Essentials of International Human Resource Management

Managing People Globally

David C. Thomas, Mila B. Lazarova

• Publisher: SAGE Publications, Inc
• Year: 2013
• ISBN:
  9781483315874
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

With increasing globalization comes the need to understand human resource management (HRM) more broadly across countries, cultures, institutions, and organizational types. Designed to help readers explore and understand the key concepts and latest research behind the strategic management of people in organizations that operate in a global context, this accessible book provides concise coverage of HRM concepts, balancing comparative approaches and US and non-US schools of thought. Not limited to the multinational firm, the book reflects the most current knowledge in the field and considers all types of organizations embedded in the global context. Chapter-opening vignettes (short cases) exemplify the chapter's core topics and show readers how chapter content can be applied. Extensive references make it easy for readers to explore concepts in more depth.

1

Globalization and Human Resource Management

LEARNING OBJECTIVES

After reading this chapter you should be able to

• describe what is meant by the term globalization,

• define global human resource management (HRM),

• discuss the factors in the external environment that influence global HRM,

• outline the important differences in global and domestic HRM,

• outline the historical development of global HRM, and

• describe the role of the global human resource (HR) professional.

Goldstar Mining¹

Trevor Hackett scooped his 2-year-old daughter Sally into his arms as he walked into the arrivals area of Toronto’s Pearson International Airport. “I don’t think I’ll be going back to Colombia anytime soon,” he said cheerily to reporters as he made his way through the crowd. Even the blowing snow outside could not dampen his spirits today. He was home! Home, after being held captive for 94 days by Fuerzas Armadas Revolucionarias de Colombia (FARC) high in the mountains of remote Santander province.

It had all started when Trevor, president of Goldstar Mining, had sent Ken Powers to Colombia to head up drilling operations. The contract with Vancouver-based Megametals for core samples was just what his small firm had needed. And while everyone knew that Colombian revolutionary forces were financing their operations by kidnapping, people in the mining business didn’t give the risks much thought. In fact, they often paid so called “vaccination money” to groups like FARC. Ken had jumped at the opportunity to go, and diamond drillers of his caliber were in short supply.

When Ken was kidnapped by FARC, Trevor felt responsible. The rebels wanted a share of the gold that would be extracted from the mine, and Trevor couldn’t deliver because the site was owned by Megametals. However, he had scraped together $100,000, and through intermediaries, he had finally negotiated contact with the rebels, who had agreed to release Ken for that amount. Despite the protests of his wife and the Canadian government, he had made his way up that winding mountain trail to find Trevor and tell him that after four months “his shift was over and he could come home.” The FARC rebels released Ken but saw that Trevor was a much bigger prize, and thus his own captivity began.

The details of his own release were shrouded in mystery, but he knew it resulted from some very complex negotiations involving the guerillas and both the Columbian and Canadian governments as well as a local Catholic priest.

Introduction

HRM activities may not often involve rescuing an employee from revolutionaries in a foreign country. However, human resource management in a global context must respond to a dynamic and complex set of factors. HRM consists of the activities, policies, and practices of attracting, engaging, developing, and retaining the employees that an organization needs to accomplish its goals. It involves all of the management decisions that affect the relationship between employees and the organization.² Global HRM means conducting these activities across countries, cultures, and institutional contexts. And not only must global HRM bridge across environments, it must also operate in a worldwide context characterized by the rapid and discontinuous change that is called globalization.³

Globalization

Definitions of the term globalization vary widely. Some see it in economic terms as the absence of borders and barriers to trade and economic activity or more broadly as the overlapping of the interests of business and society.⁴ Others focus on the rapid advances in information and communications technology, suggesting that the world is flat or has crystalized as a single place.⁵ Here, we focus on the central idea that globalization is the process whereby worldwide interconnections in every sphere of activity are growing.⁶ Globalization is not an end result or caused by a single force but the dynamic interconnectedness that results from shifts that are taking place across a range of contexts, including technological, political, economic, and cultural spheres. Figure 1.1is a graphic representation of the fact that organizations operate in an increasingly interconnected world.

As shown in Figure 1.1, these interconnections operate within and across levels. For example, Thomas Friedman talks about how ten events and forces, including political (fall of the Berlin Wall and later the opening of China, Russia, and Eastern Europe), technological (the advent of Netscape and later other online search and collaborative tools such as Google), cultural (the popularization of the Internet), and economic (the use of thousands of Indian software engineers to work on the Y2K problem from all over the world and waves of outsourcing, offshoring, and global supply chaining) that converged to flatten the world.⁷ These forces have created a world that allows for multiple forms of collaboration without regard to geography, time zones, or in many cases even language. While presented as independent elements in Figure 1.1these environments interact with and influence each other. As an event occurs in any one of the external environments (the introduction of Netscape in the technological sphere) it influences other spheres (the popularization of the Internet in the cultural sphere). These interrelated shifts in the four external environments affect organizations whose leaders respond by integrating people, processes, and structures to shape organizational outcomes. In addition, other elements such as intergovernmental and nongovernment organizations (IGOs and NGOs), buyers, sellers, competitors, unions, and other mediating organizations influence elements of the external environment on the firm. For example, while the fall of the Berlin Wall touched off a worldwide rush to capitalism, NGOs, in representing the interest of society, advocate (either through opposition to or through dialog with organizations) for workers’ rights in the absence of unions or legal protection.⁸ Thus, these four spheres are not independent. Together they create a complex interconnected external environment in which the organization operates and across which the global organization must function. Despite their interconnectedness, it is useful to consider each individually with respect to global HRM.

Figure 1.1Global Interconnections

Source: Adapted from Parker (2005, p. 37).

Global Technology

The aspect of globalization with perhaps the most potential to shape the organizational environment is the dramatic advances being made in information and communication technology.⁹ Technological breakthroughs seem to be occurring on an almost daily basis with the latest communication or computing device even more powerful, smaller, less expensive, and more user-friendly than its predecessor. The pace of technological change is breathtaking. For example, the computer in your cell phone today is a million times cheaper, a thousand times more powerful, and about a hundred times smaller than the one computer owned by the Massachusetts Institute of Technology (MIT) in 1965.¹⁰ The effects of technology largely result from two interlinked activities. First, advances in information technology reduce the cost of communication, leading to more global goods and capital markets. This globalization in turn increases competition and contributes to the spread of technology and to its further development. The decreasing price and increased sophistication of computing systems has placed in the hands of a wide range of organizations capabilities that were available only to large multinational firms only a few years ago. And access to information, resources, products, and markets are all affected by this improved technology. This means that small firms can now compete globally. This is of considerable significance given that across countries of all levels of development, the majority of firms are small and medium sized (SMEs). Now even they have to think globally about HRM. It also means that all organizations are less limited by physical place; for example, making it possible for teams of individuals to be rapidly assembled and just as rapidly disassembled throughout the world, even creating virtual organizations in which employees do not meet face to face but are linked by computer technology.¹¹ Organizational boundaries are less rigid, and the value chain functions of production, sales and marketing, and distribution might all be located in different countries. As for their influence on HR, technological advances allow for various administrative functions to become easily automated or outsourced.¹² As recently as 30 years ago, there was a widespread belief that technology is largely irrelevant in HR as computers do not have people skills and can not handle HR work. While the “transition from paper to pixels” has taken a couple of decades, today there are very few HR tasks that do not require technology. Organizations in many countries depend on it to manage recruitment, hiring, employee evaluation, compensation, and outsourcing.¹³ Therefore, rapid technological change is challenging traditional thinking about organizing and the HR function. And of course, the work roles of employees in all organizations will change to reflect an increasingly information-driven environment.

Global Economics

It is possible to argue that globalization is nothing new—just business as usual. For example, international trade as a percentage of gross world product was only slightly higher at the end of the 20th century than it was before 1914.¹⁴ However, the number of new economic entrants to the international business arena is difficult to ignore. And global economic interconnections are increasingly evident in shifting patterns of trade, foreign direct investment, capital, and labor. In particular, globalization has resulted in worldwide capital markets that were previously closely aligned with nations, allowing both large and small firms around the world to participate in the global economy. A “flat world” is one in which the economic playing field has been leveled for all participants, small and large from developed countries and emerging economies, and one in which value chains in both manufacturing and service industries are becoming (or can become) truly global.¹⁵ While U.S. multinational firms dominated the international business landscape just after World War II, in 2011 as shown in Table 1.1, Tokyo, Beijing, and Paris were home to most of Fortune magazine’s Global 500. In additio...

Table of contents

• Cover Page
• Halftitle
• Title
• Copyright
• Brief Contents
• Detailed Contents
• List of Tbles and Figures
• Preface
• Acknowledgments
• 1 Globalization and Human Resource Management
• 2 Cultural and Institutional Context of Global Human Resource Management
• 3 Organizational Context of Global HRM
• 4 Transfer of HRM Across Boundaries
• 5 HRM in International Joint Ventures, Mergers and Acquisitions, and Collaborative Alliances
• 6 Global Staffing
• 7 Global Human Resource Development
• 8 Global Performance Management and Compensation
• 9 International Mobility and Global Careers
• 10 International Employee Representation and Corporate Social Responsibiity
• 11 Emerging Issues in Global HRM
• Appendix: GLOBE Country Scores
• Cases
• References
• Index
• About the Authors
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