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Human Resource Management in the International Firm: The Framework [WLO: 2] [CLOs: 1, 2] The principle of internal consistency refers to the way in which the HR practices work together and with other parts of the work organization. In this week’s reading, a few foreign countries are discussed on a global economic scale. Please review and choose a foreign country to discuss in your initial post. Prior to beginning work on this discussion forum, · Review Chapter 1 in the textbook. · Read How Global Companies Can Build Strong Cultures RemotelyLinks to an external site.. · Research a foreign country of your choice (e.g., India, China, Mexico, etc.) in terms of its culture and HR business practices. In your initial discussion forum post, · Describe the type of programs you would need to develop in order to inform your parent organization about the local culture and business practices of your chosen foreign country. · Explain how cultural views on ethnicity, race, gender, sexual orientation, national origin, and disability might impact the programs. · Discuss at least two strategies a company could implement to overcome biases in management style and communication that could adversely affect employee retention and organizational decision making. · Explain how a company could counter the type of bias found in the foreign country you chose that relates to an aging workforce, religion, gender, and reverse discrimination. Your responses should be a minimum of 300 words. Support your statements with at least one scholarly, peer-reviewed, or credible source. Week 1 - Weekly Lecture “If you’ve hired the right people, they will want to grow. … A good PR person will want to learn how to communicate more effectively on the web.” – Jack Welch Evolution of Human Resources In Week One, you will review the history of Global Human Resource Management from the early Romans, through WW1 and II, to today. Human Resource Management began to emerge as a field of study in the mid-1980s. At that time, the emphasis was on HR planning for corporate restructuring, layoffs and performing outplacement functions. Great attention was placed on talent development. During the last 10 years, however, the field has expanded to put more emphasis on global knowledge and talent management as competitive elements. With the growing internationalisation of economic activity by large firms and small firms alike, there is an increasing need for HR specialists to manage people across borders. Keep in mind that global business brings with it many challenges not only for the large companies but also the small sized firms that have adopted an international plan. Every day Leaders and managers are working in virtual organizations that stretch across national borders. This has become a very strong tool in every manager's productivity arsenal as we are pushed for shorter product/service lead-times and steeper cost reductions. In this unit we examine some of the factors that have created the need for organizations to develop International Human Resource Management (IHRM) practices for managing people in a global economy. The concept of HRM detail its American origins and its spread to culturally close nations, such as the UK and Australia, before spreading to more culturally diverse nations such as France, Portugal and Germany. As a result the development of HRM is presented as an example of US management practices following on from scientific management, management by objectives, strategic planning and so on that has progressively become incorporated into the work of academics and managers worldwide. Recommended texts In academia two texts – Strategic Human Resource Management (1984) edited by Fombrun, Tichy and Devanna at the University of Michigan and Human Resource Management: A General Manager’s Perspective (1985) by Beer and his colleagues at the Harvard Business School, are generally linked to the emergence of HRM. These two publications encouraged much of the interest in HRM and led to the development of HRM as an academic subject area in the mid to late 1980s within university departments and eventually within the new Business Schools attached to universities in the UK. What is HRM’ depends, however, on the societal setting in which it is asked. All over the world there has been a change in the language of academics and practitioners with regard to the nature of the employment relationship. Previous terms such as ‘personnel management’, personnel administration’ and industrial relations have been superseded by the term HRM but the term itself has no precise meaning and as a consequence the term can have different meanings in different national contexts. References Beer, M., Spector, B., Lawrence, P., Mills, D. Walton, R. (1985). Human resource management. The Free Press: New York. Fombrun, C., Tichy, N., Devanna, M. (1984). Strategic human resource management. New York: Wiley. 411164 2514..2531 Management of human resources in foreign firms operating in India: the role of HR in country-specific headquarters Pawan Budhwar* Aston Business School, Aston University, Aston Triangle, Birmingham, UK Multinational companies (MNCs) are known to establish country-specific headquarters (CSHQs) or centres to create and transfer knowledge in order to better co-ordinate and control their operations, and also to share knowledge between affiliates both within and outside the country. This paper highlights the role played by the human resource (HR) function in Indian CSHQs. The analysis is based on interview and survey data from senior HR specialists in 74 foreign firms operating CSHQs in India. The study identifies the range of services that the Indian CSHQs’ HR function provides to the local business units of the MNC. A high level of freedom from the MNCs’ corporate headquarters to both develop and implement HR policies and practices is found. The CSHQ is found to be instrumental in the creation and dissemination of HR-related learning. The study also identifies the problems faced by the HR function operating with a CSHQ and the actions necessary to overcome these issues. Keywords: country-specific headquarters; global integration versus local responsive- ness; IHRM; India; learning; MNCs Introduction The importance of emerging markets such as China and India for the global economic growth is now well acknowledged (see The Economist 2010). With China taking over from Japan as the second largest economy, and India projected to become the fourth largest economy by 2020, and other emerging markets such as Brazil and Russia becoming more prominent, it is timely to investigate the management systems within multinational companies (hereafter called MNCs) that are relevant for these economies (e.g. Merchant 2008). Given the rapidly increasing levels of foreign direct investment (FDI) to the developing parts of the world, more MNCs are now operating in emerging economies. According to UNCTAD’s global investment trends report, FDI inflows to major emerging markets such as China, Thailand, Brazil, India, Hong Kong and Mexico increased in a range of 6–53% in 2010 (UNCTAD 2010). In India, in particular, despite the global economic crisis (by which India was minimally affected), FDI inflows rose by 43% year- on-year to $3.1 billion in April 2010 alone (The Economist 2010; Business Standard 2011). Economic-boom conditions in India have created serious competition for talent and significant wage inflation (see Budhwar and Varma 2011a). The role of the human resource (HR) department in such conditions has become crucial and is key to the management of scarce talent. However, there still exist many differences (such as socio- economic and institutional) between emerging markets and developed nations, and within emerging economies, across a variety of variables such as labour markets, sectors, political stability and quality of infrastructure (Budhwar and Sparrow 2002a). ISSN 0958-5192 print/ISSN 1466-4399 online q 2012 Taylor & Francis http://dx.doi.org/10.1080/09585192.2012.668404 http://www.tandfonline.com *Corresponding author. Email:
[email protected] The International Journal of Human Resource Management, Vol. 23, No. 12, June 2012, 2514–2531 http://dx.doi.org/10.1080/09585192.2012.668404 http://www.tandfonline.com There is a resurgence of interest in the management of HRs in emerging economies (see Budhwar and Debrah 2004, 2009; Merchant 2008; Li and Scullion 2009; Hartmann, Feisel and Schober 2010; Lawler, Chen, Wu, Bae and Bai 2011) and several journals have devoted special issues to management in developing and emerging countries (e.g. Academy of Management Journal 2000; Journal of International Business Studies 2001, 2010; International Journal of Human Resource Management 2007; Personnel Review 2010). Despite this generic interest, the existing literature still says little regarding the management of HRs within the affiliates of MNCs operating in emerging markets (see Budhwar, Schuler and Sparrow 2009a; Schuler, Sparrow and Budhwar 2009). This study addresses this gap. It examines in detail the role played by the HR function in Indian country-specific headquarters (hereafter called CSHQs). This has become an important research task because a large number of MNCs now have multiple operations in India and have to manage complex networks of business units and activities. These Indian CSHQs (also called India headquarters or India centres) have full-fledged HR departments dedicated mainly to their Indian operations. To a great extent, they are given near complete autonomy from the headquarters of the parent firms, not, however, as a foreign subsidiary mandated as a centre of excellence (COE; Frost, Birkinshaw and Prescott 2002), but as a consequence of the variety, complexity and idiosyncratic nature of the business operations. Indeed, it may not yet be sensible for MNCs to adopt a ‘one size fits all’ approach to operations in different emerging markets (see Sparrow 2012, this issue). Given the freedom and non-traditional national remit, many HR managers working in the Indian CSHQ of foreign firms also call their HR departments an Indian HR centre. A key question, then, is whether these highly autonomous Indian HR centres are different from other non-globally integrated country HR operations. With significant diversity between affiliates and corporate HQs and within country affiliates in large emerging economies such as India, and the need for HR co-ordination, the HR function in an Indian CSHQ is likely to set a separate agenda to that of the corporate HQ. Significant variations (socio-cultural, economic, political, legal, etc.) between emerging markets and within India mean that it might not be sensible for the MNCs to adopt a one-size-fits all remit for Indian HR co-ordination. The globalisation path might mean that specific capabilities or business models may be associated with the work located in India (see Sparrow 2012, this issue) creating a need to address very specific demands for the HR function in the Indian CSHQ. This might mean granting local autonomy beyond the normal balance of global integration–local responsiveness. In order to examine such assumptions, there is a need for empirical evidence. This research examines the role played by the HR function in the Indian CSHQ of foreign firms operating in India through the study of (1) the staffing of the HR department; (2) the nature of HR functions and the services provided by the HR department and (3) the problems experienced by the Indian CSHQ HR department. Literature review This research utilises three sources of theory which have relevance to understanding developments in India – that on emerging markets, global integration and local responsiveness and regional headquarters (hereafter called RHQs; regional/country- specific centres) – in order to explain how the HR function in country-specific centres in India is helping MNCs to manage their operations. The first source of literature is that on HRM in emerging markets. The Indian economy has grown significantly since the initiation of widespread economic reforms in 1991. With The International Journal of Human Resource Management 2515 regard to economic change and uncertainty, having been one of the least affected by the last two major economic crises (the Asian economic turmoil of the late 1990s and the recent banking crisis), the World Bank projects India to become the fourth largest economy by 2020. It is now the second most attractive destination for the FDI of the emerging markets after China (Ernst and Young 2011). Over 20,000MNCs are already operating in India and many more are considering setting up operations there. The unique Indian context (socio- cultural, economic, legal, institutional and political factors) means that foreign firms expect to experience challenges – from point of entry to the Indian market to the routine operationalisation of their core functions. These include dealing with significant regional variations within India, poor infrastructure and delays in various operations due to bureaucracy and corruption (see Budhwar and Varma 2011b). This is also applicable for the management of HRs. Cross-cultural management comparisons show India to be a cultural island, reducing the potential for regional synergies in HRM – i.e. it does not fall into any of the established clusters of nations (see Sparrow and Budhwar 1997). Within the HRM of emerging markets literature, there has been some investigation carried out on HRM in MNC affiliates in China (see Björkman and Lu 1999a,b; Ahlstrom, Bruton and Chan 2001), Czech Republic (Sheehan 2012, this issue); Hungary (Zeira, Newbury and Yeheskel 1997; Sheehan 2012, this issue), Poland (Sheehan 2012, this issue); Russia (Fey andBjörkman 2001; Fey andDenison 2003),Malaysia (Rose andKumar 2007), Vietnam (Thang, Rowley, Quang and Warner 2007), India (Björkman and Budhwar 2007; Holtbrugge, Friedmann and Puck 2010), Greece (Myloni, Harzing and Mirza 2007) and Jordan (Baddar Al-Husan, Brennan and James 2009). These studies have focused on the transfer of HR across subsidiaries, the role of HR in the success of joint ventures, contribution of HR towards organisational performance and issues related to recruitment, culture fit andmanaging host country nationals. Over the past decade or so, there has been an emerging stream of HR literature on India (see Budhwar and Sparrow 2002b; Budhwar and Singh 2007; Budhwar and Bhatnagar 2009; Budhwar and Varma 2010, 2011b; Cappelli, Singh, Singh