Human Resources/Human Resource Management
(a) How does difference in International Human Resource Management Strategies affect the relative importance of each of the Human Resources Domains?
(b) What are the 4 Sources of uniqueness that can aid a company in seeking Competitive advantage?
(a) What are the advantages & disadvantages of using Home Country, Host Country & III Country Nationals? Under what specific circumstances might an organization choose to utilize III country nationals?
(b) Based on your reading of the major EEO Law what information should an employee include in a personnel policies & procedure manual given to all employees?
(a) For each of the following Human Resource System what type of analysis is needed to develop a professionally & legally defensible system?
i ) Training program for employees. ii ) Job Design. iii ) Compensation System. iv) Performance Appraisal System.
(B) What are the advantages & disadvantages of the various external recruitment sources?
(a) “The most efficient solution to the problems of interview validity is to do away with the interview & paper- &- pencil measures.” Do you agree? Explain.
(b) Many Managers describe performance appraisal as the responsibility that they like the least. Why this is so? What could be done to improve the situation?
(a). Suppose you are going to design a training program for newly hired Sales Associates for a retail chain. Results from the needed assessment indicated they would need training on policies & procedure, selling cloth to customers & customers complaints & returns. What learning policy would you like to build into the program? What training methods would you like to choose for your training program? Explain your choices.
(b) Why is it important to integrate career development program with other program in organization. For eg. Performance ,appraisal, training, selection, compensation. Offer some suggestions for how it can be done?
(a) Identify the critical variables related to the selection of the most appropriate PFP System?
(b) Why is it advantages for both the union & management to remain flexible during collection bargaining negotiations?
(c ) Discuss recent approaches that have been used to improve work place safety & health?
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Q.1 A ) How do difference in International Human Resource Management Strategies affect the relative importance of each of the Human Resources Domains ?
1. Country of Origin Effect on Strategy
One of the key challenges facing the MNCs is how to balance between the need for global integration and local adaptation. National origin of MNCs is seen as a major influence in determining this balance
There is empirical evidence that suggests that almost all MNCs have a trace of their country of origin within them. It could be subconscious choices which are influenced by the cultural and institutional characteristics of the country of origin of the MNC or it could be transferred through the people who work in the organization . U.S. multinationals have been typically contrasted with Japanese multinationals in respect of their styles of HRM employed in their subsidiaries. Japanese multinationals have the characteristic of being strong but with informal centralization and are highly reliant on establishing international networks. U.S. multinationals appear to have elaborate systems of control and standardized worldwide systems in place. Moreover, whether the country is high or low on cultural context will also determine the impact of their country of origin on the IHRM practices.
As stated before, “there is relatively little research on the internationalization of emerging economy firms either into other emerging economies or into developed economies”
Correspondingly within the MNCs from the emerging economies, organizational culture, decision making and control on subsidiaries can be noticeably different as compared to their counterparts in developed markets due to national culture and economic differences
2. Conceptual Framework
strategic international human resource management (SIHRM) that explicitly links HRM with the strategic management processes of the MNCs in emerging economies and emphasizes coordination or congruence among the various HRM practices. It focuses on SIHRM orientation, i.e., the “general philosophy or approach taken by top management of the MNC in the design of its overall IHRM system, particularly the HRM systems to be used in its overseas affiliates”
‘there is a growing consensus that a key differentiator between the corporate winners and losers in the 21st century will be the effectiveness of the human organization’ and it is particularly critical in the emerging markets (Strategic Direction, 2007). In the context of IHRM, Ngo, Turban, Lau and Liu (1998) found strong support for the hypothesis that country of origin influences the firm’s HRM practices. Taylor et al.’s (1996) model of IHRM considers that the transfer of HRM policies and practices ‘can go in any direction’, not just from home to host countries. Similarly, American and European HRM systems influence and are influenced by East Asian HRM systems (Chew & Zhu, 2002). Empirical studies on the diffusion of HRM practices by MNCs across their subsidiaries indicate that they predominantly adopt hybrid methods, combining both push force for control from headquarters and pull factors for conformity to host country, to suit the markets they are serving (Rose & Kumar, 2007). Global, national and internal pressures play a role in influencing HR strategic recipes and delivery mechanisms (Brewster, Sparrow, & Harris, 2005). Edwards & Rothbard (2000) contrast different approaches to the transfer of employment practices in MNCs and argue for an integrated approach that focuses on interrelationships between markets and institutions on the one hand and the material interests of actors on the other.
4.1. Influencing factors:
control and coordination mechanisms and diffusion of management practices in an MNC are subject to several external and internal influencing factors (see Figure 1). If the degree of integration between the headquarters and the subsidiary is high it requires higher levels of control and coordination. With regard to external influencing factors, the MNCs from emerging economies face a “double hurdle” of liability of foreignness and liability of country of origin with perceived poor global image of their home country. These constraints are further accentuated by liabilities of smallness and newness . As Guillen and Garcia–Canal (2009) note, they also need to deal with the liability and competitive disadvantage that stems from being latecomers lacking the resources and capabilities of established MNCs from the most advanced countries. Furthermore, the degree and level of integration between headquarters and subsidiaries will also influence the multinationals. Similarly, with regard to internal influencing factors, the strategic framework of the MNC, organizational culture, leadership, decision making and delegation of authority can be considerably different in MNCs from emerging economies than their counterparts in developed markets due to national cultural, economic and political differences .
Proposition1: MNCs from emerging economies adopt control and coordination mechanisms because of the double hurdle they face of ‘liability of foreignness’ and ‘liability of country of origin’.
Control of subsidiaries in developed markets:
MNCs exercise a degree of control over their subsidiaries to ensure their resources and efforts are directed towards attaining the main objectives of the MNC. Control refers to the processes by which an MNC ensures that their subsidiaries operate in a particular way as determined by the headquarters in order to achieve organizational goals . corporate control “comprises of all the mechanisms instituted to tie the operations and decisions within and across components into a larger whole and establish coherence of meaning and purpose within the larger enterprise” (p.190). We adopt the Harzing’s (1999) typology that suggests two dimensional classification between direct (personal & impersonal) and indirect (personal & impersonal) control. Complementary to the above typology is Taylor et al.’s (1996) classification of adaptive or polycentric approach vs. exportive or ethnocentric approach to management control of subsidiaries.
MNCs utilize the knowledge gained in operating in developed markets to transfer best practices across the entire organization. They are expected to adopt an “adaptive” or “polycentric” approach to management in developed country subsidiaries. In terms of HR strategy, this could mean low internal consistency with the rest of the firm and high external consistency with the external environment. Accordingly, HR practices may include hiring host country managers with local knowledge and transfer of practices “both” ways, depending on which is seen as working better.
Proposition 2: MNCs from emerging economies adopt a predominantly ‘adaptive’ or ‘polycentric’ approach to manage their subsidiaries in developed markets.
Control of subsidiaries in emerging markets:
MNCs from emerging economies entering other emerging markets may follow their counterparts in developed markets by adopting an ethnocentric approach. They attempt wholesale transfer of the parent firm’s HRM systems to their subsidiaries, especially with regard to their core competencies, to achieve high internal consistency. The other reason identified is the limited availability of management and technical skills in some countries. Some authors have noted that MNCs are more likely to adopt an adaptive or polycentric approach in developed countries than lesser-developed countries due to the greater availability of managerial skills in developed countries.
Proposition 3: MNCs from emerging economies adopt predominantly an ‘exportive’ or ‘ethnocentric’ approach to managing their subsidiaries in other emerging markets.
Organizational Structure & Systems:
At the apex of this organization lies the Leadership Council, consisting of around 45 top leaders from business and support functions. It is charged with the responsibility to formulate, implement and review strategic policies and priorities on a regular basis. At the heart of Alpha’s organizational structure lie the Customer Facing Units (CFUs), consisting of Vertical Business Units (VBUs) and Regional Business Units (RBUs). The CFUs are charged with the entire spectrum of customer relationship management and in the process are supported by Horizontal Competency Units (HCUs) that provide the backing of appropriate resources.
The approach to leadership at Alpha is exemplified by the motto “every Alphaite (employee) is a leader”. Alpha believes that it is in the ‘business of building and developing leaders faster than the competition’. Its organizational structure and systems are supposed to be underpinned by its philosophy of enabling leadership with its core concepts of ‘full life cycle business’ (FLCB) and ‘full life cycle leaders’ (FLCL). Alpha is said to espouse a philosophy of encouraging employees to “think like CEOs” whereby every employee is encouraged to consider himself/herself as the chief executive officer (CEO) of the particular task that they perform and the people whom it affects as their investors in the business.
The same performance metrics are supposed to be applied to every employee and position at every location. The metrics assess the performance of each employee on specified built measures, such as people, process and product against specific outcome measures, namely better, larger, faster, cheaper and steadier (repeatable). These metrics mirror the ones followed at its key U.S.-based client which is world renowned for its management systems. According to the Global Head of HR, ‘metrics are the most common communication tool at Alpha’. The company claims to take its metrics driven business approach beyond organizational boundaries by involving customers and suppliers as part of its “eco-system.”
as follows: Hypothesis la: Systems of High Performance Work Prac-tices will diminish employee turnover and increase pro-ductivity and corporate financial performance.
Hypothesis Ib: Employee turnover and productivity will mediate the relationship between systems of High Per-formance Work Practices and corporate financial per-formance.
Hypothesis 2: Complementarities or synergies among High Performance Work Practices will diminish em-ployee turnover and increase productivity and corporate financial performance.
Hypothesis 3: Alignment of a firm's system of High Per-formance Work Practices with its competitive strategy will diminish employee turnover and increase produc-tivity and corporate financial performance.
Factor Structure of High Performance Work Practicesa Questionnaire Item 1 2 Alpha Employee skills and organizational structures .67
What is the proportion of the workforce who are included in a formal information sharing program (e.g., a newsletter)? .54 .02
What is the proportion of the workforce whose job has been subjected to a formal job analysis? .53 .18
What proportion of nonentry level jobs have been filled from within in recent years? .52 -.36
What is the proportion of the workforce who are administered attitude surveys on a regular basis? .52 -.07
What is the proportion of the workforce who participate in Quality of Work Life (QWL) programs, Quality Circles (QC), and/or labor-management participation teams? .50 -.04
What is the proportion of the workforce who have access to company incentive plans, profit-sharing plans, and/or gain-sharing plans? .39 .17
What is the average number of hours of training received by a typical employee over the last 12 months? .37 -.07
What is the proportion of the workforce who have access to a formal grievance procedure and/or complaint resolution system? .36 .13
What proportion of the workforce is administered an employment test prior to hiring? .32 -.04 Employee motivation .66
What is the proportion of the workforce whose performance appraisals are used to determine their compensation? .17 .83
What proportion of the workforce receives formal performance appraisals? .29 .80
Which of the following promotion decision rules do you use most often? (a) merit or performance rating alone; (b) seniority only if merit is equal; (c) seniority among employees who meet a minimum merit requirement; (d) seniority.b -.07 .56
For the five positions that your firm hires most frequently, how many qualified applicants do you have per position (on average)? -.15 .27 Eigenvalue 2.19 1.76 Proportion of variance accounted for 16.80 13.60
Human Resources Domains
Four alternatives for a cross border strategy
• International Strategy: appropriate when there is little foreign business – knowledge
transfer from the center of headquarters. Coordination cost are low.
• Multinational Strategy: Affiliates are autonomous and local adapted. Cross-borderadvantages
of standardization and learning are low. Coordination-costs are lowest.
• Global Strategy: Advantages of standardization of policies and practices. Strong
centralism. Lack of local responsiveness causes disadvantages. National segmented
markets, cultures, policies set barriers. Coordination costs are high.
• Transnational Strate gy: uses advantages form globalization, localization and cross-borderlearning
simultaneously. Coordination cost are highest.
A transnational human resource strategy include (Welge/Holtbrügge
1998, Dowling/Welch/Schuler 1999):
• Vision and Guidelines: Mutual orientation. Reduce narrow-minded behavior. Mutual
understanding and acceptance leading to worldwide cooperation.
• Decision-making: International decision-making committees and communication between
the product, country, and function specialists in networks.
• Recruitment: Oriented and focused on qualification and no longer on country of origin.
Human resource development: through international networking and further educational
opportunities, overseas assignments. Personnel maintenance: handle flexibly.
• Cross-border career paths through internationally comparable policies for potential
opportunities and performance evaluation. A compensation policy that encourages
conformity to a common corporate objective.
The following examples and remarks form executives of leading companies offer inspiration
to reconsider the own route and to avoid possible stumbling blocks.
Thus, the regular examination of human resource policy is advisable (see Box below). This should
begin with the articulated core values of the corporate culture, then be identified as models, and
finally, be carried out as human resource policy. In this entire process it is vital not to lose sight of
those who make a difference: the employees.
Checklist for Examining Existing Human Resource policies
• Relevance: Are the policies relevant in the current business environment?
• Strategy: Are the policies connected to the company’s goals?
• Adaptability: Are the policies adaptable to changing circumstances?
• Applicability: Are the policies applicable across the company’s theater of operations?
• Familiarity: Are employees aware of the policies?
• Clarity: Are the policies easy to interpret and apply?
• Boundaries:Do the policies clarify the bounds of acceptable employee behavior?
• Commitment: Do employees support the policies?
B ) What are the 4 Sources of uniqueness that can aid a company in seeking Competitive advantage ?
Many firms strive for a competitive advantage, but few truly understand what it is or how to achieve and keep it. A competitive advantage can be gained by offering the consumer a greater value than the competitors, such as by offering lower prices or providing quality services or other benefits that justify a higher price. The strongest competitive advantage is a strategy that that cannot be imitated by other companies.
Competitive advantage can be also viewed as any activity that creates superior value above its rivals. A company wants the gap between perceived value and cost of the product to be greater than the competition.
Michael Porter defines three generic strategies that firm's may use to gain competitive advantage: cost leadership, differentiation, and focus. A firm utilizing a cost leadership strategy seeks to be the low-cost producer relative to its competitors. A differentiation strategy requires that the firm possess a "non-price" attribute that distinguishes the firm as superior to its peers. Firms following a focus approach direct their attention to narrow product lines, buyer segments, or geographic markets. "Focused" firms will use cost or differentiation to gain advantage, but only within a narrow target market.
COST ADVANTAGE RESULTING FROM EFFICIENCY
Efficiency is the ratio of inputs to outputs. Inputs can be any materials, overhead, or labor that is assigned to the product or service. The outputs can be measured as the number of products produced or services performed. The firm that can achieve the highest efficiency for the same service or product can widen the gap between cost and perceived value and may have greater profit margins.
There are many ways a company can increase efficiency. Efficiency is enhanced if, holding outputs constant, inputs are reduced; or if holding inputs constant, outputs are increased. Inputs can be reduced in many ways. Labor inputs can be reduced if employees are better trained so that time spent on each individual output is decreased.
Decreasing waste can decrease materials needed. If a method can be devised to decrease waste, it would increase efficiency. For instance, a bottling plant might determine that 10 gallons of liquid are spilled every day as a result of the bottling process. If the amount of lost liquid can be reduced, efficiency will increase.
Outputs can be increased by increasing the number of units a machine can produce in given period of time. Decreasing downtime can also increase outputs. For example, if a machine regularly breaks down and is out of order for two hours a day, finding a way to eliminate this downtime would increase the number of outputs.
It is often argued that large companies, by definition, are able to be more efficient because they can achieve economies of scale that others are not able to reach. Large companies usually offer more products in each product line, and their products may help to satisfy many different needs. If a consumer is not sure of the exact product he needs, he can go to the larger producer and be confident that the larger producer has something to offer. The consumer might believe that the smaller producer may be too specialized. Larger companies can cater to a larger population because of sheer size, while smaller companies have fewer resources and must specialize or fall victim to larger, more efficient companies.
Product differentiation is achieved by offering a valued variation of the physical product. The ability to differentiate a product varies greatly along a continuum depending on the specific product. There are some products that do not lend themselves to much differentiation, such as beef, lumber, and notebook paper. Some products, on the other hand, can be highly differentiated. Appliances, restaurants, automobiles, and even batteries can all be customized and highly differentiated to meet various consumer needs. In Principles of Marketing (1999), authors Gary Armstrong and Philip Kotler note that differentiation can occur by manipulating many characteristics, including features, performance, style, design, consistency, durability, reliability, or reparability. Differentiation allows a company to target specific populations.
It is easy to think of companies that have used these characteristics to promote their products. Maytag has differentiated itself by presenting "Old reliable," the Maytag repairman who never has any work to do because Maytag's products purportedly function without any problems and do not require repairs. The Eveready Battery Co./Energizer has promoted their products' performance with the Energizer Bunny® that "keeps going and going."
Many chain restaurants differentiate themselves with consistency and style. If a consumer has a favorite dish at her local Applebee's restaurant, she can be assured it will look and taste the same at any Applebee's restaurant anywhere in the country. And, the style of theme restaurants is the key to some establishments. Planet Hollywood and Hard Rock Cafe profit from their themes.
In the auto industry, durability is promoted by Chevrolet's "Like a Rock" advertising campaign.
Companies can also differentiate the services that accompany the physical product. Two companies can offer a similar physical product, but the company that offers additional services can charge a premium for the product. Mary Kay cosmetics offers skin-care and glamour cosmetics that are very similar to those offered by many other cosmetic companies; but these products are usually accompanied with an informational, instructional training session provided by the consultant. This additional service allows Mary Kay to charge more for their product than if they sold the product through more traditional channels.
In the personal computer business, Dell and Gateway claim to provide excellent technical support services to handle any glitches that may occur once a consumer has bought their product. This 24-hour-a-day tech support provides a very important advantage over other PC makers, who may be perceived as less reliable when a customer needs immediate assistance with a problem.
Hiring and training better people than the competitor can become an immeasurable competitive advantage for a company. A company's employees are often overlooked, but should be given careful consideration. This human resource-based advantage is difficult for a competitor to imitate because the source of the advantage may not be very apparent to an outsider. As a Money magazine article reported, Herb Kelleher, CEO of Southwest Airlines, explains that the culture, attitudes, beliefs, and actions of his employees constitute his strongest competitive advantage: "The intangibles are more important than the tangibles because you can always imitate the tangibles; you can buy the airplane, you can rent the ticket counter space. But the hardest thing for someone to emulate is the spirit of your people."
This competitive advantage can encompass many areas. Employers who pay attention to employees, monitoring their performance and commitment, may find themselves with a very strong competitive advantage. A well-trained production staff will generate a better quality product. Yet, a competitor may not be able to distinguish if the advantage is due to superior materials, equipment or employees.
People differentiation is important when consumers deal directly with employees. Employees are the frontline defense against waning customer satisfaction. The associate at Wal-Mart who helps a customer locate a product may result in the customer returning numerous times, generating hundreds of dollars in revenue. Home Depot prides itself on having a knowledgeable sales staff in their home improvement warehouses. The consumer knows that the staff will be helpful and courteous, and this is very important to the consumer who may be trying a new home improvement technique with limited knowledge on the subject.
Another way a company can differentiate itself through people is by having a recognizable person at the top of the company. A recognizable CEO can make a company stand out. Some CEOs are such charismatic public figures that to the consumer, the CEO is the company. If the CEO is considered reputable and is well-liked, it speaks very well for the company, and consumers pay attention. National media coverage of CEOs has increased tremendously, jumping 21 percent between 1992 and 1997 (Gaines-Ross).
Armstrong and Kotler pointed out in Principles of Marketing that when competing products or services are similar, buyers may perceive a difference based on company or brand image. Thus companies should work to establish images that differentiate them from competitors. A favorable brand image takes a significant amount of time to build. Unfortunately, one negative impression can kill the image practically overnight. Everything that a company does must support their image. Ford Motor Co.'s former "Quality is Job 1" slogan needed to be supported in every aspect, including advertisements, production, sales floor presentation, and customer service.
Often, a company will try giving a product a personality. It can be done through a story, symbol, or other identifying means. Most consumers are familiar with the Keebler Elves and the magic tree where they do all of the Keebler baking. This story of the elves and the tree gives Keebler cookies a personality. When consumers purchase Keebler cookies, they are not just purchasing cookies, but the story of the elves and the magic tree as well. A symbol can be an easily recognizable trademark of a company that reminds the consumer of the brand image. The Nike "swoosh" is a symbol that carries prestige and makes the Nike label recognizable.
Quality is the idea that something is reliable in the sense that it does the job it is designed to do. When considering competitive advantage, one cannot just view quality as it relates to the product. The quality of the material going into the product and the quality of production operations should also be scrutinized. Materials quality is very important. The manufacturer that can get the best material at a given price will widen the gap between perceived quality and cost. Greater quality materials decrease the number of returns, reworks, and repairs necessary. Quality labor also reduces the costs associated with these three expenses.
When people think of innovation, they usually have a narrow view that encompasses only product innovation. Product innovation is very important to remain competitive, but just as important is process innovation. Process innovation is anything new or novel about the way a company operates. Process innovations are important because they often reduce costs, and it may take competitors a significant amount of time to discover and imitate them.
Some process innovations can completely revolutionize the way a product is produced. When the assembly line was first gaining popularity in the early twentieth century, it was an innovation that significantly reduced costs. The first companies to use this innovation had a competitive advantage over the companies that were slow or reluctant to change.
As one of the first Internet service providers, America Online offered a unique innovation for accessing the nascent Internetts unique and user-friendly interface. The company grew at a massive rate, leading the rapidly developing Internet sector as a force in American business. While most innovations are not going to revolutionize the way that all firms operate, the small innovations can reduce costs by thousands or even millions of dollars, and large innovations may save billions over time.
SUSTAINABLE COMPETITIVE ADVANTAGE
The achievement of competitive advantage is not always permanent or even long lasting. Once a firm establishes itself in an area of advantage, other firms will follow suit in an effort to capitalize on their similarities. A firm is said to have a "sustainable" competitive advantage when its competitors are unable to duplicate the benefits of the firm's strategy. In order for a firm to attain a "sustainable" competitive advantage, its generic strategy must be grounded in an attribute that meets four criteria. It must be:
• Valuablet is of value to consumers.
• Raret is not commonplace or easily obtained.
• Inimitablet cannot be easily imitated or copied by competitors.
• Non-substitutableonsumers cannot or will not substitute another product or attribute for the one providing the firm with competitive advantage.
SELECTING A COMPETITIVE ADVANTAGE
A company may be lucky enough to identify several potential competitive advantages, and it must be able to determine which are worth pursuing. Not all differentiation is important. Some differences are too subtle, too easily mimicked by competitors, and many are too expensive. A company must be sure the consumer wants, understands, and appreciates the difference offered.
The maker of expensive suits may offer its suits in the widest array of colors, but if 95 percent of the consumers wear only black and navy blue suits, then the wide array of colors adds little perceived value to the product. Variety would not become a competitive advantage, and would be a waste of resources. A difference may be worth developing and promoting, advise Armstrong and Kotler, if it is important, distinctive, superior, communicable, preemptive, affordable, and profitable.
A competitive advantage can make or break a firm, so it is crucial that all managers are familiar with competitive advantages and how to create, maintain, and benefit from them.