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CU MBA SEM IV International HRM

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Description: CU MBA SEM IV International HRM


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CHANDIGARH UNIVERSITY Institute of Distance and Online Learning SLM Development Committee Prof. (Dr.) H.B. Raghvendra Vice- Chancellor, Chandigarh University, Gharuan, Punjab:Chairperson Prof. (Dr.) S.S. Sehgal Registrar Prof. (Dr.) B. Priestly Shan Dean of Academic Affairs Dr. Nitya Prakash Director – IDOL Dr. Gurpreet Singh Associate Director –IDOL Advisors& Members of CIQA –IDOL Prof. (Dr.) Bharat Bhushan, Director – IGNOU Prof. (Dr.) Majulika Srivastava, Director – CIQA, IGNOU Editorial Committee Prof. (Dr) Nilesh Arora Dr. Ashita Chadha University School of Business University Institute of Liberal Arts Dr. Inderpreet Kaur Prof. Manish University Institute of Teacher Training & University Institute of Tourism & Hotel Management Research Dr. Manisha Malhotra Dr. Nitin Pathak University Institute of Computing University School of Business © No part of this publication should be reproduced, stored in a retrieval system, or transmitted in any formor by any means, electronic, mechanical, photocopying, recording and/or otherwise without the prior written permission of the authors and the publisher. SLM SPECIALLY PREPARED FOR CU IDOL STUDENTS 2 CU IDOL SELF LEARNING MATERIAL (SLM)

First Published in 2021 All rights reserved. No Part of this book may be reproduced or transmitted, in any form or by any means, without permission in writing from Chandigarh University. Any person who does any unauthorized act in relation to this book may be liable to criminal prosecution and civil claims for damages. This book is meant for educational and learning purpose. The authors of the book has/have taken all reasonable care to ensure that the contents of the book do not violate any existing copyright or other intellectual property rights of any person in any manner whatsoever. In the event, Authors has/ have been unable to track any source and if any copyright has been inadvertently infringed, please notify the publisher in writing for Corrective action. 3 CU IDOL SELF LEARNING MATERIAL (SLM)

CONTENT Unit - 1: International Hrm.................................................................................................... 5 Unit - 2: International Strategy ............................................................................................ 25 Unit - 3: Cross Cultural Negotiation .................................................................................... 60 Unit - 4: International Business And Ihrm ........................................................................... 86 Unit - 5: Globalization And Hr Strategy ............................................................................ 100 Unit - 6: Multinational Performance Management ............................................................. 125 Unit 7- International Compensation System ...................................................................... 145 Unit - 8: Job Analysis........................................................................................................ 166 Unit 9: International Hr Planning ...................................................................................... 187 Unit - 10: Recruitment And Selection:............................................................................... 205 Unit - 11: Recruitment And Selection................................................................................ 228 Unit - 12: International Training And Development .......................................................... 250 Unit - 13: International Training And Development .......................................................... 267 Unit - 14: International Hrm.............................................................................................. 292 4 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 1: INTERNATIONAL HRM 5 STRUCTURE 1.0 Learning Objectives 1.1 Introduction 1.2 Global Business 1.3 International HRM 1.3.1 Definition and Concept 1.3.2 Objectives of IHRM 1.3.3 Need of IHRM: 1.3.4 Dimensions of IHRM 1.3.5 Roles of IHRM 1.4 Difference between Domestic HRM and IHRM 1.5 Issues and Trends in International HRM 1.6 Summary 1.7 Keywords 1.8 Learning Activity 1.9 Unit End Questions 1.10 References 1.0LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe the significance and implications of Globalization  Explain the Concept and Objective of International HRM  Illustrate the dimension of InternationaHRM  Compare the role of Domestic and International HRM CU IDOL SELF LEARNING MATERIAL (SLM)

1.1 INTRODUCTION Global business refers to international trade whereas a global business is a company doing business across the world. The exchange of goods over great distances goes back a very long time. Anthropologists have already established long-distance trading in Europe in the Stone Age. Sea-borne trading was commonplace in many regions of the world in times predating Greek civilization. Such trade, of course, was not by definition \"global\" but had the same characteristics. In the 16th century all of the continents came to be routinely linked by ocean- based communications. Trading activity in the modern sense rapidly followed at the beginning of the 17th century; it might be more accurate to say that it \"returned\" again because trading of such character had taken place in Roman times as well. Globalization is a long-standing program advocated by the economically advanced nations to free up international trade across the globe through treaties. It has also come to mean the relocation of production or service activities to places that have much lower labor costs. Global business in the past—or currently—does not require what advocates of globalization seek, namely a so-called level playing field. International trade has always had a mixed character in which national organizations and private enterprises have both participated, in which monopolies have been imposed, frequently defended by armed forces, in which all manner of restraints and tariffs have been common and participants have made all sorts of efforts to counter such interference or to profit from it. Increased international trade and widespread globalization over the past few decades have given rise to a contemporary branch of HRM, i.e., international HRM, also known as global HRM.It deals with the typical HRM functions like recruitment, selection, training and development, performance appraisal, etc., at the international level. 1.2 GLOBAL BUSINESS An international business is any company that operates and produces or sells goods between two or more countries. There are three ways a business can be considered international: 1. It produces goods domestically and sells domestically and internationally. 2. It produces goods in a different country but sells domestically. 3. It produces goods in a different country and sells domestically and internationally FACETS OF GLOBAL BUSINESS TO CONSIDER: 6 CU IDOL SELF LEARNING MATERIAL (SLM)

Globalization doesn’t just refer to the location of a firm’s offices and customers—it also encompasses the nuances and economic factors of conducting business internationally and existing in a global economy. Even if your company operates domestically, globalization can influence the way you do business. Here are a few factors to consider when thinking about how global business impacts your organization:  Politics and laws: International politics can color relationships between nations and regulate what products are allowed in and out of their borders. Keeping up with current events can help you prepare for the business impacts of shifts in policy and foreign affairs.  The environment: There’s no global issue more pressing than climate change. Unfortunately, globalization can contribute significantly to its negative effects due to increased transportation of materials and products, business travel, and the number of factories. If you’re engaging in global business, keep sustainability in mind to avoid contributing to climate change.  Macroeconomics: Principles of macroeconomics can allow you to compare countries’ financial health on a one-to-one basis and draw connections between trends. Some metrics to know include: o Gross domestic product (GDP) o Unemployment rate o Inflation rate o Degree of income inequality o Currency exchange rate  Human rights: Because laws dictating human rights—including labor laws— differ from country to country, operating as a global business requires research and critical thought to ensure you’re not exploiting people for labor, even if it’s technically legal. Ethics are required for making decisions that may add the cost to the business at the expense of protecting human rights.  Cultural differences and language barriers: Operating a global business requires knowing and respecting other cultures. Without understanding the areas, you do business in, you could unintentionally offend someone and harm your working relationships. In the case of language barriers, this may require you to hire translators and multilingual employees to bridge the gap. 7 CU IDOL SELF LEARNING MATERIAL (SLM)

1.3 INTERNATIONAL HRM/ CROSS CULTURAL HRM 1.3.1 DEFINITION AND CONCEPT: International human resource management is the process of employing, training and developing and compensating the employees in international and global organizations. An international company is one which has subsidiaries outside the home-county which rely on the business expertise or manufacturing capabilities of the parent company. Generally, an MNC is considered to have a number of businesses in different countries but managed as a whole from the headquarters, located in one country. International HRM deals with the typical HRM functions like recruitment, selection, training and development, performance appraisal, etc., at the international level. According to Hugh Scullion, International HRM (IHRM) involves the HRM issues and problems arising from the internationalisation of business, and the HRM strategies, policies and practices which firms pursue in response to the internationalisation of business. International Human Resource Management (IHRM) is “the process of procuring, allocating, and effectively utilizing human resources in a multinational corporation”. In the words of Edwin B. Flippo, “International or domestic HRM involves the planning, organizing, directing and controlling of the procurement, development, compensation, integration and maintenance of people for the purpose of contributing to organizational, individual and social goals.” Pulapa Subba Rao defines international human resource management as, performing HRM and its related activities and arranging for related and necessary immigration facilities for prospective and current expatriate employees, by organizations operating in domestic and/or foreign countries. International human resource management (IHRM) is the process of procuring, allocating, and effectively utilizing human resources in a multinational corporation. If the MNC is simply exporting its products, with only a few small offices in foreign locations, then the task of the international HR manager is relatively simple. However, in global firm’s human resource managers must achieve two somewhat conflicting strategic objectives. First, they must integrate human resource policies and practices across a 8 CU IDOL SELF LEARNING MATERIAL (SLM)

number of subsidiaries in different countries so that overall corporate objectives can be achieved. At the same time, the approach to HRM must be sufficiently flexible to allow for significant differences in the type of HR policies and practices that are most effective in different business and cultural settings. Organizations like Procter & Gamble, IBM, Pepsi and Coca Cola have had extensive international experience and their success can only be attributed to their capability of constantly deploying the right people at the right place, facilitating knowledge and innovation dissemination and constantly identifying and developing talents on a global basis. Thus, for Ford which has a global HR perspective “The company requires understanding different cultures, what motivates people from different societies, and how they are reflected in the structure of international assignments”. 1.3.2 Objectives of IHRM 1. It enhances to develop managerial skills, organisational knowledge and technical abilities of HR managers and employees; 2. To develop more and better handle of global business operations; 3. To manage and secure the performance, compensation and career path of employees; 4. To manage and organise cross cultural counselling and language training programme; 5. To develop more feasible understanding of work practices at global levels; 6. To raise and develop better and new performance management of human resources; 7. To get more and more opportunities within global HR scenario; 8. To develop better and competitive HR strategies in global competitive scenario; 9. To reduce the cultural differences as amicable for cultural environment. 1.3.3 NEED OF IHRM: HRM activities are performed in a particular context. It implies that either different HRM activities may be required in a global firm as compared to the domestic firm or even if the HRM activities remain the same, there may be difference in the way of performing these activities. There are four major contextual variables because of which HRM activities in a global firm differ from a domestic firm, hence the need for international HRM. These are cultural diversity, workforce diversity, language diversity, and economic diversity. 9 CU IDOL SELF LEARNING MATERIAL (SLM)

I. Cultural Diversity: Culture of a country is one of the key factors which affect people-oriented processes, and HRM is a people-oriented process. Therefore, culture of a country has very significant impact on HRM practices. When we consider global perspective of HRM, we find cultural diversity along the globe, that is, cultures of two countries are not alike. II. Workforce Diversity: Workforce diversity is increasingly becoming common for large organizations even for domestic ones. However, in a global firm, additional workforce diversity emerges because of hiring personnel from different countries. A typical global firm may draw its employees from three types of countries — home country (PCNs), host country (HCNs), and third country (TCNs). In a global firm, workforce diversity can also be seen in the context of employee mobility from one country to another country for performing jobs. On this basis, an employee can be put in one of the following categories: 1. Expatriate — a parent country national sent on a long-term assignment to the host country operations. 2. Inpatriate — a host country national or third country national assigned to the home country of the company where it is headquartered. 3. Repatriate — an expatriate coming back to the home country at the end of a foreign assignment. Workforce diversity implies that various categories of employees not only bring their skills and expertise but also their attitudes, motivation to work or not to work, feelings, and other personal characteristics. Managing such employees with pre-determined HRM practices may not be effective but contingency approach has to be adopted so that HRM practices become tailor-made. III. Language Diversity: Language is a medium of expression but employees coming from different countries have different languages. Though English is a very common language, it does not serve the purpose adequately as it does not cover the entire world. While employees coming from different countries may be encouraged to learn the language of the host country for better dissemination of the information, it does not become feasible in many cases. An alternative to this is to send multilingual communications. It implies that anything transmitted to employees should appear in more than one language to help the message get through. While there are no hard- and-fast rules in sending such messages, it appears safe to 10 CU IDOL SELF LEARNING MATERIAL (SLM)

say that such a message should be transmitted in the languages the employees understand to ensure adequate coverage. IV. Economic Diversity: Economic diversity is expressed in terms of per capita income of different countries where a global company operates. Economic diversity is directly related to compensation management, that is, paying wages/salaries and other financial compensation to employees located in different countries. One of the basic principles of paying to employees is that “there should be equity in paying to employees.” However, putting this principle in practice is difficult for a global company because its operations are located in different countries having different economic status. In such a situation, some kind of parity should be established based on the cost of living of host countries. Diversity of various types in a global firm suggests that HRM practices have to be tailor- made to suit the local conditions. 1.3.4 DIMENSION OF INTERNATIONAL HRM Home Country PCN Thir Procure d TCN Allocate Cou ntry Utilize HCN Host Country Fig 1.3.1: Dimensions of IHRM 11 CU IDOL SELF LEARNING MATERIAL (SLM)

Morgan (1986) had developed a unique model to depict how IHRM works.He asserted that IHRM basically is comprised of three components, namely- 1. The wide spectrum of HR activities particularly with reference to the added responsibilities of the international HR managers in terms of managing cultural diversity and developing international executives. 2. The National/Country specific people and cultural categories involved in IHR activities and lastly 3. Types of international employees deployed in various international organizations. HR Activities: The HR activities on an International perspective can be broadly depicted as those of procurement, allocation and utilization of human resources in the organization. These activities include international human resource planning, staffing (recruitment, selection, induction and placement), performance management, training and development, compensation and reward management and managing international employee relations and industrial relations. These HR activities with respect to an international scenario have a broad spectrum mainly in terms of the complexity created by country differences, level of control, cultural differences and so many factors influencing the international business environment. Country Categories Involved in IHRM: The model further depicts that in an international perspective three types of country categories may be involved, namely- a. The host country where the subsidiary could be located or be operating. b. The home country where the MNC/International firm could be headquartered. c. The “third-country” from where employees, capital and other resources like technology or logistics could be availed or procured by the organization. Employee Categories Involved in IHRM: Depending on the above country categories, the employees in an international perspective could be broadly classified as under: a. Host Country Nationals (HCNs) representing the employees hired from the host country. b. Parent Country Nationals (PCNs) representing the employees expatriated to the foreign subsidiary from the home country of the MNC. c. Third Country Nationals (TCNs) representing the employees deployed from third/other countries other than that of the home country of the MNC. 12 CU IDOL SELF LEARNING MATERIAL (SLM)

1.3.5 ROLES OF IHRM: Various international human resource management roles suggested by various researchers are: 1. Champions of Processes: This roles encompasses: a. Building commitment of the senior leadership. b. Training managers. c. Monitoring HR processes. 2. Guardian of Culture: This includes: a. Supervision and management of implementation of global values and systems. b. Ensuring future leaders are sensitive and equipped to deal with global challenges. 3. Effective Political Influencer: It means: a. Understanding internal labour market where a subsidiary is located. b. Managing the internal labour market for the global managers. 4. Network Leadership: It includes: a. Building strong internal and external networks. b. Keeping abreast with latest trends and developments. c. Mobilizing resources to staff project teams effectively. 5. Builder: This includes: a. Articulating various International HR management basics. b. Developing basic internal HR management practices at the beginning of internalization. 6. Change Partner: This means: a. Continuously calibrating human resource management practices as the external environment changes. 13 CU IDOL SELF LEARNING MATERIAL (SLM)

b. To enable the MNC to be agile in terms of its HR practices to meet the challenges of the environment and cash-on the business opportunities. 7. Navigator: It encompasses: a. Competency development of the people and developing a competent organization. b. Balancing between long-term and short-term plans and goals. c. Balancing between global integration and local responsiveness. d. Balancing between change and status quo in an global environment 1.4 DIFFERENCE BETWEEN DOMESTIC AND INTERNATIONAL HRM It emerges that international HRM practices have to be different from those of domestic HRM. It is characterized by more and varied HR activities, need for broader perspective, more involvement in employees’ personal lives, high emphasis on change in employee mix, high risk exposure, and more external influences 1. More and Varied HR Activities: As compared to domestic HRM, in international HRM, there are more and varied HR activities. In international HRM, the volume of the same HR activities which are relevant for domestic HRM too increases because these activities have to be performed in a different context. For example, when employee is chosen for an international assignment, he needs additional training which would enable him to adjust in the new environment. This training will be in addition to training meant for skill development for performing the job effectively. There are many HR activities in which this type of situation emerges. This will be taken up while going through the discussion of international HR activities. Variety in HR activities exists in international HRM because many activities are undertaken which are performed in international HRM only, for example, managing visa and completing various formalities which are necessary for an employee to perform job in an overseas location. There are several such activities. 2. Need for Broader Perspective: As compared to domestic HRM, international HRM requires much wider perspective in respect of almost all HR activities. It implies that HR managers have to consider a variety of 14 CU IDOL SELF LEARNING MATERIAL (SLM)

factors in making decisions on any issue of international HRM. Many of these factors are not relevant in the case of domestic HRM. For example, while fixing international compensation packages, HR managers have to take into account the cost of living of different international locations to bring some kind of parity among employees working at different locations. Similarly, fringe benefits have to be provided to suit conditions of different locations. There are many such activities which require much broader perspective. 3. More Involvement in Employees’ Personal Lives: As compared to domestic HRM, HR managers are required to have more involvement in employees’ personal lives in the case international HRM. This higher level of involvement is required to ensure that the employees are suitably placed in an international location with which they are not well familiar. This lack of familiarity may be on a number of factors like housing, health care practices, meeting of legal requirements of host country, etc. In many cases, the number of such factors may be quite large. In order to take care of such factors, many organizations prefer to have a special unit in their HR department, known as ‘International Human Resource Service’. The basic logic behind creation of such a unit is to provide specialized service which is relevant only in the case of international HRM. 4. High Emphasis on Change in Employee Mix: In international HRM, high emphasis is placed on change in employee mix particularly in terms of nationality of employees. Very often, it happens that when an organization establishes a business in a foreign country, it recruits a greater number of employees from the country of its origin. However, in order to have a favourable image in the country of its operations, it recruits and develops local (host country) personnel. As a result, over the period of time, the proportion of local employees becomes sizeable. This strategy is adopted by most of the multinationals. This process is taken on gradual basis. 5. High Risk Exposure: There is high risk exposure in international HRM as compared to domestic HRM. The risk involved may be of different types (political, regulatory, etc.) in an international business. However, HR-related risk may be in the form of lack of suitable HR practices meeting local requirements, social-cultural risk in the form of non-acceptance of parent country nationals as employees, etc. Such risk may have serious consequences in many cases like social boycott of parent country nationals, kidnapping of employees or harassing them in other forms, and in extreme case, 15 CU IDOL SELF LEARNING MATERIAL (SLM)

takeover of the business by the local government on the plea of not meeting local HR-related conditions. Therefore, HR managers have to be careful in making decisions on issues of international HRM. 6. More External Influences: A maxim of managing a business is- farther away a business goes, more influences it has to face. This is true for international HRM too. As compared to domestic HRM, international HRM activities are influenced by a variety of external factors. HR managers are required to deal with a new set of socio-cultural milieu, political and legal system, etc. 1.5ISSUES AND TRENDS IN INTERNATIONAL HRM International HRM can be a challenging exercise because of fairly obvious reasons: I. Integration Issues: It is difficult to push the right button at the right time, especially when managers operate from headquarters separated by distance. Controlling operations of subsidiary companies in different parts of the globe through remote control can be really taxing — especially in coordinating effort and put the same on track in sync with the established policies of a company. II. Heterogeneous Functions: International HRM can be very challenging when one takes a look at what international HR managers are supposed to handle in terms of variety and complexity — including issues relating to international hiring, placement, culture-specific training, compensation relating problems, administrative services to expatriates, carrying out appraisals from time to time, offering growth opportunities to the talented ones, putting out fires with labour, resolving conflicts and maintaining health labour-management relations, etc. The employees sent abroad on an assignment need to be taken care of in a special way. Their families too need to be taken care of including medical, educational, insurance, transportation benefits, etc. HR issues relating to the above are going to be impacted by a variety of factors which demand a closer examination. There are certain problems and challenges as arising within the process and methods of global HR scenario. 16 CU IDOL SELF LEARNING MATERIAL (SLM)

Some of the challenges and emerging issues in IHRM are: 1. Ethics and corporate social responsibilities 2. Bribery 3. Code of conduct for MNCs 1. Ethics and Corporate Social Responsibilities: Ethics and corporate social responsibilities in the international business environment are always debatable. MNCs have been accused of being indifferent to the problems of host countries as they are more concerned about the profitability of their companies. MNCs have to balance the ethics and moral of their country and host country. i. Ethical relativist ii. Ethical absolutist iii. Ethical universalist i. Ethical Relativist: An ethical relativist believes that there is no right or wrong. What is right in a particular situation in one place may not be so in another. Relativism offers flexibility but may prove to be disastrous in the long-run for an MNC. ii. Ethical Absolutist: An MNC which believes in this approach is strongly influenced by the practices and policies of its home country. They do not give much importance to the culture and values of the host country. Ethical absolutists have been criticised for their arrogance and for showing little respect to the traditions and culture of the host countries. iii. Ethical Universalist: An ethical universalist believes that there are fundamental rules which help us differentiate between right and wrong. These rules need to be adhered to in any country and in any situation. An ethical universalist believes that cultural variations between countries should not lead to any wrongdoing on the part of the MNCs. There is a distinction between practices which are culturally different and ones which are morally wrong. MNCs should understand this difference and work towards achieving high ethical standards. 2. Bribery: According to a survey conducted by J. Macken, developed countries give around $85 billion to underdeveloped countries in the form of bribes. MNCs from developed countries have been accused of bribing Government officials. Hence, countries should frame laws to prevent 17 CU IDOL SELF LEARNING MATERIAL (SLM)

corruption. For example, in the US, there is a law called Foreign Corrupt Practices Act (FCPA), which prohibits US- based firms from bribing officials in other countries. 3. Code of Conduct for International Business: The first step in framing a code of conduct for international business players came in the form of the Caux Roundtable Conference on ‘Principles for Business Conduct’ held in 1994. It was a conference on international business ethics, held at Caux in Switzerland and was attended by the business leaders from all countries. The focus was to formulate a set of rules and ethical codes which would be used for benchmarking global business practices. Major work on this issue was done at Minnesota centre for corporate responsibility in the US. The main aim of Caux conference as given in the charter is, “to further the twin value of living and working together and human dignity by promoting free trade, environmental and cultural integrity and prevention of bribery and corruption.” Certain Other Areas in International Human Resource Management: A specific area deserving attention in international human resource management is the standards set by international and regional organisations in regard to the use of human resources. A particular mention may be made of the role of the ILO, European Union, (EU), South Asian Association for Regional Cooperation (SAARC), Association of South East Cooperation (APEC) and BRICS (Brazil, Russia, India, China and South Africa). The ILO creates international standards of labour in the forms of Convention and Recommendation. Conventions are obligation-creating instruments. The member states ratifying a Convention are under the obligation to give effect to its provisions by enacting labour law or under collective agreement or in other ways. The MNCs operating in foreign countries must abide by the provisions of ratified Conventions as embodied in labour law, collective agreement or other instruments. Similarly, the European Union also creates norms in various areas related to the use of human resources in the member countries. Some of these norms are related to industrial relations, workers’ participation in management and rights and obligations of employers and unions. Some of the norms adopted by organisations in the Asian countries also have direct or indirect relevance to the use of human resources. The areas of activities in domestic and international human resource management are not dissimilar, but the international HRM requires revamping and modifying them taking into account the dissimilarities in the cultural, political, economic and legal environment of the countries in which they operate. 18 CU IDOL SELF LEARNING MATERIAL (SLM)

Not only they have to change their mind set to work in this new set but they have to train the employees to adjust with the new set. In fact, effectiveness of HR depends to a very great extent on the degree of such an adjustment. 1.6 SUMMARY  An international business is any company that operates and produces or sells goods between two or more countries.  Facets of Global Business To Consider: o Politics and laws: o The environment: o Macroeconomics: o Human rights: o Cultural differences and language barriers:  International human resource management is the process of employing, training and developing and compensating the employees in international and global organizations.  Need of IHRM: o Cultural Diversity o Workforce Diversity o Language Diversity o Economic Diversity  DIMENSION OF INTERNATIONAL HRM: o The HR activities on an International perspective can be broadly depicted as those of procurement, allocation and utilization of human resources in the organization. o Country Categories Involved in IHRM – Home, Host and Third Country o Employee Categories Involved in IHRM: PCN, HCN, TCN 19 CU IDOL SELF LEARNING MATERIAL (SLM)

 Various international human resource management roles suggested by various researchers are: o Champions of Processes: o Guardian of Culture: o Effective Political Influencer: o Network Leadership: o Builder o Change Partner: o Navigator:  It emerges that international HRM practices have to be different from those of domestic HRM. It is characterized by more and varied HR activities, need for broader perspective, more involvement in employees’ personal lives, high emphasis on change in employee mix, high risk exposure, and more external influences.  International HRM can be a challenging exercise because of Integration Issues & Heterogenous Functions.  Some of the challenges and emerging issues in IHRM are: o Ethics and corporate social responsibilities o Bribery o Code of conduct for MNCs 1.7 KEYWORDS 1. Immigration is the international movement of people to a destination country of which they are not natives or where they do not possess citizenship in order to settle as permanent residents or naturalized citizens 2. Expatriate — a parent country national sent on a long-term assignment to the host country operations. 3. Inpatriate — a host country national or third country national assigned to the home country of the company where it is headquartered. 4. Repatriate — an expatriate coming back to the home country at the end of a foreign assignment. 5. Multilingualism is the ability of an individual speaker or a community of speakers to communicate effectively in three or more languages 20 CU IDOL SELF LEARNING MATERIAL (SLM)

1.8 LEARNING ACTIVITY 1. What are the necessary skills required to become good Global HR Manager? _________________________________________________________________________ __________________________________________________________________________ 2. What is the significance of IHRM? __________________________________________________________________________ __________________________________________________________________________ 1.9 UNIT END QUESTIONS A. Descriptive Questions Short Answers: 1 Explain the concept of Global Business. 2 Define IHRM and state its objectives. 3 Explain Ethics and CSR aspect of IHRM. 4 State the difference between the categories of employees in IHRM. 5 Write a note on Economic Diversity involved in IHRM. Long Answers: 1 Why IHRM is emphasized and embraced in Global Organizations? 2 Discuss the Dimension of IHRM. 3 Differentiate between Domestic and IHRM 4 Discuss the emerging issues in IHRM 5 Discuss the various roles of IHRM. B. Multiple Choice Questions 1. Ethics will ensure the business decision are not exploiting ___________of the labours. a. Medical Rights b. Human Rights 21 CU IDOL SELF LEARNING MATERIAL (SLM)

c. Security Rights d. Education Rights 2. Which of the following is highlighted in the IHRM definition of the Hugh Scullion? a. HRM issues and problems b. HR activities c. Managerial Skills d. Immigration facilities 3. What is affected by the Culture? a. Logistics b. IT system c. Manufacturing Process d. People-oriented processes 4. Employees coming back to the home country at the end of a foreign assignment are called as a. Support Staff b. Expatriate c. Inpatriate d. Contract employees 5. Which role of IHRM takes care of Supervision and management of implementation of global values and systems? a. Guardian of Culture b. Champions of Processes c. Effective Political Influencer d. Network Leadership Answers 1 -b ; 2 – a; 3 - d; 4 -c ; 5 – a 22 CU IDOL SELF LEARNING MATERIAL (SLM)

1.10 REFERENCES 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 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:     International Journal of Human Resource Studies  23     CU IDOL SELF LEARNING MATERIAL (SLM)

  (Integrity-Asia & ispatguru)        24 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 2: INTERNATIONAL STRATEGY STRUCTURE 2.0 Learning Objectives 2.1 Introduction 2.2 Culture 2.2.1 Definition 2.2.2 Coverage of Culture 2.3 Determinants of Culture: 2.4 Cross Cultural Theories 2.4.1 The Seven Dimensions of Culture: 2.4.2 Hofstede's Cultural Dimensions 2.4.3 Halls and Halls High and Low Context Theory: 2.4.4 Andre Laurent’s Study of Management Styles: 2.5 Summary 2.6 Keywords 2.7 Learning Activity 2.8 Unit End Questions 2.9 References 2.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe the significance and concept of Culture  Explain the Determinants of the Culture  Comprehend the importance and applications of Cross-Cultural Theories 25 CU IDOL SELF LEARNING MATERIAL (SLM)

2.1INTRODUCTION The fundamental necessity to apprehend dynamic cultures is quite crucial as different cultures tend to interpret different views and things. Such views may be beneficial to one and neutral to another. The things and notions that are considered to be essential for one group within an organization may not be turn out to be the same for the other group. Hence with this contrast as well as diversity, an organization has to perceive and comprehend the necessity of different group of people. It is essential to harmonize sensitively and substantially to the need and wants of different groups. Efforts need to be put proactively to reduce the gap among the people belonging to different culture backgrounds who are working together in an organization. Cross-cultural management can be understood as the administration of individuals and activities that include an alternate culture backdrop and dynamic background. The study related to cross-culture focuses on the crucial notions such as training and encouraging how to deal with clashes of the diverse culture and initiate viable and sound management. Its fundamental objective is to plan an achievable management structure and the executive’s component over the distinctive culture foundations. It likewise plans to utilize endeavors’ assets, particularly apply potential estimation of undertakings proficiently and successfully. If we talk about the relative significance of cultural cognizance in the field of international business, there can be observed different aspects as well as facets:  There are some firms that need more cross-cultural awareness as compared to other firms and organizations.  Many countries may require more powerful cross-cultural sensitivity and scrutiny in comparison with other countries.  Some functions do require more concentrated knowledge regarding cross culture than others.  Because of contrasting role and personality, some people need a high level of cultural insight in comparison to others. 2.2CULTURE 2.2.1 DEFINITION AND CONCEPTS: Culture is defined as a complex whole which consists of customs, attitudes, beliefs and values of a society. It is a set of shared attitudes, values, goals and practices that characterizes an institution, organization or group. It is the total way of life of people. 26 CU IDOL SELF LEARNING MATERIAL (SLM)

According to Hofstede, “Culture is the software of the mind - the social programming that runs the way we think, act and perceive ourselves and others.” Terpstran (1987) has defined culture as: \"The integrated sum total of learned behavioural traits that are manifest and shared by members of society\" Culture, therefore, according to this definition, is not transmitted genealogically. It is not, also innate, but learned. Facets of culture are interrelated and it is shared by members of a group who define the boundaries. Often different cultures exist side by side within countries, especially in Africa. It is not uncommon to have a European culture, alongside an indigenous culture, say, for example, Shona, in Zimbabwe. Culture also reveals itself in many ways and in preferences for colours, styles, religion, family ties and so on. The colour red is very popular in the west, but not popular in Islamic countries, where sober colours like black are preferred. According to E.B Taylor, “Culture is a part of civilization which includes knowledge, belief, art, morals, law and custom and other capabilities and habits acquired by man as a member of society.” According to Kluckhohn, “Culture is the total lifestyle of people.” Culture has following features: o It is very complex in nature. o It develops from interaction among human beings in society. o It passes from generation to generation. o It is a learned behaviour. Hence education also shapes culture. o It is learnt by human beings right from childhood. It is learnt by the human beings in the course of development o It determines personality. It shapes the way we think, act and perceive others. o It is influenced by family system and society in which one lives. o It shapes human beliefs, preferences, and lifestyle. It also shapes human values, i.e. what is right and what is wrong, what type of behaviour is rewarding and what type of behaviour is punishing. o It does not change in short run. Culture, alongside economic factors, is probably one of the most important environmental variables to consider in global marketing. Culture is very often hidden from view and can be easily overlooked. Similarly, the need to overcome cultural myopia is paramount. 27 CU IDOL SELF LEARNING MATERIAL (SLM)

2.2.2 COVERAGE OF CULTURE Culture refers to the pattern of human activity and the symbols which gives significance to this activity. The importance of a culture lies in the fact that it acts a link between people and their value system. The significance of the culture is as follows: Creates Identification: The culture and the values followed in a particular community display its own unique identity. By practicing a set of rituals and traditions, the community gains a unique character and personality, simply because of the culture of the people belonging to it. Being shared amongst various members of a community, the language, art, and religion serve as the major symbols of culture, thereby distinguishing it from other cultures in the society. Further, it is learned and passed on from the older generations to the newer ones, thereby keeping the culture alive and fresh. Bonds People: Culture is merely a bond or tie that keeps people belonging to a particular region or community together. Thus, people following similar rituals, customs, and values fall into one culture, thereby bonding them together. These include the festivals they celebrate, the kind of clothing they wear, the food they eat, most importantly, the cultural values they adhere to. Establishes Principles: Culture is often viewed as an integrated system that controls the society. As such, people coming from a particular culture exhibit distinguished standards and behaviours. The cultural values that people inhibit form the founding principles of an individual’s life. Moreover, these cultural values highly influence a person’s principles and philosophies of life and one’s way of living. Thus, a culture is significant in affecting a human being’s social life. Stand Apart: In Foreign Countries People who have seeped their cultural values and traditions in their lives display them in foreign lands as well. In today’s competitive world, most people migrate from their homeland to other countries in the quest of a better living. It is only due to their sustaining of the cultural values that they stay connected with their family and community, in 28 CU IDOL SELF LEARNING MATERIAL (SLM)

particular. Further, they maintain their unique rituals and customs so that they do not mingle with the foreigners and lose out their traditions back home. 2.3DETERMINANTS OF CULTURE: Based on the definition of culture, there are a few basic elements of culture. These elements are universal; meaning that they form the cultural environment of all societies. But what is important is that they perform differently in different societies, leading ultimately to cultural diversity across different societies. The major elements of culture are material culture, language, aesthetics, education, religion, attitudes and values, customs and social organisation. Language: Language is the medium through which message is conveyed. It may be verbal or non-verbal. The formal includes the use of particular words or how the words are pronounced. The latter embraces the gestures through which feelings are expressed. When an international manager gives the instruction to his subordinates who are from host country may not understand the instructions properly. So, to avoid such problem either the same language should be spoken in home or host country which is not possible normally or a global language which is acceptable by home and host country should be used. Again, even if the language is same in the two countries, it is possible that the same word or the same phrase carries different meaning in different countries. For example, the word, homely means friendly and comfortable in England but plain or even ugly in the United States. Language reflects the nature and values of society. There may be many sub-cultural languages like dialects which may have to be accounted for. Some countries have two or three languages. In Zimbabwe there are three languages - English, Shona and Ndebele with numerous dialects. In Nigeria, some linguistic groups have engaged in hostile activities. Language can cause communication problems - especially in the use of media or written material. It is best to learn the language or engage someone who understands it well. Aesthetics Aesthetics refer to the ideas in a culture concerning beauty and good taste as expressed in the arts -music, art, drama and dancing and the particular appreciation of colour and form. African music is different in form to Western music. Aesthetic differences affect design, colours, packaging, brand names and media messages. Colour symbolism is very important 29 CU IDOL SELF LEARNING MATERIAL (SLM)

in international business. Black is the symbol of mourning in the USA and UK, while it is white in Japan. While designing the advertisement programme or while packaging products, an international manager must consider these aesthetic sensibilities of the home and host country so that people are not marginalised and marketing should be done smoothly. Education: Education refers to the transmission of skills, ideas and attitudes as well as training in particular disciplines. Education can transmit cultural ideas or be used for change, for example the local university can build up an economy's performance. Education level indicates the literacy rate and enrolment in school and colleges in a particular culture. This element has a direct and close relationship with the availability of the skilled manpower, production of sophisticated products, and adaptation of imported technologies. If the education level is high in a particular society, it is easy for multinational organization to operate efficiently because of availability of skilled manpower, ease of training and sophisticated production is possible. Pattern of education is as important as its level. For example if in India more educated people have degree in Arts, Languages then a company Nokia or Samsung(mobile giants) would not be able to operate effectively as they are today with most of Indian graduates whose degree is in IT and engineering. Education levels, or lack of it, affect marketers in a number of ways:  Advertising programmes and labelling  girls and women excluded from formal education (literacy rates)  conducting market research  complex products with instructions  relations with distributors and,  support sources - finance, advancing agencies etc. Religion: It is an element of culture. It sets the ideals of life and thereby the values and attitude of individuals living in a society. These values manifest in individual’s behaviour and performance. Since, different forms of religion differ in details. Like the attitude towards entrepreneurship or consumption, and so varies among different societies practicing different forms of religion or among different schools of thoughts of the same religion. 30 CU IDOL SELF LEARNING MATERIAL (SLM)

For example, in Hinduism, the caste system comes in the way of mobility of the work force as certain types of works to be performed only by a certain caste. It was very rigid a few decades ago, but now have considerably softened. Religion provides the best insight into a society's behaviour and helps answer the question why people behave rather than how they behave. Like Religion can affect marketing in a number of ways:  Religious holidays - Ramadan cannot get access to consumers as shops are closed.  Consumption patterns - fish for Catholics on Friday  Economic role of women – Islam  Caste systems - difficulty in getting to different costs for segmentation/niche marketing  Joint and extended families - Hinduism and organizational structures;  Institution of the church - Iran and its effect on advertising, \"Western\" images  Market segments - Maylasia - Malay, Chinese and Indian cultures making market segmentation  Sensitivity is needed to be alert to religious differences. Attitudes and values: Values are the belief and norms prevalent in a particular society. They determine largely the attitude and behaviour of individuals towards work, status, change and so on. In some societies, where income and wealth are emphasized upon, people work overtime to earn more and on the contrary where leisure is preferred, people work for limited hours to meet their essential needs. The attitude towards social status is also important factor. For example, in Japan youth pay a higher price for Levi’s jeans as it gives them a feeling of higher social status. Also such attitude towards social status motivates individuals to opt for a particular branch of study. In the USA, business professionals have higher social status while in less developing countries bureaucracy is believed to be the best profession. Values often have a religious foundation, and attitudes relate to economic activities. It is essential to ascertain attitudes towards marketing activities which lead to wealth or material gain, for example, in Buddhist society these may not be relevant. Also \"change\" may not be needed, or even wanted, and it may be better to relate products to traditional values rather than just new ones. Many African societies are risk averse; therefore, entrepreneurialism may not always be relevant. Attitudes are always precursors of human behaviour and so it is essential that research is done carefully on these. Customs: 31 CU IDOL SELF LEARNING MATERIAL (SLM)

Customs and manners vary from one society to another. In the USA, silence is taken as negation, while it is not so in India and Japan. Similarly, Britons prefer instant coffee, while in the USA, ground coffee and instant coffee both are popular. In a view of such differences, it is imperative for international business to be aware of varying manners and customs. Social organisation/Institutions: Social institutions form an integral part of culture. They are concerned mainly with the size of the family and social stratification. In the United States of America and the United Kingdom and most other developed countries, the size of the family is small, comprising of a husband, wife and children. In some countries grandparents are also the part of a family and even in countries cousins, aunts and uncles also form the larger family. In India, it’s very common practice. In some societies, social stratification is very much apparent. In some countries like Japan, irrespective of the position or rank of the employees everybody share single huge hall of the company as office space, while in some countries senior most people get higher position and spacious isolated cubicles. Social stratification is also apparent in people’s buying habits. Low income people use low price products often and affluent class is attracted towards brands and expensive variety of goods. So international business organization when operates in foreign land must consider the different segment which is the major buyers of their products and employees who believe in equal status or inequality. Material culture Material culture refers to tools, artefacts and technology. Before marketing in a foreign culture it is important to assess the material culture like transportation, power and communications and so on. Input-output tables may be useful in assessing this. All aspects of marketing are affected by material culture like sources of power for products, media availability and distribution. For example, refrigerated transport does not exist in many African countries. Material culture introductions into a country may bring about cultural changes which may or may not be desirable. (see the case below) Case 1: Canned Drinks In Zimbabwe Until the early 1990s, Zimbabwe did not allow both alcoholic and non-alcoholic beverages to be packed in cans. There were both economic and environmental reasons for this. Economically, Zimbabwe did not have the production facility for canning. Environmentally, Zimbabwe had seen the 32 CU IDOL SELF LEARNING MATERIAL (SLM)

litter in Botswana, caused by discarded empty cans. By putting a deposit on glass containers they ensured the empties were returned to the retailer, thus avoiding a litter problem. However, with the advent of trade liberalisation under the Structural Reform Program, the Government of Zimbabwe decided to allow the import of some 4 million cans as an experiment, after which it would assess the environmental impact. The result was a huge influx of canned alcoholic and other beverages not just from nearby Botswana and South Africa but from Australia, USA and Europe 2.4CROSS CULTURAL THEORIES 2.4.1 THE SEVEN DIMENSIONS OF CULTURE: The Seven Dimensions of Culture were identified by management consultants Fons Trompenaars and Charles Hampden-Turner, and the model was published in their 1997 book, \"Riding the Waves of Culture.\" Trompenaars and Hampden-Turner developed the model after spending 10 years researching the preferences and values of people in dozens of cultures around the world. As part of this, they sent questionnaires to more than 46,000 managers in 40 countries. They found that people from different cultures aren't just randomly different from one another; they differ in very specific, even predictable, ways. This is because each culture has its own way of thinking, its own values and beliefs, and different preferences placed on a variety of different factors. Trompenaars and Hampden-Turner concluded that what distinguishes people from one culture compared with another is where these preferences fall in one of the following seven dimensions. This is especially useful if you do business with people from around the world, or if you manage a diverse group of people. The model also highlights that one culture is not necessarily better or worse than another; people from different cultural backgrounds simply make different choices. However, the model doesn't tell you how to measure people's preferences on each dimension. Therefore, it's best to use it as a general guide when dealing with people from different cultures. 1. Universalism versus Particularism: (Rules versus Relationships) Dimension Characteristics Strategies 33 CU IDOL SELF LEARNING MATERIAL (SLM)

Dimension Characteristics Strategies Universalism People place a  Help people understand high importance how their work ties into on laws, rules, their values and beliefs. values, and  Provide clear obligations. They instructions, processes, try to deal fairly and procedures. with people based  Keep promises and be on these rules, consistent. but rules come  Give people time to before make decisions. relationships.  Use an objective process to make decisions yourself, and explain your decisions if others are involved. Particularism People believe  Give people autonomy that each to make their own circumstance, and decisions. each relationship,  Respect others' needs dictates the rules when you make that they live by. decisions. Their response to  Be flexible in how you a situation may make decisions. change, based on  Take time to build what's happening relationships and get to in the moment, know people so that and who's you can better involved. understand their needs.  Highlight important rules and policies that 34 CU IDOL SELF LEARNING MATERIAL (SLM)

Dimension Characteristics Strategies need to be followed. Typical Universalist cultures include the U.S., Canada, the U.K, the Netherlands, Germany, Scandinavia, New Zealand, Australia, and Switzerland. Typical particularistic cultures include Russia, Latin-America, and China. 2. Individualism versus Communitarianism: (The Individual versus The Group) Dimension Characteristics Strategies Individualism People believe in  Praise and personal freedom and reward achievement. They individual believe that you performance. make your own  Give people decisions, and that autonomy to you must take care of make their yourself. own decisions and to use their initiative.  Link people's needs with those of the group or organization.  Allow people to be creative and to learn from their 35 CU IDOL SELF LEARNING MATERIAL (SLM)

Dimension Characteristics Strategies mistakes. Communitarianism People believe that  Praise and the group is more reward group important than the performance. individual. The group  Don't praise provides help and individuals safety, in exchange publically. for loyalty. The  Allow people group always comes to involve before the individual. others in decision making.  Avoid showing favouritism. Typical individualist cultures include the U.S., Canada, the U.K, Scandinavia, New Zealand, Australia, and Switzerland. Typical communitarian cultures include countries in Latin-America, Africa, and Japan. 3. Specific Versus Diffuse: (How Far People Get Involved) Dimension Characteristics Strategies Specific People keep work  Be direct and to the and personal lives point. separate. As a result,  Focus on people's they believe that objectives before you relationships don't focus on have much of an strengthening impact on work relationships. 36 CU IDOL SELF LEARNING MATERIAL (SLM)

Dimension Characteristics Strategies objectives, and,  Provide clear although good instructions, relationships are processes, and important, they procedures. believe that people  Allow people to keep can work together their work and home without having a lives separate. good relationship. Diffuse People see an overlap  Focus on building a between their work good and personal life. relationship before They believe that you focus on business good relationships objectives. are vital to meeting  Find out as much as business objectives, you can about the and that their people that you work relationships with with and the others will be the organizations that you same, whether they do business with. are at work or  Be prepared to meeting socially. discuss business on People spend time social occasions, and outside work hours to have personal with colleagues and discussions at work. clients.  Try to avoid turning down invitations to social functions. Typical specific cultures include the U.S., the U.K., Switzerland, Germany, Scandinavia, and the Netherlands. Typical diffuse cultures include Argentina, Spain, Russia, India, and China. 37 CU IDOL SELF LEARNING MATERIAL (SLM)

4. Neutral versus Emotional: (How People Express Emotions) Dimension Characteristics Strategies Neutral People make a  Manage your great effort to emotions effectively. control their  Watch that your body emotions. Reason language doesn't influences their convey negative actions far more emotions. than their  \"Stick to the point\" in feelings. People meetings and don't reveal what interactions. they're thinking  Watch people's reactions or how they're carefully, as they may be feeling. reluctant to show their true emotions. Emotional People want to  Open up to people to find ways to build trust and rapport express their  Use emotion to emotions, even communicate your spontaneously, at objectives. work. In these  Learn to manage cultures, it's conflict effectively, welcome and before it becomes accepted to show personal. emotion.  Use positive body language.  Have a positive attitude. Typical neutral cultures include the U.K., Sweden, the Netherlands, Finland, and Germany. Typical emotional cultures include Italy, France, Spain, and countries in Latin-America. 38 CU IDOL SELF LEARNING MATERIAL (SLM)

5. Achievement versus Ascription: (How People View Status) Dimension Characteristics Strategies Achievement People believe  Reward and recognize that you are what good performance you do, and they appropriately. base your worth  Use titles only when accordingly. relevant. These cultures  Be a good role value model. performance, no matter who you are. Ascription People believe  Use titles, especially that you should when these clarify be valued for who people's status in an you are. Power, organization. title, and position  Show respect to people matter in these in authority, especially cultures, and when challenging these roles define decisions. behavior.  Don't \"show up\" people in authority.  Don't let your authority prevent you from performing well in your role. Typical achievement cultures include the U.S., Canada, Australia, and Scandinavia. Typical ascription cultures include France, Italy, Japan, and Saudi Arabia. 39 CU IDOL SELF LEARNING MATERIAL (SLM)

6. Sequential Time versus Synchronous Time: (How People Manage Time) Dimension Characteristics Strategies Sequential People like  Focus on one activity Time events to happen or project at a time. in order. They  Be punctual. place a high value  Keep to deadlines. on punctuality,  Set clear deadlines. planning (and sticking to your plans), and staying on schedule. In this culture, \"time is money,\" and people don't appreciate it when their schedule is thrown off. Synchronous People see the  Be flexible in how you Time past, present, and approach work. future as  Allow people to be interwoven flexible on tasks and periods. They projects, where often work on possible. several projects at  Highlight the once, and view importance of plans and punctuality and commitments as deadlines if these are flexible. keys for meeting 40 CU IDOL SELF LEARNING MATERIAL (SLM)

Dimension Characteristics Strategies objectives. Typical sequential-time cultures include Germany, the U.K., and the U.S. Typical synchronous-time cultures include Japan, Argentina, and Mexico. 7. Internal Direction versus Outer Direction: (How People Relate to Their Environment) Dimension Characteristics Strategies Internal People believe  Allow people to Direction that they can develop their skills (This also control nature or and take control of known as having their environment their learning. an internal locus to achieve goals.  Set clear objectives of control .) This includes that people agree how they work with. with teams and  Be open about within conflict and organizations. disagreement, and allow people to engage in constructive conflict. Outer Direction People believe  Provide people with (This also that nature, or the right known as having their resources to do an environment, their jobs external locus of controls them; effectively. they must work  Give people 41 CU IDOL SELF LEARNING MATERIAL (SLM)

Dimension Characteristics Strategies control .) with their direction and environment to regular achieve goals. At feedback , so that work or in they know how relationships, their actions are they focus their affecting their actions on others, environment. and they avoid  Reassure people conflict where that they're doing a possible. People good job. often need  Manage reassurance that conflict quickly and they're doing a quietly. good job.  Do whatever you can to boost people's confidence.  Balance negative and positive.  Encourage people to take responsibility for their work. Typical internal-direction cultures include Israel, the U.S., Australia, New Zealand, and the U.K. Typical outer-direction cultures include China, Russia, and Saudi Arabia. 2.4.2 HOFSTEDE'S CULTURAL DIMENSIONS With access to people working for the same organization in over 40 countries of the world, Dr Geert Hofstede has collected cultural data and analysed his findings. He initially identified four distinct cultural dimensions that served to distinguish one culture from another. Later he 42 CU IDOL SELF LEARNING MATERIAL (SLM)

added a fifth dimension, and that is how the model stands today. He scored each country using a scale of roughly 0 to 100 for each dimension. The higher the score, the more that dimension is exhibited in society. The Five Dimensions of Culture Armed with a large database of cultural statistics, Hofstede analysed the results and found clear patterns of similarity and difference amid the responses along these five dimensions. Interestingly, his research was done on employees of IBM only, which allowed him to attribute the patterns to national differences in culture, largely eliminating the problem of differences in company culture. The five dimensions are: 1. Power/Distance (PD) This refers to the degree of inequality that exists – and is accepted – among people with and without power. A high PD score indicates that society accepts an unequal distribution of power, and that people understand \"their place\" in the system. Low PD means that power is shared and well dispersed. It also means that society members view themselves as equals. Application: According to the model, in a high PD country such as Malaysia (104), you would probably send reports only to top management and have closed-door meetings where only select powerful leaders were in attendance. PD Characteristics Tips High PD  Centralized  Acknowledge a companies. leader's power.  Strong hierarchies.  Be aware that you may need to go to  Large gaps in the top for answers compensation, authority, and respect. 43 CU IDOL SELF LEARNING MATERIAL (SLM)

PD Characteristics Tips Low PD  Flatter  Use teamwork. organizations.  Involve as many  Supervisors and people as possible employees are in decision considered almost making. as equals. 2. Individualism (IDV): This refers to the strength of the ties people have to others within the community. A high IDV score indicates loose connections. In countries with a high IDV score there is a lack of interpersonal connection, and little sharing of responsibility beyond family and perhaps a few close friends. A society with a low IDV score would have strong group cohesion, and there would be a large amount of loyalty and respect for members of the group. The group itself is also larger and people take more responsibility for each other's well-being. Application: The model suggests that in the Central American countries of Panama and Guatemala where the IDV scores are very low (11 and 6, respectively), a marketing campaign that emphasized benefits to the community or that tied into a popular political movement would likely be understood and well received. IDV Characteristics Tips High IDV  High valuation on  Acknowledge people's time and accomplishments. their need for freedom.  Don't ask for too much personal  An enjoyment of information. challenges, and an expectation of  Encourage debate rewards for hard and expression of own ideas. 44 CU IDOL SELF LEARNING MATERIAL (SLM)

IDV Characteristics Tips work.  Show respect for age and wisdom.  Respect for privacy.  Suppress feelings and emotions to Low IDV  Emphasis on work in harmony. building skills and becoming masters  Respect traditions of something. and introduce change slowly.  Work for intrinsic rewards.  Harmony more important than honesty. 3. Masculinity (MAS): This refers to how many a society sticks with, and values, traditional male and female roles. High MAS scores are found in countries where men are expected to be \"tough,\" to be the provider, and to be assertive. If women work outside the home, they tend to have separate professions from men. Low MAS scores do not reverse the gender roles. In a low MAS society, the roles are simply blurred. You see women and men working together equally across many professions. Men are allowed to be sensitive, and women can work hard for professional success. Application: Japan is highly masculine with a score of 95, whereas Sweden has the lowest measured value (5). According to the model, if you were to open an office in Japan, you might have greater success if you appointed a male employee to lead the team and had a strong male contingent on the team. In Sweden, on the other hand, you would aim for a team that was balanced in terms of skill rather than gender. MAS Characteristics Tips 45 CU IDOL SELF LEARNING MATERIAL (SLM)

MAS Characteristics Tips High  Men are masculine  Be aware that MAS and women are people may expect feminine. male and female roles to be distinct.  There is a well defined distinction  Advise men to between men's avoid discussing work and women's emotions or work. making emotionally based decisions or arguments. Low MAS  A woman can do  Avoid an \"old anything a man boys' club\" can do. mentality.  Powerful and  Ensure job design successful women and practices are are admired and not discriminatory respected. to either gender.  Treat men and women equally. 4. Uncertainty/Avoidance Index (UAI) This relates to the degree of anxiety that society members feel when in uncertain or unknown situations. High UAI-scoring nations try to avoid ambiguous situations whenever possible. They are governed by rules and order and they seek a collective \"truth.\" Low UAI scores indicate that the society enjoys novel events and values differences. There are very few rules, and people are encouraged to discover their own truth. Application: Hofstede's Cultural Dimensions imply that when discussing a project with people in Belgium, whose country scored a 94 on the UAI scale, you should investigate the various options and then present a limited number of choices, but have very detailed information available on your contingency and risk plans. (Note that there will be cultural differences between French and Dutch speakers in Belgium.) 46 CU IDOL SELF LEARNING MATERIAL (SLM)

UAI Characteristics Tips High UAI  Very formal  Be clear and business conduct concise about your with lots of rules expectations and and policies. parameters.  Need and expect  Plan and prepare, structure. communicate often and early,  Sense of provide detailed nervousness plans, and focus spurns high levels on the tactical of emotion and aspects of a job or expression. project.  Differences are  Express your avoided. emotions through hand gestures and raised voices. Low UAI  Informal business  Do not impose attitude. rules or structure unnecessarily.  More concern with long term strategy  Minimize your than what is emotional happening on a response by being daily basis. calm and contemplating  Accepting of situations before change and risk. speaking.  Express curiosity when you discover differences. 47 CU IDOL SELF LEARNING MATERIAL (SLM)

5. Long Term Orientation (LTO): This refers to how much society values long-standing – as opposed to short-term – traditions and values. This is the fifth dimension that Hofstede added in the 1990s, after finding that Asian countries with a strong link to Confucian philosophy acted differently from Western cultures. In countries with a high LTO score, delivering on social obligations and avoiding \"loss of face\" are considered very important. Application: According to the model, people in the United States and United Kingdom have low LTO scores. This suggests that you can pretty much expect anything in this culture in terms of creative expression and novel ideas. The model implies that people in the U.S. and U.K. don't value tradition as much as many others, and are therefore likely to be willing to help you execute the most innovative plans as long as they get to participate fully. (This may be surprising to people in the U.K., with its associations of tradition.) LTO Characteristics Tips High LTO  Family is the basis  Show respect for of society. traditions.  Parents and men  Do not display have more extravagance or authority than act frivolously. young people and women.  Reward perseverance,  Strong work ethic. loyalty, and commitment.  High value placed on education and  Avoid doing training. anything that would cause another to \"lose face.\" Low LTO  Promotion of  Expect to live by equality. the same standards and rules you  High creativity, 48 CU IDOL SELF LEARNING MATERIAL (SLM)

LTO Characteristics Tips individualism. create.  Treat others as you  Be respectful of would like to be others. treated.  Do not hesitate to  Self-actualization introduce is sought. necessary changes. 2.4.3 HALLS AND HALLS HIGH AND LOW CONTEXT THEORY: The general terms \"high context\" and \"low context\" (popularized by Edward Hall) are used to describe broad-brush cultural differences between societies. High context refers to societies or groups where people have close connections over a long period of time. Many aspects of cultural behavior are not made explicit because most members know what to do and what to think from years of interaction with each other. Your family is probably an example of a high context environment. Low context refers to societies where people tend to have many connections but of shorter duration or for some specific reason. In these societies, cultural behavior and beliefs may need to be spelled out explicitly so that those coming into the cultural environment know how to behave. High Context: o Less verbally explicit communication, less written/formal information o More internalized understandings of what is communicated o Multiple cross-cutting ties and intersections with others o Long term relationships o Strong boundaries- who is accepted as belonging vs who is considered an \"outsider\" o Knowledge is situational, relational. 49 CU IDOL SELF LEARNING MATERIAL (SLM)

o Decisions and activities focus around personal face-to-face relationships, often around a central person who has authority. Examples: Small religious congregations, a party with friends, family gatherings, expensive gourmet restaurants and neighborhood restaurants with a regular clientele, undergraduate on-campus friendships, regular pick-up games, hosting a friend in your home overnight. Low Context: o Rule oriented, people play by external rules o More knowledge is codified, public, external, and accessible. o Sequencing, separation--of time, of space, of activities, of relationships o More interpersonal connections of shorter duration o Knowledge is more often transferable o Task-centered. Decisions and activities focus around what needs to be done, division of responsibilities. Examples: Large US airports, a chain supermarket, a cafeteria, a convenience store, sports where rules are clearly laid out, a motel. While these terms are sometimes useful in describing some aspects of a culture, one can never say a culture is \"high\" or \"low\" because societies all contain both modes. \"High\" and \"low\" are therefore less relevant as a description of a whole people, and more useful to describe and understand particular situations and environments. Ways that High and Low Context Differ The Structure of Relationships High: Dense, intersecting networks and longterm relationships, strong boundaries, relationship more important than task Low: 50 CU IDOL SELF LEARNING MATERIAL (SLM)

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