Withtheadventofglobalization,organizationsbigorsmallhaveceasedtobelocal,they

havebecomeglobal!Thishasincreasedtheworkforcediversityandculturalsensitivities
haveemergedlikeneverbefore.AllthisledtothedevelopmentofGlobalHumanResource
Management.
Eventhoseorganizationswhoconsiderthemselvesimmunetotransactionsacross
geographicalboundariesareconnectedtothewidernetworkglobally.Theyareinoneway
ortheotherdependentuponorganizationsthatmayevennothaveheardabout.Thereis
interdependencebetweenorganizationsinvariousareasandfunctions.
ThepreliminaryfunctionofglobalHumanResourceManagementisthattheorganization
carriesalocalappealinthehostcountrydespitemaintaininganinternationalfeel.To
exemplify,anymultinational/internationalcompanywouldnotliketobecalledaslocal,
howeverthesamewantsadomestictouchinthehostcountryandthereliesthechallenge.
Wemaytherefore,enumeratetheobjectivesofglobalHRMasfollows:

Createalocalappealwithoutcompromisingupontheglobalidentity.

Generatingawarenessofcrossculturalsensitivitiesamongmanagersgloballyand
hiringofstaffacrossgeographicboundaries.

Traininguponculturesandsensitivitiesofthehostcountry.

ThestrategicroleofHumanresourcesManagementinsuchascenarioistoensurethat
HRMpoliciesareintandemwithandinsupportofthefirmsstrategy,structureand
controls.Specifically,whenwetalkofstructuresandcontrolsthefollowingbecomeworth
mentioninginthecontextofGlobalHRM.

DecisionMaking:Thereisacertaindegreeofcentralizationofoperatingdecision
making.ComparethistotheInternationalstrategy,thecorecompetenciesare
centralizedandtherestaredecentralized.

Coordination:Ahighdegreeofcoordinationisrequiredinwakeofthecrosscultural
sensitivities.Thereisinadditionalsoahighneedforculturalcontrol.

IntegratingMechanisms:Manyintegratingmechanismsoperatesimultaneously.

GlobalHRMandtheStaffingPolicy

Herealsotheroleisnodifferenti.e.hiringindividualswithrequisiteskillstodoaparticular
job.Thechallengehereisdevelopingtoolstopromoteacorporateculturethatisalmostthe
sameeverywhereexceptthatthelocalsensitivitiesaretakencareof.
Also,thedecidinguponthetopmanagementorkeypositionsgetsverytricky.Whetherto
choosealocalfromthehostcountryforakeypositionordeployonefromtheheadquarters
assumesimportance;andfinallywhetherornottohaveauniformhiringpolicyglobally
remainsabigchallenge.

Neverthelessanorganizationcanchoosetohireaccordingtoanyofthestaffingpolicies
mentionedbelow:

Ethnocentric:HeretheKeymanagementpositionsarefilledbytheparentcountry
individuals.

Polycentric:Inpolycentricstaffingpolicythehostcountrynationalsmanage
subsidiarieswhereastheheadquarterpositionsareheldbytheparentcompany
nationals.

Geocentric:Inthisstaffingpolicythebestandthemostcompetentindividualshold
keypositionsirrespectiveofthenationalities.
GeocentricstaffingpolicyitseemsisthebestwhenitcomestoGlobalHRM.The
humanresourcesaredeployedproductivelyanditalsohelpsbuildastrongcultural
andinformalmanagementnetwork.Theflipsideisthathumanresourcesbecomea
bitexpensivewhenhiredonageocentricbasis.Besidesthenationalimmigration
policiesmaylimitimplementation.

GlobalHRMthereforeisaverychallengingfrontinHRM.Ifoneisabletostriketheright
chordindesigningstructuresandcontrols,thejobishalfdone.Subsidiariesareheld
togetherbyglobalHRM,differentsubsidiariescanfunctionoperatecoherentlyonlywhenit
isenabledbyefficientstructuresandcontrols.

FactorsAffectingGlobalHR:
Managing human resources in different cultures, economies, and legal systems
presents some challenges. However, when well done, HR management pays
dividends. A seven-year study in Britain of over 100 foreign companies showed that
good HR management, as well as other factors, accounted for more of the variance
in profitability and productivity than did technology, or research and development.
The most common obstacles to effective HR management are cross-cultural
adaptation, different organizational/workforce values, differences in management
style, and management turnover. Doing business globally requires that adaptations
be made to reflect these factors. It is crucial that such concerns be seen as
interrelated by managers and professionals as they do business and establish
operations globally. Figure depicts the general considerations for HR managers
with global responsibilities. Each of those factors will be examined briefly.
Legal and Political Factors

The nature and stability of political systems vary from country to country. U.S. firms
are accustomed to a relatively stable political system, and the same is true in many
of the other developed countries in Europe. Although presidents, prime ministers,
premiers, governors, senators, and representatives may change, the legal systems
are well-established, and global firms can depend on continuity and consistency.
However, in many other nations, the legal and political systems are turbulent. Some
governments regularly are overthrown by military coups. Others are ruled by
dictators and despots who use their power to require international firms to buy
goods and services from host-country firms owned or controlled by the rulers or the
rulers families.
In some parts of the world, one-party rule has led to pervasive corruption, while in
others there are so many parties that governments change constantly. Also, legal
systems vary in character and stability, with business contracts sometimes
becoming unenforceable because of internal political factors.
International firms may have to decide strategically when to comply with certain
laws and regulations and when to ignore them because of operational or political
reasons. Another issue involves ethics. Because of restrictions imposed on U.S.based firms through the Foreign Corrupt Practices Act (FCPA), a fine line exists
between paying agent fees, which is legal, and bribery, which is illegal.
HR regulations and laws vary among countries in character and detail. In many
Western European countries, laws on labor unions and employment make it difficult
to reduce the number of workers because required payments to former employees
can be very high, as the HR Perspective on the next page indicates. Equal
employment legislation exists to varying degrees.
In some countries, laws address issues such as employment discrimination and
sexual harassment. In others, because of religious or ethical differences,
employment discrimination may be an accepted practice.
All of these factors reveal that it is crucial for HR professionals to conduct a
comprehensive review of the political environment and employment-related laws
before beginning operations in a country. The role and nature of labor unions
should be a part of that review.
Economic Factors
Economic factors affect the other three factors in Figure. Different countries have
different economic systems. Some even still operate with a modified version of
communism, which has essentially failed. For example, in China communism is the
official economic approach. But as the government attempts to move to a more
mixed model, it is using unemployment and layoffs to reduce government
enterprises bloated with too many workers.
Many lesser-developed nations are receptive to foreign investment in order to
create jobs for their growing populations. Global firms often obtain significantly

cheaper labor rates in these countries than they do in Western Europe, Japan, and
the United States. However, whether firms can realize significant profits in
developing nations may be determined by currency fluctuations and restrictions on
transfer of earnings.
Also, political instability can lead to situations in which t he assets of foreign firms
are seized. In addition, nations with weak economies may not be able to invest in
maintaining and upgrading the necessary elements of their infrastructures, such as
roads, electric power, schools, and telecommunications. The absence of good
infrastructures may make it more difficult to convince managers from the United
States or Japan to take assignments overseas.
Economic conditions vary greatly. For example, Figure shows the relative cost of
living for major cities in the world. Cost of living is a major economic consideration
for global corporations.
Cultural Factors
Cultural forces represent another important concern affecting international HR
management. The culture of organizations was discussed earlier in the text, and of
course, national cultures also exist. Culture is composed of the societal forces
affecting the values, beliefs, and actions of a distinct group of people. Cultural
differences certainly exist between nations, but significant cultural differences exist
within countries also. One only has to look at the conflicts caused by religion or
ethnicity in Central Europe and other parts of the world to see the importance of
culture on international organizations. Getting individuals from different ethnic or
tribal backgrounds working together may be difficult in some parts of the world.
Culture can lead to ethical differences among countries. The HR Perspective on the
next page gives several examples.
One widely used way to classify and compare cultures has been developed by
Geert Hofstede, a Dutch scholar and researcher. Hofstede conducted research on
over 100,000 IBM employees in 53 countries, and he identified five dimensions
useful in identifying and comparing culture. A review of each of those dimensions
follows.
POWER DISTANCE
The dimension of power distance refers to the inequality among the people of a
nation. In countries such as Germany, the Netherlands, and the United States,
there is a smaller power distancewhich means there is less inequalitythan in
such countries as France, Indonesia, Russia, and China. As power distance
increases, there are greater status and authority differences between superiors and
subordinates.
One way in which differences on this dimension affect HR activities is that the
reactions to management authority differ among cultures. A more autocratic

approach to managing is more common in most other countries, while in the United
States there is a bit more use of participatory management.
INDIVIDUALISM
Another dimension of culture identified by Hofstede is individualism, which is the
extent to which people in a country prefer to act as individuals instead of members
of groups. On this dimension, people in Asian countries tend to be less
individualistic and more group-oriented, whereas those in the United States score
the highest in individualism. An implication of these differences is that more
collective action and less individual competition is likely in those countries that
deemphasize individualism.
MASCULINITY/FEMININITY
The cultural dimension masculinity/femininity refers to the degree to which
masculine values prevail over feminine values. Masculine values identified by
Hofstede were assertiveness, performance orientation, success, and
competitiveness, whereas feminine values included quality of life, close personal
relationships, and caring. Respondents from Japan had the highest masculinity
scores, while those from the Netherlands had more femininity-oriented values.
Differences on this dimension may be tied to the role of women in the culture.
Considering the different roles of women and what is acceptable for women in the
United States, Saudi Arabia, Japan, and Mexico suggests how this dimension
might affect the assignment of women expatriates to managerial jobs in the various
countries.
UNCERTAINTY AVOIDANCE
The dimension of uncertainty avoidance refers to the preference of people in a
country for structured rather than unstructured situations. A structured situation is
one in which rules can be established and there are clear guides on how people are
expected to act. Nations high on this factor, such as Japan, France, and Russia,
tend to be more resistant to change and more rigid. In contrast, people in places
such as Hong Kong, the United States, and Indonesia tend to have more business
energy and to be more flexible.
A logical use of differences on this factor is to anticipate how people in different
countries will react to changes instituted in organizations. In more flexible cultures,
what is less certain may be more intriguing and challenging, which may lead to
greater entrepreneurship and risk taking than in the more rigid countries.
LONG-TERM ORIENTATION
The dimension of long-term orientation refers to values people hold that emphasize
the future, as opposed to short-term values, which focus on the present and the
past. Long-term values include thrift and persistence, while short-term values
include respecting tradition and fulfilling social obligations. People scoring the

highest on long-term orientation were China and Hong Kong, while people in
Russia, the United States, and France tended to have more short-term orientation.
Differences in many other facets of culture could be discussed. But it is enough to
recognize that international HR managers and professionals must recognize that
cultural dimensions differ from country to country and even within countries.
Therefore, the HR activities appropriate in one culture or country may have to be
altered to fit appropriately into another culture or country.

GLOBAL OR INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Global or international human resource management is the process of employing,
developing and rewarding people in international or global organizations. It involves
the world-wide management of people, not just the management of expatriates. An
international organization or firm is one in which operations take place in subsidiaries
overseas, which rely on the business expertise or manufacturing capacity of the
parent company. Such companies or organizations bring with them their own
management attitudes and business styles. Human resource managers of such
organizations cannot afford to ignore the international influences on their work.
ISSUES IN INTERNATIONAL (GLOBAL) HRM
International human resource management involves a number of issues not present
when the activities of the firm or organization are confined to one country. The issues
in global HRM include:
The variety of international organizational models that exist
The extent to which HRM policy and practice should vary in different

countries. (This is also known as the issue of Convergence and Divergence).

The problem of managing people in different cultures and environments
The approaches used to select, deploy, develop and reward expatriates who

could be nationals of the parent company or third-country nationals (TCNs)

nationals of countries other than the parent company who work abroad in
subsidiaries of that organization.

INTERNATIONAL ORGANIZATIONAL MODELS

Bartlett and Ghoshal (1993) have identified 4 models
1. Decentralized federation in which each national unit is managed as a separate

entity that seeks to optimize its performance in the local environment. (This is
the traditional multinational corporation).
2. Coordinated

federation in which the centre develops sophisticated

management systems enabling it to maintain overall control, although scope is

given to local management to adopt practices that recognize local market
conditions.
3. Centralized hub in which the focus is on the global market rather than on local

markets. Such organizations are truly global rather than multinational.

4. Transnational in which the corporation develops multi-dimensional strategic

capacities directed towards competing globally but also allows local

responsiveness to market requirements.
CONVERGENCE AND DIVERGENCE
Another issue facing international organizations is the extent to which their human
resource (HR) practices should either converge worldwide to be basically the same
in each location, or diverge to be differentiated in response to local requirements.
There is a natural tendency for managerial traditions in the parent company to shape
to the nature of key decisions, but there are strong arguments for giving as much local
autonomy as possible in order to ensure that local requirements are sufficiently taken
into account. (This is known as global/local dilemma). Convergence may be
increasing as a result of the following factors:
The power of markets
The importance of cost
Quality and productivity pressures

 The development of like-minded international cadres

The widespread practice of benchmarking best practice.

CULTURAL DIVERSITY
Culture and environment diversity is a key issue in international human resource
management (HRM). In a study that become a classic in the study of cultural
differences, Hofstede (1980) investigated value differences between over 11,000
employees in some 40 countries employed by International Business Machine (IBM).
His study focused on the influence of national culture on the sub-cultures of the
worldwide organization.
4 key dimensions were identified.
1. Individualism versus Collectivism i.e. where individualism is a national

cultural attribute that favours people looking to themselves and their families
as their first priority, and where collectivism is an attribute that favours people
giving their prime loyalty to, and finding protection in, the wider group.
2. Power distance i.e. the extent to which different cultures accept different

distributions of power within the society; High Power distance society accepts
wide differences of power between those at the top of society and those at the
bottom, while Low Power distance society sees power as being shared much
more equitably, leaving less of a power gap between the top and the bottom
ranks.
3. Uncertainty Avoidance i.e. the extent to which a society is tolerant of

uncertainty and which therefore feels less need to avoid it (Low Avoidance) or
feels threatened by it (High Avoidance).

4. Masculinity versus Femininity i.e. where a nation has a tendency to prefer

assertiveness and materialism (masculinity), or has a higher concern for

relationships and the welfare of others (femininity).
Comparing the results obtained from the 40 different countries against the criteria of
the framework, produced 8 culture clusters, labeled according to geographical areas
(Asian, Near Eastern and Nordic) or language (Latin, Germanic and Anglo) and
economic development (Less developed or More developed).
1. More developed Latin

2. Less developed Latin

High power distance

High power distance

High uncertainty avoidance

High uncertainty avoidance

High individualism

Low individualism

Medium masculinity

Whole range of masculinity

(Belgium, France, Brazil

Argentina, Spain, Italy)

(Columbia, Mexico, Chile,

Venezuela, Peru, Portugal)

3. More developed Asian

4. Less developed Asian

Medium power distance

High uncertainty avoidance
Medium individualism
High masculinity

High power distance

Low uncertainty avoidance
Low individualism
Medium masculinity

(Japan)

(Pakistan, India, Taiwan,

Thailand, Hong Kong,
Philippines, Singapore)

5. Near Eastern
High power distance

6. Germanic
Low power distance

High uncertainty avoidance

Low individualism
Medium masculinity

High uncertainty avoidance

Medium individualism
High masculinity

(Greece, Iran, Turkey,

Yugoslavia)

(Austria, Israel, Germany,

Switzerland)

7. Anglo

8. Nordic

Low power distance

Low-medium uncertainty avoidance
High individualism
High masculinity
(Australia, USA, Canada,
Great Britain, Ireland,
New Zealand, South Africa)

Low power distance

Low-medium uncertainty
avoidance
Medium individualism
High masculinity
(Denmark, Norway, Sweden,
Finland, Netherlands)

From this Hofstede concluded that it was impractical to produce a unified managerial
approach that could be adopted world wide to meet the needs of individuals and
groups, their structures and the requirements of change.
The conclusion to be drawn from this study is that a contingency approach to human
resource management is called for in these circumstances.
Ouchi also made an important contribution to our understanding of the international
dimension of human resource management. He studied the characteristics of Japanese
and American organizations to see if selected practices from Japan could be translated
to the United States. Ouchi discovered the following differences in the behaviour of
Japanese and American organizations.
Japanese organizations

American organizations

Offer lifetime employment

(Core workers only)

Offer (generally) short-term

employment

Promote from within

Recruit form outside

Career paths are non-specialised

Generally specialised career paths

Shared decision-making

Individual decision-making

High degree of mutual trust/loyalty

between managers and employees

Varying degrees of trust/loyalty

between managers and staff

Importance of collective responsibility

Individual responsibility for results

Long term performance appraisal

Short-term performance more

important

Success seen in terms of

Co-operative efforts

Success seen in terms of

individual achievements

Ouchi then proposed what he called Theory Z as opposed to McGregors Theories X

and Y as a means by which American companies could imitate certain features of the
Japanese approach to managing people. He argued that American firms could make
changes in the following areas of human resource management:
They could offer more secure employment prospects and better prospects of a

career
They could extend employee participation in decision-making
They could place greater reliance on team-spirit and on recognizing the
contribution of individuals to team effort
They could encourage greater mutual respect between managers and their staff.
Given the difficulties of developing careers in todays business organizations, where
reducing the number of job levels, as well as minimizing the number of jobs is
commonplace, it seems unlikely that most international organizations can offer their
employees guarantees of long-term prospects. However, some of these characteristics
have adopted in many organizations and indeed are regarded as good or best
practices.
In view of the above, the universalistic approach to HRM prevalent in the USA is
rejected in Europe where the basic functions of HRM are given different weights
between countries and are carried out differently. In addition, the cultural differences
mentioned above have produced the slogan in international human resource
management Think GLOBALLY and act LOCALLY. This means that an
international balancing act is required, which leads to the fundamental assumption
made by Bartlett and Ghoshal that: balancing the needs of co-ordination, control and
autonomy and maintaining the appropriate balance are critical to the success of the
multinational company.

To achieve this balancing act, there are six capabilities that enable firms to integrate
and concentrate international activities and also separate and adopt local activities:
Being able to determine core activities and non-core activities;
Achieving consistency while allowing flexibility;
Building global brand equity while honouring local customs and laws;
Obtaining leverage (bigger is better) while achieving focus (smaller is better);
Sharing learning and creating new knowledge;
Engendering a global perspective while ensuring local accountability.
CONCLUSION
Global human resource management provides an organized framework for
developing and managing people who are comfortable with the strategic and
operational paradoxes embedded in global or international organizations and who are
capable of managing cultural diversity. Because of cultural diversities and issues of
convergence and divergence, it is impractical to develop a truly international
approach to global human resource management. This means that organization
structures, management styles, organization cultures and change management
programmes have to be adapted to the dominant cultural attributes of the host nation
just as a careful balancing act is sought between being global and local needs.