Tassilo Schuster, Michael Dickmann, Benjamin Bader, Tassilo Schuster, Michael Dickmann

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000300239
• Edition: 1
• Topic: Business
• Subtopic: Human Resource Management
• Index: Business

Questions related to managing people in hostile environments have become more central on the agenda of business leaders and HR professionals in multinational corporations (MNCs). This is due to developments such as the increase of terrorism or the political instability in many regions. In consequence, research on the role of HR in hostile environments has increased, though it can still be considered in its early stages.

Danger and Risk as Challenges for HRM: Managing People in Hostile Environments adds to this emerging field of research by investigating the management of people in hostile environments from conceptual as well as empirical perspectives. It delivers an essential and comprehensive overview and gives deep insight into this highly relevant topic from leading authors in the field.

This book will be of great value to scholars and researchers interested in the role of human resource management (HRM) in hostile environments, people management in companies in conflict-affected areas and to those interested in new grounds in HR Research.

The chapters in this book were originally published as a special issue of the International Journal of Human Resource Management.

Managing people in hostile environments: lessons learned and new grounds in HR research

Benjamin Bader, Tassilo Schuster, Michael Dickmann

ABSTRACT

Questions related to managing people in hostile environments have become more central on the agenda of business leaders and HR professionals in MNCs. This is due to developments such as the increase of terrorism or the political instability in many regions. In consequence, research on the role of HR in hostile environments has increased as well, though it can still be considered in its early stages. We would like to review the current state of research on managing people in hostile environment. In particular, with this article we contribute to the literature by developing a conceptual framework that distinguishes between micro-, meso- and marco-level research and charts progress, mechanisms and results. We call this the Situation – Response – Outcome (SRO) Framework of HRM in hostile environments. Depending on the level of analysis, the framework further differentiates between a pre-crises, acute-crisis, and post-crises phases of HRM in hostile environments. As a result, it serves as the basis to cluster existing literature around it and to show avenues for future research.

Introduction

With the terrorist attacks in New York and Washington on September 11, 2001 (hereafter 9/11), terrorism was catapulted to the top of governmental agendas around the world. We can certainly say that this event has been a tipping point at least in how terrorism is perceived in the wider society (Woods, Eyck, Kaplowitz, & Shlapentokh, 2008). But not only governments started to change their perception on terrorism. Terrorism suddenly became highly relevant in the business context as well (Suder, 2004). Terrorist groups seek to destabilize the economy as a whole by attacking business premises or specific companies to advance their political or ideological agendas (Alexander, 2004). Despite a slight drop of terrorism-related incidents between 2001 and 2004, the number of attacks has tremendously grown year by year with a peak of 16,860 incidents in 2014 (Global Terrorism Database, 2017). A significant terrorist threat comes from international terrorism, which generally targets Western businesses and people located outside or inside their home country, with the ambition to mount high impact attacks designed to result in mass casualties in order to receive a broad media attention. Therefore, it is not surprising to see that the number of terrorism-related incidents in OECD countries has also dramatically increased in recent years, largely due to ISIS/ISIL inspired attacks. In fact, according to the Institute for Economics and Peace, we witnessed a 67 percent increase in attacks and a nearly 600 percent increase in deaths from terrorism between 2014 and 2016. A significant portion of the fatalities was caused by a few high-impact attacks. For example, the Paris attacks in November 2015 resulted in 137 deaths; the Nice truck attack in July 2016 caused 87 deaths; and the Orlando nightclub shooting in June 2016 resulted in 50 deaths (Institute for Economics and Peace, 2017).

In the literature on terrorism, there is a consensus that a main goal of the perpetrators of terrorist attacks is to disrupt society by evoking a culture of fear, anxiety and panic. This is achieved by transmuting a specific terrorist incident beyond its localized setting and thereby creating a perception that every resident and company is vulnerable to terrorism (Cronin, 2003; Victoroff, 2005). Repeated and large-scale terrorist attacks targeting the business sector and its employees caused that Multinational Companies (MNCs) from any part of the world are affected, especially if they operate in and send employees to high-risk countries where terrorism and other disturbances are a commonplace occurrence. This does not necessarily mean that MNCs face direct consequences of terrorism such as human costs (loss of life, physical injury) or the destruction of buildings and equipment. In fact, only few MNCs experience these direct effects. Instead terrorism’s indirect effects tend to be widely felt (Czinkota, Knight, Liesch, & Steen, 2010). Indirect effects include declines in foreign direct investments, disruptions in the international supply chains of MNCs, new governmental regulations and immigration laws and negative reactions of employees towards their employers (Czinkota, Knight, Liesch, & Steen, 2005; Frey, Luechinger, & Stutzer, 2007). In particular, employees that are exposed to terrorism-related threats often suffer from post-traumatic stress, anxiety, feelings of insecurity, decreased self-efficacy, and a decrease in subjectively rated health (Peus, 2011).

However, terrorism is not the only form of violent risk and danger to which MNCs and its employees are exposed. Apart from terrorism, there are other leading causes of violence and instability around the world such as ethnopolitical conflicts, civil unrest, civil war, and drug-related crime, which show tremendous effects on the business activities of MNCs, especially for subsidiaries of foreign MNCs (Oh & Oetzel, 2011; Ramirez, Madero, & Muñiz, 2016).

Therefore, it can be considered as a natural response that questions related to managing people in those hostile environments¹ have nowadays become commonplace on the agenda of business leaders and HR professionals in MNCs (Dickmann, 2017), especially since the expatriate population who is sent to a broad set of countries continues to grow (Brookfield Global Relocation Services, 2016). When comparing the agendas of human resource management (HRM) in hostile environments with those in normal settings, we see that HRM is confronted with additional challenges, which do not occur in such intensity in normal settings. This starts with finding employees who are willing to work in hostile environments, executing safety and security policies, providing safety trainings, developing internal intelligence and communication strategies of potential hazards and risks, developing emergency and recovery plans, adapting compensation schemes by adding appropriate hardship allowances, and offering post-trauma support when employees are involved in a terrorist incident. Also for individual expatriates who live and work in high-risk countries, those hostile environments cause additional challenges beyond those of a common international assignment as they cannot move freely throughout the country, have to live in closed and secured compounds, often require bodyguards for being chauffeured to their work location, and need to handle an increased vulnerability and stress levels.

To better understand the unique setting of hostile environments for managing people, an increasing number of scholars, academics, and specialized business consultants started to address those topics from an HR perspective. In this regard, we contribute to this research by developing a framework that distinguishes between a pre-crises, acute-crisis, and postcrises phases (i.e. has a process perspective). We then cluster existing literature around it and show starting points for future research.

People management in hostile environments: lessons learned

Despite a very early, ground-breaking study of Michael Harvey (1993) and frequent calls for more research with some initial studies on the topic in the first years after 9/11 (e.g. Czinkota et al., 2005; Howie, 2007), research on managing people in hostile environments still has not made its way into mainstream IHRM literature. In fact, even though we witnessed a significant increase of research on hostile environments in the IHRM literature over the last decade, the research stream is still in its infancy and scattered. We do not intend to present a comprehensive literature review here but rather like to outline the current state of knowledge in the field and systemize previous studies regarding people management in hostile environments. This does not only help us to better understand different streams of research on hostile environments but also enables us to better categorize the articles in this Special Issue and to provide recommendation on how research on hostile environments can break new grounds. As outlined above, Harvey (1993) was among the very first scholars to explore the impact of terrorism on business in general and on HRM in particular. In this seminal study, it becomes apparent that research on terrorism simultaneously takes place on different levels of analysis. Based on this observation, we create an overarching framework for managing people in hostile environments by distinguishing between three perspectives: macro, meso, and micro.

On the macro level, the role of national governments has played a vital role for managing people in hostile environments. Already in 1993, Harvey pointed out that national governments do not provide adequate assistance when companies were attacked by terrorists. Sandler and Enders (2005), who studied the economic consequences of terrorism in developed and developing countries, showed that governments of developed markets may be better to support the business sector after a terrorist attack. It is outlined that governments in developed markets are better equipped with monetary or fiscal stimuli following terrorist attacks and have more sophisticated defensive measures such as anti-terrorism laws, immigration policies, or public security means (law enforcement, intelligence and information services, emergency management) that enable the state to restore confidence in society after terrorist attacks. It is clear that the security apparatus of the state – military, intelligence, and police forces – have a key role in identifying and dealing with terrorist threats and atrocities. Moreover, there is evidence that terrorism can have severe consequences for the business sector by reducing per-capita income growth (Blomberg, Hess, & Orphanides, 2004), shrinking GDP, investments and exports (Eckstein & Tsiddon, 2004), decreasing firms’ international competitiveness (Spich & Grosse, 2005), or lowering bilateral trade when a country that experienced a terrorist incident is a trading partner (Nitsch & Schumacher, 2004). Another important issue at the macro-level is to differentiate between types of hostile environments (terrorism, crime, civil unrest, etc.) in order to show the unique impact on MNCs and their employees. In this matter, there is already initial evidence in the literature that the feeling of vulnerability and anxiety after terrorist incidents is more pervasive and persistent with greater mental health consequences than effects from other types of hostile environment and disasters (Holloway & Fullerton, 1994; Jacobs & Kulkarni, 1999; James, 2011b; Ryan, West, & Carr, 2003). In contrast, a recent study by Faeth and Kittler (2017) showed that expatriates in a more terrorism-exposed context perceive fear less strongly than expatriates in environments with high degrees of conventional crime. A reason for this could be that becoming victim in a crime is regarded as more likely than becoming victim in a terrorist attack, even though the consequences may be less severe.

At the meso-level, the focus has been on how MNCs and their HR departments can manage people in hostile environments. The topics here have been widely connected to corporate strategies, HR policies, and HR practices in the context of hostile environments. The global mobility literature takes a process perspective that distinguishes between pre-, during- and post-assignment phases (Harris, Brewster and Sparrow, 2003). To analyze HR strategies, policies, and practices for global workers in hostile environments, it seems reasonable to develop a framework that follows a process-related perspective and distinguishes between a pre-crises,, acute-crisis, and postcrises phase (Devlin, 2006; Fee, McGrath-Champ, & Liu, 2013). These three process categories were already underlying the work of Harvey (1993). Concerning the pre-crises phase he revealed – based on the survey results of 79 US Fortune 500 companies – that more than half of those companies had absolutely no formal programs to deal with the impact of potential terrorist attacks. Those that had a program in place prioritized to spend money on security equipment instead of training executives, expatriates, and accompanying family members. Based on his findings, he recommended that in a precrisis phase, companies need to gather information about potential terrorist threats, provide training to executives and their families, and to form a crisis management team that will be prepared for the possibility of a terrorist attack. More recent research outlines various instruments on how MNCs can increase the safety and security of expatriates in hostile environments. For instance, it is argued that MNCs can better guide expatriates during terrorist-related incidents when they have developed formal HR policies related to employees safety and security and created evacuation plans prior to an actual incident (Devlin, 2006; Fee & McGrath-Champ, 2017; Sánchez & Goldberg, 2003).

Moreover, MNCs should gather intelligence on potential hazards and risks by collecting and analyzing information on possible crisis triggers (Kalbassi, 2016). In addition, Fowler, Kling and Larson (2007) investigate whether different organizations vary in their corporate strategies toward organizational preparedness for coping with hostile environments and provide initial evidence that for-profit organizations have a lower organizational preparedness than public organizations. They also conclude that decision-makers in for-profit companies may be less willing to spend money on these types of plans than those in public organizations. Finally, it is argued that MNCs can offer trainings and briefings to increase expatriates’ awareness of potential risks and to provide them with instruments on how to reacted when they face a potential crisis (Darby & Williamson, 2012).

In the acute-crisis phase, it is of utmost importance to have a crisis management team at hand that ensures the implementation of safety and security plans on site and that guides and supports expatriates during incidents (James, 2011a). A study amongst global mobility professional has shown that many MNCs cooperate with government and private security forces in terms of working on crisis reaction plans and provisions (Dickmann, 2015). It is interesting to note, that some companies seem to treat their expatriates differently from local partners and family. Unfortunately, a large number of MNCs do not have any elaborated crisis reaction approach which indicates that much of the host country risk is borne by assignees themselves. Many authors have observed a substantial increase into the exploration of self-initiated expatriates (Andresen; Al Ariss & Walter, 2012; Vaiman & Haslberger, 2013). Little is known about these SIEs living in hostile environments and their reaction to, say, terrorist incidents.

Finally, in the post-crisis phase, MNCs need to support expatriates to deal with psychological trauma and ensure an efficient readjustment of the expatriate in the work and social environment (Hirshon, Eng, Brunkow, & Hartzell, 1997). In this matter, Waldman, Carmeli and Halevi (2011) revealed that organizations are ineffective in simultaneously responding to both material and psychological needs of individuals in the aftermath of a terrorist event. A second important instrument in the post-crisis phase is that MNCs reflect on the effectiveness of their crisis management and critically evaluate where improvements can be implemented (Wang, 2008). Other studies showed how firms respond to major disasters (Oh & Oetzel...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Citation Information
• Notes on Contributors
• Foreword
• 1 Managing people in hostile environments: lessons learned and new grounds in HR research
• 2 Engaging in duty of care: towards a terrorism preparedness plan
• 3 Protecting expatriates in hostile environments: institutional forces influencing the safety and security practices of internationally active organisations
• 4 In the line of fire: managing expatriates in hostile environments
• 5 Terrorism and expatriate withdrawal cognitions: the differential role of perceived work and non-work constraints
• 6 Mind the gap: the role of HRM in creating, capturing and leveraging rare knowledge in hostile environments
• 7 A risk management model for research on expatriates in hostile work environments
• 8 Localization of staff in a hostile context: an exploratory investigation in Afghanistan
• Index