CU MBA SEM IV Cross- Cultural HRM

 Organizations exist to fulfill human needs.  Organizations and people need each other.  When the fit between the individual and the organization is poor, either one of them or both of them will suffer.  When the fit between the individual and the organization is good, both will gain. Hence, cultural diversity is now more a need than a compulsion. When managers appreciate the cultural beliefs and values of employees, a supportive environment is created. Through this, the organization gets successful in creating the right climate of mutual trust and co- operation 4.3 DIVERSITY MANAGEMENT 4.3.1 DEFINITION: Various authors have defined diversity management in several ways. Some of those are listed below: - Wentling (2001) defines, ―Diversity management initiatives are efforts to create an environment that works naturally for the total diversity mixture, but not just for women and minorities. Torres and Bruxelles (1992) ―Managing diversity mean enabling the diverse workforce to perform its full potential in an equitable environment, where no one group has an advantage or disadvantage. Diversity management refers to all those efforts which are made to manage and respect the cultural differences among the people. Managing diversity is going ahead of affirmative action. 4.3.2 APPROACHES TO DIVERSITY MANAGEMENT: Thomas and Ely (1998) identified three paradigms for managing diversity. These approaches help to identify the stage of development of the firm’s diversity culture. The brief description about the approaches is as follows: - 101 CU IDOL SELF LEARNING MATERIAL (SLM)

Fig 4.3.1: Approaches to Diversity Management 1. Discrimination and Fairness Approach: This approach focuses on making proactive programmes for ensuring equal opportunity, fair treatment, recruitment and observance of Equal Employment Opportunity conditions for everyone. Companies following this approach normally introduce mentoring and career development programmes explicitly for the women and people of minority caste and train other employees as well to respect cultural differences. The essential driving force of this approach is to eliminate prejudice from the workplace and to promote an understanding of cultural differences. Under this concept, the success of this paradigm is determined on the basis of the extent to which the organization is able to attain its recruitment and retention goals instead of the extent to which the work environment of the organization encourage the employees to bring into play their capabilities and viewpoints to carry out their work more efficiently. Though as per this paradigm, the staff gets diversified, but the work does not. The diversification of workforce does not influence the work culture of the organization and leadership could not exploit the potential benefits of diversity (Thomas and Ely, 1998). 2. Access and Legitimacy Approach: The approach focuses on the acceptance and utilization of the differences among employees to cater the diverse customer groups. Organizations applying this approach, believe that the marketplace is culturally diverse and hence can present an opportunity or a threat for them. Thus, the organizations or the companies work on improving the diversity of its workforce as 102 CU IDOL SELF LEARNING MATERIAL (SLM)

they understand the need of having the employees who possess multi-skills and that too in more than one language so that the customers can be understood and served in a better way and thus gain legitimacy with them. Diversity is not just fair; it makes business sense. Celebration of differences concept basically categorizes the employees into jobs that suit their niche or cultural background. However, the diverse employees often feel exploited as the opportunities in the other parts of the organization are not open to them. Further, in adverse business scenario or downsizing, the special department ‘employees are the most vulnerable to lose their job. 3. Learning and Effectiveness Approach: This learning and effectiveness approach aims at integrating employees by recognizing that cultural differences are an important source of organizational learning. The differences are valued and are made a part of the core business processes. The organization following this approach believes in an open discussion and ensures respect for differences. The approach aims at developing positive diversity climate and thereby promoting a culture of integration. The organization internalizes differences among employees by putting itself in the shoes of the employees to understand their different perspectives and thus finding the ways of increasing the effectiveness. This learning contributes to the growth of the organization and thus, the team spirit is inculcated among the employees from different cultural backgrounds. They feel valued and respected. To facilitate this approach needs bureaucratic, egalitarian structure. Further, organizational culture needs to encourage openness and set high standards of performance for employees. (Thomas and Ely, 1998). 4.3.3 PROCESS OF CULTURAL DIVERSITY MANAGEMENT: According to Ross and Schneider (1992), the strategic process of diversity management consists of the following steps: - 1.Diagnosis: Every organization needs to identify the current situation in terms of policy, statistics and culture by looking both at the issues and the causes. 2. Aims Setting: The next step is setting of aims that normally include the important concerns such as the business case for avoiding discrimination, identifying the vital role of commitment from the top management of the organization, and a vision of what the organization would look like, after successful diversity management. 103 CU IDOL SELF LEARNING MATERIAL (SLM)

3. Awareness raising: This is a very important stage in which the awareness needs to be raised. The awareness about diversity needs to be raised among the employees at all the levels, especially the managers. 4. Policy development: The new systems are implemented through the involvement of all the employees. These should not be imposed. 5. Managing the transition:It involves a variety of training initiatives. These may include programmes which are specifically designed for minority groups in order to make them understand the culture of the organization and acquire essential skills. Specific diversity management policies and programmes needs to be developed , particularly focusing on selection, appraisal and coaching, training sessions for further awareness and to identify cultural diversity and to manage different cultures. 6. To sustain momentum:This requires involvement of a senior management functionary, not necessarily from HR department, but anyone who continues the process together with the trade union. 7. To assess achievements in terms of business benefits: The last step is to manage the success or achievements of diversity management policies, in terms of business benefits such as better or improved relations with the customers, improvements in the productivity and profitability 4.3.4 STRATEGIES FOR MANAGING CULTURAL DIVERSITY: Adler (1997) has identified the three strategies for managing Cultural diversity in the organization. Fig 4.3.2: Strategies for Managing Cultural or Workforce Diversity 1. Ignore cultural differences:The managers following this approach in the organization does not recognize cultural differences and its impact on the organization. This strategy is mainly adopted by parochial type of organizations. In such type of organizations, managers 104 CU IDOL SELF LEARNING MATERIAL (SLM)

and employees believe that our way is the only way to manage and organize. In their view, diversity is just an irrelevant concept. Thus, the efforts for effective diversity management, minimizing the negative impact of cultural differences or increasing the positive impacts of diversity do not find any place here. 2. Minimize cultural differences: This strategy is mainly adopted by ethnocentric organizations. Here the managers do recognize the cultural diversity but only as a source of problems. The approach of the managers in an ethnocentric organization is that ―our way is the best way to organised and manage. They think other ‘s ways of doing as inferior ways of managing. The managers believe in reducing diversity by reducing the problems of differences. They don ‘t consider the benefits of diversity. Such an organization therefore prefers to choose/have a homogenous workforce. Thus, the ethnocentric organizations remain deprive or untouched from the benefits of diverse workforce by minimizing the scope of having cultural diverse workforce in the organization. 3. Manage cultural differences:The organizations which use the strategy of managing differences are synergetic organizations. These types of organizations recognize or acknowledge the effects of cultural diversity that results in both advantages and disadvantages. Managers following this approach believe that ―our way and their way of managing and behaviour differ, but neither is superior to other. Rather, the creative combinations of our way and their way can be the best approach to managing and organizing. Synergetic organizations manage the cultural diversity by training the managers and employees to recognize cultural differences and to use those cultural differences to create advantages for the organization. 4.3.5: RESPONSES TO DIVERSITY: The responses of managers and employees to diversity can take a number of forms which could be suitable in different situations. The eight responses identified by Thomas (1995) are exclusion, denial, suppression, segregation, assimilation, tolerance, building relationships and fostering mutual adaptation. He described these eight diversity responses in the following way: - 105 CU IDOL SELF LEARNING MATERIAL (SLM)

1. Exclusion: This involves keeping the members of the diverse groups out or pushing out diverse groups, once they are in. 2. Denial: According to this response, the individuals believe in ignoring the cultural differences in the organization. 3. Suppression: The individuals are encouraged to restrain their differences. 4. Segregation: This refers to putting members of particular groups in certain work or departments. 5. Assimilation: It attempts to transform members of a diverse group into replicas of the dominant group. Affirmative action programs are mainly adopted by the organization for this type of response. 6. Tolerance: In this situation, the differences among the individuals are acknowledged but the steps are taken to minimize the interaction between the groups. 7. Building Relationships: It is believed that, building a good relationship will overcome differences. 8. Fostering mutual adaptation: This approach believes in accepting and understanding the differences and diversity. Thus, it can be concluded that nobody can deny the fact that in today‘s era there exists culturally diverse workforce in almost every organization. And, the managers and the organizations as a whole need to leave no stone unturned to make sure that the culturally diverse workforce are given a topmost priority. That is, if some issues crop in amongst the diverse employees, then it becomes the prime duty of the manager in charge of the same to deal with it very carefully. Because, diversity if handled properly, can prove to be a competitive edge for the organization. And if ignored, can bring the organization to the road. The managers thus have to be prepared well in advance about which strategies they would opt for, if something goes wrong while dealing with the culturally diverse workforce. 4.4 SUMMARY  Diversity includes all those visible and non-visible factors that cause differences among people, e.g. gender, religion, physical disability, family status, age, race, hierarchical status, language, education, profession and life style etc. 106 CU IDOL SELF LEARNING MATERIAL (SLM)

 Primary dimensions of diversity indicate those human differences that are inborn and have an ongoing influence throughout the life of a person along with the impact on the early socialization.  On the contrary, the secondary dimensions of diversity are the ones that can be changed and thereby include, but are not restricted to educational background, geographical location, marital status, parental status, religious beliefs and work- experience etc.  John Hopkins explained the concept of diversity in the form of a wheel. The centre of the wheel indicates internal dimensions which are generally most permanent or visible. The outermost part of the wheel represents the dimensions which are acquired and undergo a change with the passage of time.  Diversity management refers to all those efforts which are made to manage and respect the cultural differences among the people.  Different approaches to Diversity management are o Discrimination and Fairness Approach: o Access and Legitimacy Approach: o Learning and Effectiveness Approach:  The strategic process of diversity management consists of the following steps: o Diagnosis: o Aims Setting: o Awareness raising: o Policy development: o Managing the transition: o To sustain momentum: o To assess achievements in terms of business benefits: o 107 CU IDOL SELF LEARNING MATERIAL (SLM)

 Strategies for Managing Cultural or Workforce Diversity: o Ignore cultural differences: o Minimize cultural differences: o Manage cultural differences:  The responses of managers and employees to diversity can take a number of forms which could be suitable in different situations. o Exclusion o Denial o Suppression o Segregation o Assimilation o Tolerance o Building Relationships: o Fostering mutual adaptation 4.5 KEYWORDS 1. First Language - A first language is the language a person has learned from birth or within the critical period, or that a person speaks the best and so is often the basis for sociolinguistic identity. 2. Cultural differences are the various beliefs, behaviors, languages, practices and expressions considered unique to members of a specific ethnicity, race or national origin. 3. Transition - is the process in which something changes from one state to another. 4. Cultural Differences - The cultural differences reflect differences in personal values and in the assumption, people make about how business is organized. 5. Synergy is an interaction or cooperation giving rise to a whole that is greater than the simple sum of its parts 4.6 LEARNING ACTIVITY 1. Why it is important to consider the cultural diversity? _________________________________________________________________________ 108 CU IDOL SELF LEARNING MATERIAL (SLM)

_________________________________________________________________________ 2. What would be the characteristics of the organization that are adopting _________________________________________________________________________ _________________________________________________________________________ 4.7 UNIT END QUESTIONS A. Descriptive Questions: Short Answers 1. State and explain Workforce Diversity. 2. Discuss the various dimension of the Diversity. 3. Highlight the difference between Minimizing and Managing the Culture Difference Approach. 4. Compare the Access and Legitimacy Approach and Learning and Effectiveness Approach. 5. Write a note on Diversity Management. Long Answers 1. Explain the different approaches to the Diversity Management. 2. State and discuss the Process of Cultural Diversity Management. 3. Describe the different strategies for managing Cultural Diversity. 4. Discuss different Responses to Diversity. 5. Enumerate the steps of Diversity Management Process and state its importance. B. Multiple Choice Questions: 1. Who has proposed the 9 different dimension of the Cultural Diversity? a. John Hopkins b. Loden c. Griggs d. Turan 2. The essential driving force of _________________approach is to eliminate prejudice from the workplace and to promote an understanding of cultural differences. 109 CU IDOL SELF LEARNING MATERIAL (SLM)

a. Discrimination and Fairness Approach b. Secondary Approach c. Primary Approach d. Legitimacy Approach 3. What is assumed as an important source of organizational learning? a. Diverse Educational Background b. Different Levels of Management c. Participation in Training Programs d. Cultural Differences 4. Which step of Cultural Diversity Management process involves variety of training initiatives? a. Managing the transition: b. Policy Development c. Aim setting d. To sustain momentum 5. Which type of strategy is adopted by the parochial type of organizations. a. Manage Cultural Differences b. Minimize cultural differences c. Ignore cultural differences d. Maximize Cultural Differences Answers: 1 – b; 2 – a; 3 – d; 4 – a; 5 – c ; 4.8 REFERENCE Text Book:  Wilhelm Schmeisser, Dieter Krimphove, Rebecca Popp, International Human Resource Management and International Labour Law, De Gruyter Oldenbourg,  Peter J. Dowling, Marion Festing and Allen D. Engle, Sr., International Human Resource Management, Cengage Learning EMEA  By Veronica Velo, Cross-Cultural Management, Business Expert Press 110 CU IDOL SELF LEARNING MATERIAL (SLM)

 Srinivas R. Kandula International Human Resource Management , SAGE Publications Pvt. Ltd  Pravin Durai, Human Resource Management, Pearson India Reference Book  K Aswathappa , Sadhna Dash, International Human Resource Management, McGraw Hill  Gary Dessler, Fundamentals of Human Resource Management, Pearson  Ekta Sharma, Strategic Human Resource Management and Development, Pearson India  Parissa Haghirian, Successful Cross-Cultural Management, Business Expert Press Open Sources:  https://www.Shrm.org/  https://www.ncbi.nlm.nih.gov/  https://www.futurelearn.com/  International Journal of Human Resource Studies  changingminds.org  assignmentpoint.com  interculturalmanagement.fandom.com  diva-portal.org  cvs.edu.in  strategy-business.com  www.mbaknol.com (Integrity-Asia & ispatguru)  publications.anveshanaindia.com  smallbusiness.chron.com  resources.workable.com  whatishumanresource.com  resources.workable.com  jigsawacademy.com  www.personio.com 111 CU IDOL SELF LEARNING MATERIAL (SLM)

112 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 5: GLOBALIZATION AND HR STRATEGY STRUCTURE: 5.0 Learning Objective 5.1 Introduction 5.2 HR Strategy 5.2.1 Concept 5.2.2 HR Strategy Dimensions 5.2.3 Importance Of HR Strategy: 5.3 Relationship between HR Strategy and Employee Performance 5.4 Global Human Resources Strategy 5.5 The Competency Required for International Managers. 5.6 Summary 5.7 Keywords 5.8 Learning Activity 5.9 Unit End Questions 5.10 References 5.0 LEARNING ACTIVITY After studying this unit, you will be able to:  Describe the significance of HR Strategy  Illustrate the relationship between Performance and HR Strategy  Explain the competency essential for International manager 5.1 INTRODUCTION Globalization has been a trend for the past two decades. The organisations become multinational, with offices in a variety of countries throughout the world. Globalization is considerably more than just relocating labour-intensive operations to nations with lower labour costs. Globalization entails bringing highly inventive organisations from all over the 113 CU IDOL SELF LEARNING MATERIAL (SLM)

world together to pay the same salaries. Human Resources is primarily responsible for establishing a global business culture. Human Resources is the department in charge of the company's culture growth and improvement. The importance of a shared corporate culture in a multinational organisation cannot be overstated. Around the Globe, the organisation cannot act in the same way. The formation of a shared corporate culture, on the other hand, is challenging. The countries are distinct. The HR role is to form an international team that will build a cohesive corporate culture and values. Human Resources plays a critical role in determining the necessary training courses for managers. HR must encourage managers to enrol in the courses. They must comprehend the origins of corporate culture and how they are expected to behave on a global scale. Employees and managers must communicate with colleagues from all around the world. Global decisions are made through a single mode of communication, a problem- solving methodology, and identification with the organisation. The first global function should be human resources. It has to implement internationally managed HR processes that are centred on the development of global talents and an uniform strategy. The first internationally managed HR procedures are usually performance management and talent management. The unified and internationally controlled performance management method aids in the administration of individual businesses in countries as well as the identification of the organization's future global leaders. Global Human Resources is able to find the organization's greatest skills and relocate them to different nations. It is difficult to implement global mobility, but global organizations require global managers, who are able to run difficult projects over continents. Global Human Resources are required for the identification of global leaders. HR professionals must be trained on global policies and managed from a variety of centres of excellence throughout the world. Globalization necessitates the development of new skills and competences. Managers must think globally and identify opportunities for the organisation on a global scale. They must be able to negotiate with people from various cultural backgrounds. HR must adjust its processes, procedures, policies, and training to make it easier for managers to integrate into 114 CU IDOL SELF LEARNING MATERIAL (SLM)

the organization's global world. HR's role is to assist the organisation in becoming a true global organisation. It has to look for opportunities to move different processes around the Globe as the organization is more competitive than the other participants on the market. 5.2 HR STRATEGY 5.2.1: CONCEPT: A Human Resource strategy is a business’s overall plan for managing its human capital to align it with its organisation goals. The Human Resource strategy sets the direction for all the key areas of HR, including hiring, performance appraisal, development, and compensation. The HR strategy is thus a long-term plan that dictates HR practices throughout the organization.HR Strategy is the strategy adopted by an organization which aims at integrating an organization’s culture, its employees and system by coordinating a set of actions to get the required business goals. Therefore, it must be aligned to the organization's mission, vision and goals. The characteristics of the industry in which the organizations are to be analyzed and its competitive advantage need to be determined for developing an HR strategy. Human resources management is essential, even crucial for the functioning of your organization. Any viable business needs human resources, or talent, to move forward the enterprise mission, values and principles. And of course, to do the work. Strategic human resource management enables alignment between the HR or HR function and your company's business goals. Human resource strategy differs from traditional HR in a couple of important ways. HR strategy is long-term and focuses on workforce planning as well as development from a forward-thinking viewpoint. Traditional HR, or personnel as it was once referred to as, is focused more on the transactional nature of Human Resources, such as reviewing applications, maintaining a census of FTEs (full-time equivalents) and signing up talent for insurance benefits. Strategic human resource management, on the other hand, focuses on aligning employee qualifications with the organization's workforce needs. This type of HR management provides employee 115 CU IDOL SELF LEARNING MATERIAL (SLM)

training and development to prepare the workforce for company expansion, as well as the employee's professional growth. What is HR Strategy? HR Strategy is the strategy adopted by an organization which aims at integrating core human resource aspects like organization’s culture, its employees, partners, training, incentives and overall system by coordinating a set of actions to get the required business goals. Therefore, it must be aligned to organization’s overall mission, vision and goals. The characteristics of the industry in which the organizations are to be analyzed and its competitive advantage need to be determined for developing an HR strategy. 5.2.2 HR STRATEGY DIMENSIONS The four key dimensions must be addressed in order to develop HR strategy: 1.Culture: It is the beliefs, rules and style of management of the organization. 2.Organization: It is the structure, job types, job descriptions and reporting lines of the organization. 3.People: The most important part of the organization is its people. The skills level, employee potential and the capability of the management constitutes the people. 4.Human Resources Systems: It is the people focused mechanism which deliver the correct strategy for the organization - recruitment, communications, training and development, compensation and benefits etc. 116 CU IDOL SELF LEARNING MATERIAL (SLM)

Fig 5.2.1: Dimension of HR Strategy 5.2.3 IMPORTANCE OF HR STRATEGY: The senior managers frequently, while managing people, element focus on only one or two dimensions and neglect the other people. Typically, companies prefer to relieve their managers of bureaucracy and push for more creative and entrepreneurial spirit but then the management fail to develop a suitable compensation and training system. When the mentioned creative or entrepreneurial flair does not appear from the employee’s work, the managers blame the employees and not the system. If an organization wants to retain the quality of work then its duties are not only to retain talented staff but also the organization needs to be reviewed and the training and compensation benefits need to be improved in order to facilitate employees in a better way. This is where HR strategy comes into picture. Strategy makes sure that all the core aspects of human resource management are in sync and aligned with the overall strategy. If employees are trained to become creative then the results and incentives and the overall company culture has to align accordingly to show results which are as per the company's overall strategy and mission. 117 CU IDOL SELF LEARNING MATERIAL (SLM)

Strategic Role of HR in Global Organization The strategic role of Human resources Management in such a scenario is to ensure that HRM policies are in tandem with and in support of the firm’s strategy, structure and controls. Specifically, when we talk of structures and controls the following become worth mentioning in the context of Global HRM.  Decision Making: There is a certain degree of centralization of operating decision making. Compare this to the International strategy, the core competencies are centralized and the rest are decentralized.  Co-ordination: A high degree of coordination is required in wake of the cross- cultural sensitivities. There is in addition also a high need for cultural control.  Integrating Mechanisms: Many integrating mechanisms operate simultaneously [Mbakool.com] 5.3RELATIONSHIP BETWEEN HR STRATEGY AND EMPLOYEE PERFORMANCE What Employees Do is Based on What They Have and Feel: The initial impact of HR practices is on what employees have and feel. Recruitment, selection, training and development are all aimed at bringing in or building certain skills, enabling employees to effectively perform their jobs. In addition, their experience with these practices, along with rewards, performance management and communication, shapes workers’ perceptions of the company’s fairness and desirability. And those perceptions then influence their commitment, motivation and engagement. • What employees do is largely a function of what they have, because they cannot be productive if they don’t have the right skills. • What they do is also a function of what they feel, because they may choose not to be productive if they have negative feelings toward the organization. Ultimately, HR strategy has the most significant impact on what employees actually do on the job. If the strategy focuses on customer service, for example, it will affect things like 118 CU IDOL SELF LEARNING MATERIAL (SLM)

whether employees are friendly and helpful, whether they give the right answers and solve customers’ problems. If the strategy is about efficiency, it will encourage employees to look for ways to lower costs or operate more efficiently. Do they engage in cost-saving behavior or waste time and money? The bottom line is that what employees actually do will decide how well the business strategy is executed. In the end, what employees do is the critical link in executing strategy. Because what employees do depends on what they have and feel, HR strategies need to focus simultaneously on building skills, motivation and behavior for a successful business strategy. Employee Actions Affect Business Success: There are five types of employee behavior relevant to a company’s success. 1. Task behaviorrefers to things that employees are supposed to do as part of their jobs (from the bare minimum to the maximum). 2. Discretionary behavior refers to employees using their discretion to go above and beyond their job descriptions—such as the airline gate agent who races to return a forgotten briefcase. 3. Counterproductive behavioris all those things we do not want to see our employees doing: stealing supplies, taking long personal calls, even sabotaging products or equipment. 4. Attendance is the extent to which employees show up on time. Although perfect attendance is neither possible nor even desired (in the case of a sick employee), workers who call in sick when they feel fine create scheduling hassles and reduce productivity. 5. Turnover, of course, refers to an employee leaving the organization. Again, zero turnover is neither possible nor desired, but excessive turnover of average employees results in additional replacement costs, and turnover of an outstanding employee (if replaced by a less skilled employee) may result in a permanent decrease in productivity. In discussing HR strategy, productivity is usually measured using the number of products produced or delivered divided by the number of full-time employees (FTEs) or number of labor hours. If employees are engaged in positive behaviors, fewer will be needed for a high level of output. On the other hand, careless or deliberate mistakes and negative employee behavior can cause product defects, some of which can’t be repaired. In some industries—such as mining and 119 CU IDOL SELF LEARNING MATERIAL (SLM)

refining—accidents can be costly or fatal, and HR strategies must be developed to encourage safe behavior of employees. Employee Actions Affect Customers: Any employee who interacts with customers has the potential to elicit positive or negative experiences. HR strategy has influenced what employees feel and do, with significant impact on customers and company profits. Employee Actions Affect Company: Finances Employee behavior can affect your firm’s financial outcomes, especially in its impact on operations and customer service. For instance, when quality and productivity decrease, there is an immediate impact on expenses if products must be destroyed, reworked or produced at higher cost. When customers get defective products or services, they will take their business elsewhere, obviously affecting the firm’s revenue stream. As revenues decrease and expenses increase, the firm’s profitability will soon deteriorate. Every HR practice costs money to develop and time to implement and deliver. These costs go directly to the organization’s bottom line. For instance, being selective in hiring may result in better employees, but it will cost more in terms of testing and interviewing. In addition, providing more training for employees will increase their skills and potentially their attitudes, but every day of training costs both real money—for travel, accommodations, meals, trainer fees—and days when the employee is off the job. You shouldn’t think in terms of doing more and more HR strategy, because at some point you will have diminishing returns when the additional investment in the practice costs more than the benefit gained. Do implement high- performance HR practices that increase productivity but don’t let their costs surpass the benefits—or there’s no real financial gain for the company. In order to create efficient HR practices that don’t cost more than they are worth, you need a plan, or strategy map, to keep you on track. 120 CU IDOL SELF LEARNING MATERIAL (SLM)

Fig 5.3.1: HR Strategy and Performance [shrm.org] 5.4GLOBAL HUMAN RESOURCES STRATEGY The following human strategy is appreciated by most of the Global Organization to ensure the effectiveness and efficiency in the global operation. 1. Break all the \"local national\" glass ceilings The first, and perhaps most fundamental, step toward building a global H.R. program is to end all favoritism toward managers who are nationals of the country in which the company is based. Companies tend to consider nationals of their headquarters country as potential expatriates and to regard everyone else as \"local nationals.\" But in today's global markets, such \"us-versus-them\" distinctions can put companies at a clear disadvantage, and there are strong reasons to discard them:  Ethnocentric companies tend to be xenophobic -- they put the most confidence in nationals of their headquarters country. This is why more nationals get the juicy assignments, climb the ranks and wind up sitting on the board -- and why the company ends up with a skewed perception of the world. Relatively few multinational companies have more than token representation on their boards. 121 CU IDOL SELF LEARNING MATERIAL (SLM)

A.B.B. is one company that recognizes the danger and now considers it a priority to move more executives from emerging countries in eastern Europe and Asia into the higher levels of the company.  Big distinctions can be found between expatriate and local national pay, benefits and bonuses, and these differences send loud signals to the brightest local nationals to learn as much as they can and move on.  Less effort is put into recruiting top-notch young people in overseas markets than in the headquarters country. This leaves fast-growing developing markets with shallow bench strength.  Insufficient attention and budget are devoted to assessing, training and developing the careers of valuable local nationals already on the company payroll. Conventional wisdom has defined a lot of the pros and cons of using expatriates versus local nationals. (See Exhibits I and II). But in an increasingly global environment, cultural sensitivity and cumulative skills are what count. And these come with an individual, not a nationality. After all, what exactly is a \"local national\"? Someone who was born in the country? Has a parent or a spouse born there? Was educated there? Speaks the language(s)? Worked there for a while? All employees are local nationals of at least one country, but often they can claim a connection with several. More frequent international travel, population mobility and cross- border university education are increasing the pool of available hybrid local nationals. Every country-connection a person has is a potential advantage for the individual and the company. So it is in a multinational company's interests to expand the definition of the term \"local national\" rather than restrict it. 2. Trace the lifeline Based on the company's business strategy, identify the activities that are essential to achieving success around the world and specify the positions that hold responsibility for performing them. These positions represent the \"lifeline\" of your company. Typically, they account for about 10 percent of management. Then define the technical, functional and soft skills needed for success in each \"lifeline\" role. As Ms. Major of I.B.M. notes, \"It is important to understand what people need to develop as 122 CU IDOL SELF LEARNING MATERIAL (SLM)

executives. They can be savvy functionally and internationally, but they also have to be savvy inside the organization.\" This second step requires integrated teams of business and H.R. specialists working with line managers. Over time, they should extend the skills descriptions to cover all of the company's executive posts. It took 18 months for I.B.M. to roll out its worldwide skills management process to more than 100,000 people in manufacturing and development. A good starting point is with posts carrying the same title around the globe, but local circumstances need to be taken into account. Chief financial officers in Latin American and eastern European subsidiaries, for example, should know how to deal with volatile exchange rates and high infiation. Unilever circulates skills profiles for most of its posts, but expects managers to adapt them to meet local needs. Compiling these descriptions is a major undertaking, and they will not be perfect because job descriptions are subject to continuous change in today's markets and because perfect matches of candidates with job descriptions are unlikely to be found. But they are an essential building block to a global H.R. policy because they establish common standards. The lifeline and role descriptions should be revisited at least annually to ensure they express the business strategy. Many companies recognize the need to review the impact of strategy and marketplace changes on high-technology and R&D roles but overlook the fact that managerial jobs are also redrawn by market pressures. The roles involved in running an emerging market operation, for example, expand as the company builds its investment and sales base. At I.B.M., skills teams update their role descriptions every six months to keep pace with the markets and to inform senior managers which skills are \"hot\" and which the company has in good supply. 3. Build a global database to know who and where your talent is The main tool of a global H.R. policy has to be a global database simply because multinational companies now have many more strategic posts scattered around the globe and must monitor the career development of many more managers. Although some multinational companies have been compiling worldwide H.R. databases over the past decade, these still tend to concentrate on posts at the top of the organization, neglecting the middle managers in the country markets and potential stars coming through the ranks. 123 CU IDOL SELF LEARNING MATERIAL (SLM)

I.B.M. has compiled a database of senior managers for 20 years, into which it feeds names of promising middle managers, tracking them all with annual reviews. But it made the base worldwide only 10 years ago. Now the company is building another global database that will cover 40,000 competencies and include all employees worldwide who can deliver those skills or be groomed to do so. I.B.M. plans to link the two databases by 2000. Unilever has practiced a broader sweep for the past 40 years. It has five talent \"pools\" stretching from individual companies (e.g., Good Humor Breyers Ice Cream in the United States and Walls Ice Cream in Britain) to foreign subsidiaries (e.g., Unilever United States Inc. and Unilever U.K. Holdings Ltd.) to global corporate headquarters. From day one, new executive trainees are given targets for personal development. Those who show the potential to move up significantly are quickly earmarked for the \"Development\" list, where their progress through the pools -- company, national, business group and/or region, global, executive committee -- is guided not only by their direct bosses but by managers up to three levels above. \"We want bigger yardsticks to be applied to these people and we don't want their direct bosses to hang on to them,\" explains Herwig Kressler, Unilever's head of remuneration and industrial relations. To make sure the company is growing the general management talent it will need, the global H.R. director's strategic arm reaches into the career moves of the third pool -- those serving in a group or region -- to engineer appointments across divisions and regions. To build this type of global H.R. database, you should begin with the Step 2 role descriptions and a series of personal-profile templates that ask questions that go beyond each manager's curriculum vitae to determine cultural ties, language skills, countries visited, hobbies and interests. For overseas assignments, H.R. directors correctly consider such soft skills and cultural adaptability to be as important as functional skills. The fact that overseas appointments are often made based largely on functional skills is one reason so many of them fail. 4. Construct a mobility pyramid Evaluate your managers in terms of their willingness to move to new locations as well as their ability and experience. Most H.R. departments look at mobility in black-or-white terms: \"movable\" or \"not movable.\" But in today's global markets this concept should be viewed as 124 CU IDOL SELF LEARNING MATERIAL (SLM)

a graduated scale and constantly reassessed because of changing circumstances in managers' lives and company opportunities. This will encourage many more managers to opt for overseas assignments and open the thinking of line and H.R. managers to different ways to use available in-house talent. Fig 5.4.1: Mobility Pyramid Some multinational companies, for example, have been developing a new type of manager whom we term \"glopats\": executives who are used as business-builders and troubleshooters in short or medium-length assignments in different markets. Other multinational companies are exploring the geographical elasticity of their local nationals. Consider the five-level mobility pyramid in Exhibit III. To encourage managerial mobility, each personal profile in your database should have a field where managers and functional experts assess where and for what purposes they would move. When jobs or projects open, the company can quickly determine who is able and willing to take them. Managers can move up and down a mobility pyramid at various stages of their career, often depending on their family and other commitments. Young single people or divorced 125 CU IDOL SELF LEARNING MATERIAL (SLM)

managers, for example, may be able and eager to sign up for the glopat role but want to drop to a lower level of the pyramid if they wish to start or restart a family life. Or seasoned senior managers may feel ready to rise above the regional level only when their children enter college. I.B.M. uses its global H.R. database increasingly for international projects. In preparing a proposal for a German car manufacturer, for instance, it pulled together a team of experts with automotive experience in the client's major and new markets. To reduce costs for its overseas assignments, I.B.M. has introduced geographic \"filters\": a line manager signals the need for outside skills to one of I.B.M.'s 400 resource coordinators, who aims to respond in 72 hours; the coordinator then searches the global skills database for a match, filtering the request through a series of ever-widening geographic circles. Preference is often given to the suitable candidate who is geographically closest to the assignment. The line manager then negotiates with that employee's boss or team for the employee's availability. The shape of a company's mobility pyramid will depend on its businesses, markets and development stage and will evolve as the company grows. A mature multinational food- processing company with decentralized operations, for example, might find a fiat pyramid adequate, whereas a multinational company in a fast-moving, high-technology business might need a steeper pyramid with proportionately more glopats. Kevin Barham and Marion Devine, \"The Quest for the International Manager: A Survey of Global Human Resource Strategies\" (Economist Intelligence Unit, 1991). 5. Identify your leadership capital Build a database of your company's mix of managerial skills by persuading people to describe the information in their c.v.'s, their management talents and their potential on standard personal-profile templates. Jump-start the process by having your senior managers and those in the lifeline posts complete the forms first. Add others worldwide with the potential to move up. Include functional specialists who show general management potential. Require over time that every executive join the global H.R. system. This makes it harder for uncut diamonds to be hidden by their local bosses. Recognizing that people's situations and career preferences shift over time, hold all managers and technical experts responsible for updating their c.v.'s and reviewing their personal profiles at least once a year. 126 CU IDOL SELF LEARNING MATERIAL (SLM)

Companies should make it clear that individual inputs to the system are voluntary but that H.R. and line managers nevertheless will be using the data to plan promotions and international assignments and to assess training needs. Be mindful of the personal privacy provisions in the European Union's new Data Protection directive and similar regulations forthcoming in Japan that basically require employee consent to gather or circulate any personal information. 6. Assess your bench strength and skills gap Ask each executive to compare his or her skills and characteristics with the ideal requirements defined for the executive's current post and preferred next post. Invite each to propose ways to close any personal skills gaps -- for example, through in-house training, mentoring, outside courses or participation in cross-border task forces. Compare the skills detailed in the personal assessments with those required by your business strategy. This information should form the basis for your management development and training programs and show whether you have time to prepare internal candidates for new job descriptions. Unilever uses a nine-point competency framework for its senior managers. It then holds the information in private databases that serve as feeder information for its five talent pools. The company thoroughly reviews the five pools every two years and skims them in between, always using a three- to five-year perspective. In 1990, for example, its ice cream division had a strategic plan to move into 30 new countries within seven years. Unilever began hiring in its current markets with that in mind and set up a mobile \"ice cream academy\" to communicate the necessary technical skills. I.B.M. applies its competency framework to a much broader personnel base and conducts its skills gap analyses every six months. Business strategists in every strategic business unit define a plan for each market and, working with H.R. specialists, determine the skills required to succeed in it. Competencies are graded against five proficiency levels. Managers and functional experts are responsible for checking into the database to compare their capabilities against the relevant skills profiles and to determine whether they need additional training. Their assessments are reviewed, discussed and validated by each executive's boss, and then put into the database. \"Through the database, we get a business 127 CU IDOL SELF LEARNING MATERIAL (SLM)

view of what we need versus what we have,\" explains Rick Weiss, director of skills at I.B.M. \"Once the gaps are identified, the question for H.R. is whether there is time to develop the necessary people or whether they have to be headhunted from the outside.\" 7. Recruit regularly Search for new recruits in every important local market as regularly as you do in the headquarters country. Develop a reputation as \"the company to join\" among graduates of the best universities, as Citibank has in India, for example. The best way to attract stellar local national recruits is to demonstrate how far up the organization they can climb. Although many Fortune 500 companies in the United States derive 50 percent or more of their revenues from non-domestic sales, only 15 percent of their senior posts are held by non-Americans. There may be nothing to stop a local national from reaching the top, but the executive suite inevitably refiects where a company was recruiting 30 years earlier. Even today, many multinational companies recruit disproportionately more people in their largest -- often their longest-established -- markets, thereby perpetuating the status quo. To counter such imbalances, a multinational company must stress recruitment in emerging markets and, when possible, hire local nationals from these markets for the middle as well as the lower rungs of its career ladder. Philips Electronics N.V., for example, gives each country subsidiary a target number of people to bring through the ranks for international experience. Some go on to lengthy international careers; others return to home base, where they then command more respect, both in the business and with government officials, as a result of their international assignments. 8. Advertise your posts internally Run your own global labor market. In a large company, it is hard to keep track of the best candidates. For this reason, I.B.M. now advertises many of its posts on its worldwide Intranet. Unilever usually advertises only posts in the lower two pools, but this policy varies by country and by business unit. Routine internal advertising has many advantages in that it: 128 CU IDOL SELF LEARNING MATERIAL (SLM)

 Allows a competitive internal job market to function across nationalities, genders and other categories.  Shows ambitious people they can make their future in the company.  Makes it harder for bosses to hide their leading lights.  Attracts high-fiyers who may be ready to jump ship.  Helps to break down business-unit and divisional baronies.  Reduces inbreeding by transferring managers across businesses and divisions.  Gives the rest of the company first pick of talent made redundant in another part of the world.  Solidifies company culture.  Is consistent with giving employees responsibility to manage their own careers. There are also certain disadvantages to this practice: Line managers have to fill the shoes of those who move; a central arbiter may need to settle disputes between departments and divisions, and applicants not chosen might decide to leave. To prevent that, disappointed applicants should automatically be routed through the career development office to discuss how their skills and performance mesh with their ambitions. I.B.M. used to hire only from the inside, but five years ago it began to recruit outsiders -- including those from other industries -- to broaden thinking and add objectivity. Unilever is large enough that it can garner a short list of three to five internal candidates for any post. Yet it still fills 15 percent to 20 percent of managerial jobs from outside because of the need for specialist skills and because of the decreasing ability to plan where future growth opportunities will occur. 9. Institute succession planning Every manager in a lifeline job should be required to nominate up to three candidates who could take over that post in the next week, in three months or within a year, and their bosses should sign off on the nominations. This should go a long way toward solving succession questions, but it will not resolve them completely. The problem in large multinational companies is that many of today's successors may leave the company tomorrow. In addition, managers name only those people they know as 129 CU IDOL SELF LEARNING MATERIAL (SLM)

successors. Third, the chief executives of many multinational companies keep their succession plans -- if they have any -- only in their heads. This seems to overlook the harsh realities of life and death. A better approach is that of one European shipping magnate who always carries a written list with the name of a successor for the captain of every boat in his fieet. 10. Challenge and retain your talent Global networks that transfer knowledge and good practices run on people-to-people contact and continuity. Executive continuity also cuts down on turnover, recruitment and opportunity costs. As international competition for talent intensifies, therefore, it becomes increasingly important for companies to retain their good managers. Monetary incentives are not sufficient: the package must include challenge, personal growth and job satisfaction. A policy should be adopted that invites employees to grow with the company, in every market. In addition, a career plan should be drawn up for every executive within his or her first 100 days in the organization. And plans should be reviewed regularly to be sure they stay aligned with the business strategy and the individual's need for job satisfaction and employability. Overseas assignments and cross-border task forces are excellent ways to challenge, develop and retain good managers. They can also be awarded as horizontal \"promotions.\" This is particularly useful since the fiat organizations currently in fashion do not have enough levels for hierarchical promotions alone to provide sufficient motivation. Unilever has long had a policy of retentive development and manages to hold on to 50 percent of its high-fiyers. As an integral part of its global H.R. policy, it develops the \"good\" as well as the \"best.\" Unilever reasons realistically that it needs to back up its high-fiyers at every stage and location with a strong bench of crisis-proof, experienced supporters who also understand how to move with the markets. Unilever bases these policies on three principles: 1. Be very open with people about the company's assessment of their potential and future. 130 CU IDOL SELF LEARNING MATERIAL (SLM)

2. Pay people well -- and pay those with high potential really well, even though it may look like a distortion to others. 3. Don't hesitate too long to promote people who have shown ability. Sometimes this policy involves taking risks with people. But the point of a good system is to enable a company to place bets on the right people. 5.5THE COMPETENCY REQUIRED FOR INTERNATIONAL MANAGERS. Cross-cultural communication skills: Any role or function in international business means working in diverse workplace with people from a different country or background to yours. Whether they’re a colleague, a client, or a customer, understanding how to communicate across cultures is an absolutely indispensable skill. It requires no small amount of sensitivity, respect, and diplomacy. It also requires an open mind and, often, a little bit of research. Make an effort to learn, understand, and appreciate cultural differences and nuances when it comes to communication. Knowing, for instance, how people from other cultures interpret workplace confrontation or something as simple as maintaining eye contact can help to avoid misunderstandings and facilitate better workplace communication. And good communication is good for business. Of course, listening skills are an often-overlooked element of effective communication. When you’re working with colleagues or customers abroad, actively listening is more important than ever, especially if there is a language barrier. Excellent networking abilities If you want to work in international business, developing a strong network of connections outside of your home country is essential. Successful networking can open the door to unexpected business opportunities overseas, and some reports claim that up to 80% of jobs are now landed through networking. 131 CU IDOL SELF LEARNING MATERIAL (SLM)

While online platforms like LinkedIn make it easier to find and maintain professional connections abroad, excellent in-person networking ability is still among the key skills for success in international business. Mastering your “elevator pitch” and attending industry networking events is one useful way meet like-minded professionals and grow your connections. Of course, like cross-cultural communication, networking skills also require diplomacy, tact, and a listening ear—remember that you’re building a relationship rather than simply selling your skills. For ambitious international business professionals, one of the most valuable networking opportunities is often going to business school. From your peers to your professors, the people you’ll meet on an MBA or Executive MBA program will come from all over the world and boast a diverse range of skills and expertise, making them strong candidates as future collaborators or colleagues. Collaboration For success in international business, it’s not enough to simply build a network — you need to work well with others. The ability to collaborate and work together for a common purpose is fundamental in the business world. It requires humility, allowing others to take the lead and share credit for success. It also requires confidence to tackle problems, give and receive feedback, and respectfully fight your cause. In an international business environment, collaborating with team members from other cultures is especially beneficial. First, it’s an opportunity to use and develop your cross- cultural communication skills. Secondly, it will expose you to new perspectives and ways of addressing difficult business problems. The most inspiring and successful business leaders are often the best collaborators, knowing that collective brainpower can accelerate company success. Interpersonal influence The ability to influence others is fundamental to business success, whether you’re trying to persuade an investor to secure funding for your new venture, encourage an employee to adopt a new way of working, or convince a customer to buy your product. The best business 132 CU IDOL SELF LEARNING MATERIAL (SLM)

leaders gain influence by developing good professional relationships and building respect — meaning communication, networking, and collaboration can all culminate in influence. Mastering interpersonal influence eliminates the need for a hard sell, encouraging others to get on board with your ideas because they understand the value you offer. It’s the ability to be assertive, without being aggressive. In international business, it’s a skill that will serve you well in pitching for new business, negotiating deals, and motivating diverse teams. That’s why it’s a core competency in the Hult leadership curriculum. Adaptive thinking In today’s VUCA business environment, you must have the confidence to react and adapt quickly, thinking “out of the box” to solve problems. Adaptive thinkers thrive in an ever- changing environment, making them well placed for success in international business. But how can you develop adaptive thinking skills? According to a 2015 article in Forbes, impulse control, humility, and curiosity breed adaptive thinking. When a swift response is needed in a critical business situation, adaptive thinking means taking thoughtful action rather than giving in to impulsion. It also means accepting when old solutions are no longer fit for purpose. Adaptive thinking was previously the remit of military commanders, taking decisive action in times of danger and uncertainty. Today it’s a tactical skill demanded of global professionals. Emotional intelligence In today’s HR terms, you’re more likely to hear people valuing “EQ” over the more traditional measure of “IQ”. Strong emotional intelligence is noted as a critical skill when it comes to how to do international business. That’s because it influences nearly every aspect of business interaction. Emotionally intelligent people are self-aware and in control of their emotions, meaning they are better able to react calmly in critical or stressful business situations and adapt flexibly to change. They are also able to work together effectively, collaborating and communicating well thanks to above-average interpersonal skills and a strong sense of empathy. 133 CU IDOL SELF LEARNING MATERIAL (SLM)

To help develop the valuable professional skills associated with strong emotional intelligence, a research team from Ashridge Executive Education at Hult International Business School is investigating the role mindfulness practice can play in leadership training. Resilience To succeed in international business unequivocally demands mental toughness and resilience. On a practical level, working across time zones and cultures involves long hours. Failure and setbacks are also a fact of life in the business world, but defeat isn’t. This is where resilience comes in. [Tweet “Failure and setbacks are a fact in the business world, but defeat isn’t.”] Going hand-in-hand with emotional intelligence, resilience is a key characteristic for success, allowing you to rise to meet the inevitable challenges of global business, maintain motivation, overcome risks, and recover quickly from hardship. 5.6 SUMMARY  A Human Resource strategy is a business’s overall plan for managing its human capital to align it with its organisation goals. The Human Resource strategy sets the direction for all the key areas of HR, including hiring, performance appraisal, development, and compensation.  Strategic human resource management enables alignment between the HR or HR function and your company's business goals.  HR STRATEGY DIMENSIONS: The four key dimensions must be addressed in order to develop HR strategy: o 1.Culture: o 2.Organization: o 3.People: 134 CU IDOL SELF LEARNING MATERIAL (SLM)

o 4.Human Resources Systems:  The strategic role of Human resources Management in such a scenario is to ensure that HRM policies are in tandem with and in support of the firm’s strategy, structure and controls.  Global Human Resources Strategy o Break all the \"local national\" glass ceilings o Trace the lifeline o Build a global database to know who and where your talent is o Construct a mobility pyramid o Identify your leadership capital o Assess your bench strength and skills gap o Recruit regularly o Advertise your posts internally o Institute succession planning o Challenge and retain your talent  The Competency Required for International Managers – o Cross-cultural communication skills: Make an effort to learn, understand, and appreciate cultural differences and nuances when it comes to communication. o Excellent networking abilities - Mastering your “elevator pitch” and attending industry networking events is one useful way meet like-minded professionals and grow your connections o Collaboration - In an international business environment, collaborating with team members from other cultures is especially beneficial. o Interpersonal influence - Mastering interpersonal influence eliminates the need for a hard sell, encouraging others to get on board with your ideas because they understand the value you offer. o Adaptive thinking – Helps to thrive in an ever-changing environment, making them well placed for success in international business. 135 CU IDOL SELF LEARNING MATERIAL (SLM)

o Emotionally intelligent people are self-aware and in control of their emotions, meaning they are better able to react calmly in critical or stressful business situations and adapt flexibly to change. 5.7 KEYWORDS 1. Full Time Equivalents: FTEs are most widely used by companies to determine their employees’ workload, with the perspective of trying to determine how many part-time employees and the hours they work add up to the same number of hours worked by full-time employees. 2. Glass Ceilings- The term glass ceiling refers to a metaphorical invisible barrier that prevents certain individuals from being promoted to managerial- and executive-level positions within an organization or industry. 3. Conventional Wisdom - is - the generally accepted belief, opinion, judgment, or prediction about a particular matter 4. Bench Strength - The competence and number of employees ready to fill vacant leadership and other positions. 5. Skill Gap - The term “skills gap” describes a fundamental mismatch between the skills that employers rely upon in their employees, and the skills that job seekers possess. 6. Top Notch - excellent; of very good quality 5.8 LEARNING ACTIVITY 1.What is the role of Organization in defining the HR Strategy? _________________________________________________________________________ __________________________________________________________________________ 2. Why it is important for the business to maintain global database? _________________________________________________________________________ __________________________________________________________________________ 136 CU IDOL SELF LEARNING MATERIAL (SLM)

5.9 UNIT END QUESTIONS A. Descriptive Questions: Short Answers: 1. Explain the concept of Strategy. 2. State the importance of HR Strategy. 3. What is the meaning of ‘Trace the Lifeline’? 4. Define Leadership Capital and state its significance. 5. Why succession planning is important aspect of Global HR Strategy? Long Answers: 1. How HR Strategy defines the Efficiency of the International Organization? 2. Discuss the relation between HR strategy and Employee Performance. How this relation is used to define the Global Success? 3. Explain Mobility Pyramid. 4. Describe the impact of bench strength and skill gaps. 5. What are the competencies necessary for Global Managers? B. Multiple Choice Questions: 1. The skills level, employee potential and the capability of the management constitutes the ___________________. a. people. b. HR System c. Organization d. Culture 2. What kind of Decision making is preferred in the Global Organization? a. Decentralized b. Centralized c. Informal d. Decentralized at Top and centralized at Functional Level. 3. What should be the focus of HR Strategies? 137 CU IDOL SELF LEARNING MATERIAL (SLM)

a. Building Skills b. Motivation c. Incentive Plans d. Both a & b 4. What type of behaviour is referred to things that employees are supposed to do as part of their jobs? a. Discretionary Behaviour b. Counterproductive behavior c. Task Behaviour d. Attendance 5. What type of people are on the move frequently and handle short and medium term assignments? a. Glopats b. Regionals c. Mobile Local nationals d. Globals Answers: 1- a; 2 – b ; 3 – d; 4 – c; 5 – a; 5.10 REFERENCE Text Book:  Wilhelm Schmeisser, Dieter Krimphove, Rebecca Popp, International Human Resource Management and International Labour Law, De Gruyter Oldenbourg,  Peter J. Dowling, Marion Festing and Allen D. Engle, Sr., International Human Resource Management, Cengage Learning EMEA  By Veronica Velo, Cross-Cultural Management, Business Expert Press  Srinivas R. Kandula International Human Resource Management , SAGE Publications Pvt. Ltd  Pravin Durai, Human Resource Management, Pearson India 138 CU IDOL SELF LEARNING MATERIAL (SLM)

Reference Book  K Aswathappa , Sadhna Dash, International Human Resource Management, McGraw Hill  Gary Dessler, Fundamentals of Human Resource Management, Pearson  Ekta Sharma, Strategic Human Resource Management and Development, Pearson India  Parissa Haghirian, Successful Cross-Cultural Management, Business Expert Press Open Sources:  https://www.Shrm.org/  https://www.ncbi.nlm.nih.gov/  https://www.futurelearn.com/  International Journal of Human Resource Studies  changingminds.org  assignmentpoint.com  interculturalmanagement.fandom.com  diva-portal.org  cvs.edu.in  strategy-business.com  www.mbaknol.com (Integrity-Asia & ispatguru)  publications.anveshanaindia.com  smallbusiness.chron.com  resources.workable.com  whatishumanresource.com  resources.workable.com  jigsawacademy.com  www.personio.com UNIT - 6: MULTINATIONAL PERFORMANCE 139 MANAGEMENT CU IDOL SELF LEARNING MATERIAL (SLM)

STRUCTURE 6.0 Learning Objective 6.1 Introduction 6.2 Performance Management in Global Context 6.2.1 Concept: 6.2.2 Importance of Expatriate Performance for Global Business: 6.3 International Performance Management: 6.3.1 Pre-Requisite Of International Performance Management: 6.3.2 Variables Affecting Expatriate Performance: 6.4 Challenges of international performance management 6.5 Developing International Staff and Multinational Team 6.6 Summary 6.7 Keywords 6.8 Learning Objective 6.9 Unit End Questions 6.10 References 6.0 LEARNING OBJECTIVE After studying this unit, you will be able to:  Explain the Performance Management in the International Business  Describe the pre-requisites and factors affecting International Performance Management  Outline the challenges in the International Performance Management  Describe the significance of Developing Multinational Staff and Team 6.1 INTRODUCTION Businesses need to be able to manage their performance well. It assists them in aligning their employees, resources, and systems with their strategic objectives through both formal and informal processes. It also serves as a dashboard, alerting managers to potential problems and letting them know when they need to make changes to keep the business on track. 140 CU IDOL SELF LEARNING MATERIAL (SLM)

When it comes to performance management, organizations that get it right become formidable competitive machines. “Coming together is a beginning; keeping together is progress; working together is success,” said Henry Ford. The simple principle of “what gets measured gets done” underpins effective performance management. The simple idea of “what gets measured gets done” underpins effective performance management. A corporation should build a cascade of measures and targets from its top-level strategic objectives down to the everyday operations of its frontline staff in an ideal system. Managers keep a close eye on such measures and meet with their teams on a regular basis to discuss progress toward attaining the goals. Good performance is rewarded, whereas poor performance prompts corrective action. 6.2 PERFORMANCE MANAGEMENT IN GLOBAL CONTEXT 6.2.1 CONCEPT: The process of performance management starts with the joining of a new incumbent in a system and ends when an employee quits the organization. Performance management can be regarded as a systematic process by which the overall performance of an organization can be improved by improving the performance of individuals within a team framework. It is a means for promoting superior performance by communicating expectations, defining roles within a required competence framework and establishing achievable benchmarks. According to Armstrong and Baron (1998), Performance Management is both a strategic and an integrated approach to delivering successful results in organizations by improving the performance and developing the capabilities of teams and individuals. Performance management is an ongoing communication process which is carried between the supervisors and the employees throughout the year. The process is very much cyclical and continuous in nature. A performance management system includes the following actions. 141 CU IDOL SELF LEARNING MATERIAL (SLM)

 Developing clear job descriptions and employee performance plans which includes the key result areas (KRA') and performance indicators.  Selection of right set of people by implementing an appropriate selection process.  Negotiating requirements and performance standards for measuring the outcome and overall productivity against the predefined benchmarks.  Providing continuous coaching and feedback during the period of delivery of performance.  Identifying the training and development needs by measuring the outcomes achieved against the set standards and implementing effective development programs for improvement.  Holding quarterly performance development discussions and evaluating employee performance on the basis of performance plans.  Designing effective compensation and reward systems for recognizing those employees who excel in their jobs by achieving the set standards in accordance with the performance plans or rather exceed the performance benchmarks.  Providing promotional/career development support and guidance to the employees.  Performing exit interviews for understanding the cause of employee discontentment and thereafter exit from an organization. A performance management process sets the platform for rewarding excellence by aligning individual employee accomplishments with the organization’s mission and objectives and making the employee and the organization understand the importance of a specific job in realizing outcomes. By establishing clear performance expectations which includes results, actions and behaviours, it helps the employees in understanding what exactly is expected out of their jobs and setting of standards help in eliminating those jobs which are of no use any longer. Through regular feedback and coaching, it provides an advantage of diagnosing the problems at an early stage and taking corrective actions. To conclude, performance management can be regarded as a proactive system of managing employee performance for driving the individuals and the organizations towards desired performance and results. It’s about striking a harmonious alignment between individual and organizational objectives for accomplishment of excellence in performance. 142 CU IDOL SELF LEARNING MATERIAL (SLM)

6.2.2 IMPORTANCE OF EXPATRIATE PERFORMANCE FOR GLOBAL BUSINESS: Improve Local Market Knowledge By living and working in export territories, expatriates gain a deeper understanding of local market conditions, business practices and cultural factors than employees who try to conduct overseas business from headquarters. This local understanding and awareness help organizations reduce risk and avoid mistakes that could limit market success. Instill Company Culture Expatriates work closely with overseas subsidiaries, distributors, agents and joint venture partners to ensure they understand the parent companies’ culture, standards and values. They also use their understanding of cultural differences to modify any of those factors in line with local business practices. By instilling parent company culture and practices, expatriates ensure customers receive a consistent standard of service in all export territories. Transfer Knowledge Expatriates transfer knowledge and skills to overseas partners. If they are setting up manufacturing operations, for example, expatriates can help partners implement corporate working practices and quality standards or use techniques and technologies developed in the parent company. Expatriates working with local distributors or agents can provide partners with product and market knowledge and develop joint programs to improve market penetration. Increase Local Control By appointing expatriates to manage business in export territories, organizations can increase business and financial control over local operations. They establish financial and operational targets with business partners, work with them to achieve targets and monitor performance. They provide headquarters with accurate reports and are in a position to take 143 CU IDOL SELF LEARNING MATERIAL (SLM)

remedial action if partners are not able to meet targets. Expatriates also ensure that local partners comply with policies and procedures and quality and customer service standards. Develop Management Talent Appointing employees to overseas assignments helps organizations develop their management skills and competencies. Expatriates learn to recognize and understand the diversity of local market conditions in different territories, giving them a broader perspective on marketing. They also develop the leadership and interpersonal skills to manage or collaborate with multicultural teams. Developing management talent through expatriate assignments helps organizations develop the skills to succeed in global markets. Changing Role While expatriates make an important contribution to helping their organizations develop export markets, their role is changing, according to TLNT, a website dedicated to talent management and human resources. Organizations increasingly recognize the value of developing local talent in export markets as a way of meeting the needs of individual markets. Rather than sending a succession of expatriates to run local operations, they encourage expatriates to develop local successors who can take over responsibility. 6.3 INTERNATIONAL PERFORMANCE MANAGEMENT: International performance management is the evaluation of an individual who works in a foreign subsidiary on a temporary basis to transfer knowledge or develop global leadership skills. At its best, international performance management should feed into the global goals of the business. 6.3.1 Pre-requisite of International Performance Management: Developing a system that will work successfully across markets is a significant challenge for a global human resources manager. 144 CU IDOL SELF LEARNING MATERIAL (SLM)

Define, facilitate and encourage performance Ultimately the goal of an expatriate performance management system is to define, facilitate and encourage performance in the individual and the teams they work with. Your company’s international performance management system should enable managers of expat employees to set specific, realistic, measurable goals that feed into the overall objectives of the business. However, setting goals is not sufficient for success, the programme should also contain a method of assessing performance on several occasions over a year. To achieve the goals that have been set, employees need to be able to facilitate performance through removal of barriers like outdated equipment or software, poor procedures and micro- management. However, international employees may encounter further difficulty with government requirements or personal safety depending on where they are based. Flexibility needs to be included in this regard when developing an expat performance management system. Finally, encouraging performance has been shown to be another marker of a successful international assignment. The methods for encouraging performance may vary from country to country. While additional remuneration may work successfully at headquarters, time off or other special privileges may be more valued in other countries. The easiest way to find out what may work best is to survey international employees. Once agreed it is essential that the appraisal process is transparent and fair. Training Essential to successful international performance management is a clear and effective training plan for all stakeholders. Once complete, managers need to be held accountable for implementing the process across their own employees, ideally in the form of their own performance appraisal by senior management and/or human resources. Cross-cultural differences When creating a performance development plan that is going to work cross-culturally the differences in how performance feedback should be provided needs to be accounted for. For example, in some European cultures feedback should be direct and actionable where as in 145 CU IDOL SELF LEARNING MATERIAL (SLM)

some Asian cultures the same feedback could cause unacceptable loss of face for the employee. Therefore, it is important to understand the culture on the ground when creating guidelines on how feedback should be provided. In addition to skill sets, another element of effective expat performance is personal health and wellbeing. Ensure your employees have the international health insurance protection they need to excel. 6.3.2 VARIABLES AFFECTING EXPATRIATE PERFORMANCE: When attempting to determine expatriate performance, it is important to consider the impact of the following variables and their interrelationship: The compensation package. The task – the assignment task variables and role of the expatriate. Headquarters’ support. The environment in which performance occurs – the subsidiary or foreign facility. Cultural adjustment – of the individual and the accompanying family members. Figure 6.3.1 depicts these variables and forms the basis upon which we will explore the nature of the international assignment, how performance is managed, the criteria for assessment and the other elements that comprise an effective performance management system. Compensation package. It is essential that we recognize the importance of remuneration and reward in theperformance equation. Perceived financial benefits, along with the progression potential associated with an overseas assignment, are often important motives for accepting the posting. If these expectations are not realized during the assignment, the level of motivation and commitment is likely to decrease, thus affecting performance. Task. Expatriates are allocated to foreign operations to perform certain jobs, as previously stated. Four such jobs were recognized by Hays14: The chief executive officer, often known as a subsidiary manager, is in charge of overseeing and directing the entire international operation. 146 CU IDOL SELF LEARNING MATERIAL (SLM)

Compensation Cultural Task Adjust- ment Expatriate Performance Host Head- Environ- quarter Support ment Fig 6.3.1: Expatriate Performance The structure reproducer is in charge of building or duplicating a structure in a foreign subsidiary that is comparable to one that he or she is familiar with from another area of the organisation. He or she could, for example, be developing a marketing strategy, putting in place an accounting and financial reporting system, or establishing a manufacturing facility. The troubleshooteris the person who is dispatched to a foreign subsidiary to investigate and resolve a specific problem. The operativeis the individual whose assignment is to perform functional job tasks in an existing operational structure, in generally lower level, supervisory positions. Recently, as part of a larger topic about \"corporate governance,\" some interesting presentations on executive performance management were given. The developing duties, responsibilities, and institutional safeguards to ensure a full, accurate, and unbiased assessment of top level managers have been widely cited for this crucial task group. 147 CU IDOL SELF LEARNING MATERIAL (SLM)

In a recent review of cross-cultural performance management systems, Caligiuri identifies four basic types of international assignments: ‘technical assignments’ – short-term knowledge transference activities, said to make up 5 to 10 per cent of expatriate assignments; ‘developmental assignments’ – focusing on in-country performance and the acquisition of local or regional understanding by the assignee, said to make up 5 to 10 per cent of assignments; ‘strategic assignments’ – high-profile activities that focus on developing a balanced global perspective, said to make up 10 to 15 per cent of assignments; and ‘functional assignments’ – described as more enduring assignments with local employees that involve the two-way transfer of existing processes and practices, said to make up between 55 and 80 per cent of assignments. Accurately measuring performance in the tasks inherent in technical and functional assignments may require a smaller number of sources and a greater focus on more defined output criteria (projects completed, contracts signed, etc.) Given their more complicated, subjective duties, assessing progress in developmental and strategic assignments is likely to involve a broader range of local and global players and opinions. Environmental elements are often thought to be more under a multinational's control than task variables. Activity variables can be better analyzed and adjusted as a result of this relative control, depending on the level of position and the type of the task. Along with the specifics of the task, the multinational, like any other organization, determines the role that accompanies each task position. A role is an organised set of actions associated with a specific position. Although an individual's interpretation and performance of a part can be influenced, the role itself is predefined. The parent firm (role sender) predetermines the role of the expatriate (role recipient) in the foreign assignment, and role expectations can be clearly conveyed to the expatriate before departure. Black and Porter discovered that American expatriates working in Hong Kong behaved similarly to those in the United States. A role is an organised set of actions associated with a specific position. Although an individual's interpretation and performance of a part can be influenced, the role itself is predefined. The parent firm (role 148 CU IDOL SELF LEARNING MATERIAL (SLM)

sender) predetermines the role of the expatriate (role recipient) in the foreign assignment, and role expectations can be clearly conveyed to the expatriate before departure. Black and Porter discovered that American expatriates working in Hong Kong behaved similarly to those in the United States. As Torbiorn explains Organizational norms, in terms of parent-company expectations of the manager, and the set of cultural norms that the manager holds in relation to other cultural and organisational norms that may be represented by other role senders, influence the content of the managerial role as perceived by both the individual manager and the parent company. Thus, organisational and cultural norms interact to establish the manager's role content. The challenge for the expatriate manager arises from the fact that the function is defined in one country but carried out in another. That example, cultural norms surrounding the set of actions that identify a ‘manager in the United States' may differ from those considered appropriate for a manager’s role in an important emerging economy such as Indonesia. Headquarters’ support.The expatriate assignment varies from a domestic relocation in that it requires the individual (and maybe accompanying family members) to relocate to a foreign environment outside of their usual cultural comfort zones. The primary incentive for taking the assignment may be professional or financial, but it is frequently combined with a true sense of loyalty and commitment to the sending company. As previously said, the process of adjusting to a new environment usually results in a variety of emotional and psychological reactions to novel conditions faced during the stay in the host country.The level of headquarters’ support provided to the individual and the family is an important performance variable. Host environment.The environment has an impact on all jobs, but it is more important in expatriate management. The international context, according to Gregersen et al., can be a major predictor of expatriate performance due to differences in sociological, legal, economic, technical, and physical demands. As a result, expatriate performance should be evaluated in both an international and an organisational context. As a result, the five key constraints 149 CU IDOL SELF LEARNING MATERIAL (SLM)

outlined above in terms of multinational strategy and subsidiary goal formulation are important factors to consider when managing expatriate performance. It's crucial to know what kind of operation the expatriate will be allocated to China. Conflicting parent company goals are a regular issue in overseas joint ventures, and they can make the expatriate's job more challenging. An expatriate IJV manager may find it challenging to serve two masters and face a high level of confusion about the impact of various IJV goal expectations on their performance rating. Similarly, the stage of international business will have an impact on the expatriate's success. An expatriate in charge of establishing a new facility in a foreign country, particularly in a developing or growing market, may confront different problems and limits than an expatriate manager in charge of a well-established facility. Cultural adjustment. The process of cultural adjustment may be a critical determinant of expatriate job performance. Indeed, much of the literature reviewed in our discussion of the cause of expatriate ‘failure’ covers the process of adjustment. It is likely that expatriates and their families will have some difficulty adjusting to a new environment, and this will impact on the manager’s work performance. The dilemma is that adjustment to a foreign culture is multifaceted, and individuals vary in terms of their reaction and coping behaviors. Determining the relevance of adjustment to the new environment when assessing expatriate work performance may be problematical. The five variables – compensation package, task, headquarters’ support, host environment and cultural adjustment – reviewed above, and shown in Figure 6.3.1, are not mutually exclusive, but interact in a way that has significant implications for the appraisal of international employees’ performance. Designers and users of performance management systems need to be conscious of, and responsive to, the impact of these variables. 6.4 CHALLENGES OF INTERNATIONAL PERFORMANCE MANAGEMENT There are many challenges associated with expatriate performance management. Although we have listed some below, they are likely to vary by business. Ideally work to identify the challenges your company is likely to encounter and attempt to mitigate them in the expatriate performance management plan. 150 CU IDOL SELF LEARNING MATERIAL (SLM)