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International Human Resource Management MBA Second Year (International Business) Paper No 2.1 School of Distance Education Bharathiar University, Coimbatore - 641 046 Author: P.L Rao Copyright © 2008, Bharathiar University All Rights Reserved Produced and Printed by EXCEL BOOKS PRIVATE LIMITED A-45, Naraina, Phase-I, New Delhi-110028 for SCHOOL OF DISTANCE EDUCATION Bharathiar University Coimbatore-641046 CONTENTS Page No Unit I Lesson Lesson HR and Global Business Challenge Perspectives and Approaches of IHRM 21 Unit II Lesson Lesson Lesson International HR Planning Cultural Dimensions of IHRM Performance Appraisal in a Global Context 51 70 88 Unit III Lesson Lesson Orienting and Training Employees for Global Assignments Compensation and Incentives 113 131 Unit IV Lesson Lesson International Labour Relations Repatriation 151 175 Unit V Lesson 10 Lesson 11 Human Resource Practices and Programmes in Various Countries International Law Related to Immigration and HR Model Question Paper 193 229 247 INTERNATIONAL HUMAN RESOURCE MANAGEMENT SYLLABUS UNIT I HR and global business challenge - Meaning of HR- The differences between domestic and International Human Resources - The various perspectives and approaches of International Human Resource Management UNIT II International HR Planning: - The role of cultural understanding - Culture and HR functions in a global subsidiary Recruitment and Selection - Staffing policies, approaches, Selection criteria - Relocation Performance management of international employees -performance appraisal in a global context - Recent innovative methods in HRM UNIT III Orienting and training employees for global assignments - approaches to training Integrating business strategy with international training & development Compensation - various approaches - factors affecting compensation systems Benefits - The adjustments and incentives UNIT IV International labor relations - key issues, various agreements International labour standards, safety and fair treatment, repatriation: process, problems and solutions MNC`S and HR Policies UNIT V Human Resources practices and programs adopted in USA, EUROPIEN Japan, China and Asian countries Laws related to immigration of people International contract Laws related to HR UNIT I LESSON HR AND GLOBAL BUSINESS CHALLENGE CONTENTS 1.0 Aims and Objectives 1.1 Introduction 1.2 Developing International HR Strategies 1.3 Issues in IHRM 1.4 Global Business Challenge 1.5 Meaning of IHRM 1.6 Difference between Domestic and International Human Resource 1.6.1 More HR Activities 1.6.2 Need for a Broader Perspective 1.6.3 More Involvement in Employee’s Personal Lives 1.6.4 Changes in Emphasis as the Workforce Mix of Expatriates and Locals Varies 1.6.5 Risk Exposure 1.6.6 More External Influences 1.7 Expanding the Role of HRM in International Firms 1.8 Let us Sum up 1.9 Lesson End Activity 1.10 Keywords 1.11 Questions for Discussion 1.12 Suggested Readings 1.0 AIMS AND OBJECTIVES After studying this lesson, you will be able to: Know the concept of international HRM Describe the complexity of IHRM Discuss the role of HRM in international firms 1.1 INTRODUCTION International dimensions of business and the globalisation of business have a significant impact on human resource management Therefore, a study of the concept of international management is necessary to understand the subject of international human resource management International Human Resource Management The focus of international business is on international transactions, whereas international management deals with managing such transactions within the boundary setup by corporate strategy Thus, when a company decides to enter a foreign market, that decision incorporates planning to establish the ways by which business functions–marketing, accounting, human resource management, and so on–are to be managed in that distant location Managing the various functions and coordinating them with the parent company’s overall strategy is the task of international management The international dimension of management might follow the practice of its headquarters or, the demand of the local market, or a combination of both There is no single dimension that is found to be the best Suffice it to say that many companies follow practices set by their headquarters for upstream activities (such as manufacturing) and respond according to local practices for downstream activities (such as marketing) With the recent advent of technological innovation and the emergence of the Newly Industrialized Countries (NICs), we are witnessing a convergence among nations in terms of rates and preferences, financial systems, and organization design This convergence, along with complementary developments, are forcing organizations to adhere to “borderless” terms The interesting aspect of working internationally is that we have to work with people who have different cultural heritages Cultural differences should be taken into account when communicating and interacting across nations and across cultures within nations Although multinational companies are supranational in operations and strategy, people within them not necessarily share the same cultural values and views on people and life The multinational model is built on the premise that it is necessary to understand cultural differences, rather than trying to smooth them over or override them For example, companies like IBM may have a strong corporate culture, but one of the aspects that the work of Hofstede (1980a) demonstrated was that within IBM, there is wide cultural variation across nations Hofstede (1980a) was one of the first to attempt to develop a universal framework for understanding cultural differences in managers’ and employees’ values based on a worldwide survey, although not the only one Hofstede’s work focuses on ‘value systems’ of national cultures which are represented by four dimensions: Power distance: This is the extent to which inequalities among people are seen as normal This dimension stretches from equal relations being seen as normal to wide inequalities being viewed as normal Uncertainty avoidance: This refers to a preference for structured situations versus unstructured situations This dimension runs from being comfortable with flexibility and ambiguity to a need for extreme rigidity and situations with a high degree of certainty Individualism: This looks at whether individuals are used to acting as individuals or as part of cohesive groups, which may be based on the family or the corporation This dimension ranges from collectivism to individualism (Hui, 1990) Masculinity: Hofstede (1980a) distinguishes ‘hard values’ such as assertiveness and competition, and the ‘soft’ of ‘feminine’ values of personal relations, quality of life and about caring about others, where in a masculine society gender role differentiation is emphasized Firms operating in international markets face different conditions and competitions Multinationals are characterised by an interdependence of resources and responsibilities across all business units regardless of national boundaries These companies have to cope with large flows of components, products, resources, people and information among their subsidiaries, while simultaneously recognising the specialised resources and capabilities of each This demands a complex process of coordination and cooperation involving strong cross-unit integrating devices, a strong corporate identity and a well developed worldwide management perspective Since they look for opportunities in every country (markets, cheaper cost of capital, labour and raw materials) and react to threats by various means, including speedy withdrawal of resources, they have to necessarily deal with the national governments, which control entry and impose conditions on doing business in their territories, often safeguarding the interests of local firms and consumers Hence, the way multinationals business requires high external focus and internal responsiveness National cultural traits also play a critical role in the conduct of business by influencing customer preferences and the values, beliefs and behaviour of employees Thus, culture affects both internal and external perspectives of management, including the cost of doing business and its results People play a key role in any type of business activity but their role has become very critical in the new economy and service sector Multinationals have emanated mostly from developed economies, which now control about 50% of world trade and 75% of global GDP and dominate the service sector (60 to 80%) Therefore, how multinationals manage their human resources (acquire, allocate, utilise and reward) becomes an important field of study and analysis This area of study comes under the purview of IHRM Since national cultures crucially influence these people, management processes, motivation and decision-making, including negotiations and diplomacy–their study has also become necessary to understand the subject of IHRM The second approach to IHRM is the study of industrial relations and labour management practices and policies in different countries Study of industrial relations in a country is reflective of its state of society, historical evolution, power relationships between groups, class struggle, political framework, prevailing labour laws and national approach to labour management This is a very wide field and encompasses different approaches Check Your Progress What are the four dimensions of national culture as propounded by Hofstede? 1.2 DEVELOPING INTERNATIONAL HR STRATEGIES Among the various factors that need to be addressed by a company’s international HRM system for creating global strategies are: Building a global culture, which will encourage the managerial mindsets and attitudes to develop an integrated, networked organisation to cope with global customers and global transactions Developing the leadership and managerial capability and structure to support global strategies and operations HR and Global Business Challenge 10 International Human Resource Management Gaining management interest and involvement in human resource management Ensuring optimum quality and depth of managerial personnel to serve global customers Ensuring managers have the technical and managerial skills to work effectively at the global level Increasing the extent and scope of managerial talent in the organisation Identifying the depth of managerial talent in the organisation Developing global and local approaches to training and development Ensuring management succession Sustaining and improving performance at all levels in all areas of the company Implementing global human resource systems for recruitment, performance management, training and development, succession planning, remuneration and benefits Establishing a total quality culture, and changing people’s attitudes to quality Linking HRM to strategic objectives Types of International Employees Foreign parent expatriates are employees from the foreign parent headquarters assigned to the venture, usually in upper management positions Host country nationals are employees directly recruited and employed by the venture and are nationals of the host country They may occupy all levels in the organisation; however, initially they are usually not found in the upper management levels Third-country expatriates of the foreign parent are employees in the foreign parent organisation who are nationals of neither the foreign parent country nor the host parent country Third country expatriates of the new venture are employees recruited directly by the venture who are nationals of neither the foreign parent(s) country nor the host parent(s) country Check Your Progress Identify and mention the types of employees of an international firm 1.3 ISSUES IN IHRM Before 1986, most written material on international HR focused on managing international assignments, usually from an American perspective Many current books and articles are still written from a domestic point of view, but the literature is becoming considerably broader in scope The quantity and quality of such material have increased dramatically in the past five years The following topics have been most prevalent: Managing international assignments: This continues to be the most popular topic Articles about the selection, training, compensation and repatriation of expatriate failures Many articles refer to expatriate managements as the major concern of HR managers in multinational corporations Employee and family adjustment: People’s adjustment to expatriate assignments can be extremely challenging, regardless of the country For example, an American family on an assignment in Indonesia went to a restaurant with their pet dog The restaurant manager politely greeted them at the door, took their dog and, 30 minutes later–much to the family’s horror—served it to them In America, a Chinese family bought a can of what they believed—because of the picture on the label—to be fried chicken They were surprised and disappointed to open it and learn the can contained only the shortening used for cooking fried chicken Selecting the right person for a foreign assignment: This is critical for success Expatriates must be personally adaptable and their families capable of adjusting to new and unusual challenges Orientation and training are enormously valuable in helping expatriates and their families adjust to the new culture and learn a new language Compensation plans for expatriates are usually complex and expensive because of the taxes, allowances and premiums Repatriation can be traumatic and difficult for returning executives, and the transition back home needs to be planned as carefully as the move abroad Culture, communication and gauge: International HR professionals are expected to understand the implications of cultural differences between countries and their interplay with differing corporate cultures They are often responsible for seeing that expatriates are trained to adapt to cultural differences and overcome cultural shock Also, HR professionals play an important role in ‘cultural wrinkles’ in international joint ventures, mergers and acquisitions Language and communication: These are also important in international HR management Expatriate managers must learn the foreign language or rely on local interpreters to communicate with the local workforce Parent company officials may struggle to communicate with local managers in foreign subsidiaries Because human resource professionals are often expected to foster international communication, they must understand that effective communication involves more than just speaking the same language To communicate effectively, individuals must share the deeper meanings that are often embedded cultural norms and traditions Check Your Progress Mention any five issues in international human resource management 1.4 GLOBAL BUSINESS CHALLENGE There are a number of unique problems that global companies face when trying to implement consistent practices across their global HR networks These problems act as barriers to effective Global HRM These are: Variations: The biggest challenge is also the most obvious: the worldwide variations in social, political, and economic circumstances An HR practice that works in one country may be unacceptable in another Fluctuations in currency, government regulations, compensation expectations, job security, and learning styles are just a few examples of the local variations a global HR professional faces Currently, there is a European legislation that prohibits a company from sharing employment records across geographical boundaries without the employee’s permission – a potential threat to global staffing 11 HR and Global Business Challenge Working through the IOM Council, the International Dialogue on Migration seeks to contribute to a better understanding of migration and to strengthen cooperative mechanisms between governments to comprehensively and effectively address migration issues The ILO is the only United Nations agency with a constitutional mandate to protect migrant workers, and this mandate has been re-affirmed by the 1944 Declaration of Philadelphia and the 1998 ILO Declaration on Fundamental Principles and Rights at Work It has been dealing with labour migration issues since its inception in 1919 It has pioneered international Conventions to guide migration policy and protection of migrant workers All major sectors of the ILO - standards, employment, social protection and social dialogue - work on labour migration within its overarching framework of ‘decent work for all’ ILO adopts a rights-based approach to labour migration and promotes tripartite participation (governments, employers and workers) in migration policy 11.3 IMMIGRATION LAW IN UK British Overseas Citizens have identical legal rights to British citizens - distinguished only in tittle British citizenship can be obtained as a right for anybody who was born in Britain, or British overseas territory It is also available as of right for people of whom one parent is a “British (or British Overseas) citizen otherwise than by descent” EU citizens, as created by the Treaty of Rome art 17 have the right to work, provide services or self employment in the UK 11.4 IMMIGRATION LAW IN THE USA Immigration law is a serious political issue in the USA, as the nation heads towards its 2008 Presidential Elections Of particular relevance to the debate on immigration is the fact that, due to a backlog in processing immigration applications by United States Citizenship and Immigration Services (USCIS), many would-be citizens will be ineligible to vote in the 2008 Presidential Campaign 11.4.1 Immigration and Nationality Act (INA) This is the most important and relevant federal law that governs US immigration This immigration law covers all the federal rules and regulations related to the rights and duties of foreign nationals in America This law determines whether or not a person is eligible for immigrant status as well as deportation status of illegal aliens The INA was first enacted in 1952, and since then has been modified a number of times Some changes have been regulatory changes, whereas some have come about as a result of changing governments Under the US immigration laws, a person is eligible to receive immigration status, under the following circumstances: Work opportunity: If a person has certain skills that are in demand in the US and a firm or company wishes to hire such a person, then he can be granted immigration status US law provides for five categories of permanent employment based immigration, and a person wishing to receive work-based immigration should be eligible under one of the five categories The employer is required to submit a labor certification request and a visa petition so that the employee can receive immigration Capital Investment: If a person makes a sizeable capital investment in the United States, then he may be granted immigrant status But this investment has to be beneficial to the US economy and should create a lot of job opportunities for the citizens Although 233 International Law Related to Immigration and HR 234 International Human Resource Management it must be noted that immigration under this circumstance is very rare and may or may not be granted Family Reunification: A person can also be granted immigrant status if he has family members who are American citizens But not all relatives are eligible under this rule, which mostly applies to immediate family members such as parents, spouses, and children A petition has to be filed by the relative and proof of relation has to be submitted This petition then needs to be approved by the Immigration services Bureau before immigrant status can be granted Refugees: US immigration laws also provide for granting immigrant status to refugees A person has to have faced persecution on the basis of caste, religion, nationality, or political view in his home country to qualify as a refugee He then has to undergo medical and legal scrutiny, after which he may or may not be granted US asylum Lottery System: USA has a diversity lottery process whereby it grants immigrant status to people from countries that have a low immigration rate to the US It chooses 110,000 applications but grants only 50,000 visas in a fiscal year Any country that has 50,000 or more immigrants to the US in the last five years is not eligible under this system 11.4.2 Immigration Attorneys Any person who wishes to apply for US immigration needs to complete a lot of formalities They have to apply for visas and start the neutralization process In the event of any application being turned down, the petitioners may want to challenge and overturn such decisions For all these and more issues relating to immigration, an immigration lawyer can be very helpful If you need legal help in facing immigration challenges, the services of an attorney can assist in protecting your rights under US immigration laws Take advantage of immigration law firms that are there to help you realize your American dream! 11.5 CANADIAN IMMIGRATION LAW Canadian Citizenship and Immigration to Canada start with an application for a Canada Immigration (Permanent Resident) Visa There are several categories of Canadian immigration under which you can apply to immigrate to Canada: Federal Skilled Worker: Professionals and skilled trades people Provincial Nomination Program: Workers going to a specific province Quebec Skilled Worker: People intending to reside in Quebec Business Class Immigration: Managers and business owners Family Class Sponsorship: Close family members in Canada 11.6 INTERNATIONAL CONTRACT LAWS RELATED TO HR As we enter the 21st century, we have become a world without borders Companies of all sizes have learned that opportunity transcends geographic boundaries So does risk, especially when dealing with labor and employment matters in a foreign country Suddenly you need answers to questions like – What rules govern organized labor in Mexico? How you handle the discharge of employees in Japan? Of the host of legal issues facing global businesses, perhaps none is more significant than the issues regarding the individual employees who keep the business running on a daily basis International Labor & Employment Law is a comprehensive book to help businesses understand the laws that govern labor & employment around the world and to create a successful workforce transcending traditional barriers Authored by attorneys representing twenty-five jurisdictions on six continents, this book walks through the broad legal basics of each country’s court system as well as the specific laws relating to hiring and firing, unions, employee benefits, and other important aspects of labor and human resources The chapters in this book take readers beyond the laws that exist on paper and provide practical information on the current legal environment, relevant case law, and standard business practices Whether the business requires sending employees overseas, acquiring an already-staffed company, or building a new workforce, International Labor & Employment Law will prove to be an indispensable resource for both executives and attorneys, leaving readers with a solid grasp on the fundamentals of labor law around the world Employment laws in Europe are different and generally more restrictive than in the U.S In addition, laws and regulations are in a considerable state of flux in the UK, Germany, and the other European member states throughout the continent In the UK, for example, the Government has recently introduced Regulations prohibiting discrimination on the grounds of religious belief and has indicated that it will be unlawful to discriminate against employees on grounds of age by 2006 Employers are also concerned about the impending implementation of the Information and Consultation Directive, which will force all employers of a sufficient size to establish an employee representative body and consult with it on a regular basis about general business issues In Germany, strategic questions with regard to co-determination of works councils require special expertise The rest of the EU is also active in new employment-related regulations 11.7 ROLE OF ILO The International Labour Organization (ILO) is devoted to advancing opportunities for women and men to obtain decent and productive work in conditions of freedom, equity, security and human dignity Its main aims are to promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue in handling work-related issues In promoting social justice and internationally recognized human and labour rights, the organization continues to pursue its founding mission that labour peace is essential to prosperity Today, the ILO helps advance the creation of decent jobs and the kinds of economic and working conditions that give working people and business people a stake in lasting peace, prosperity and progress The ILO is the only ‘tripartite’ United Nations agency in that it brings together representatives of governments, employers and workers to jointly shape policies and programmes This unique arrangement gives the ILO an edge in incorporating ‘real world’ knowledge about employment and work 11.8 CONTRACT LAW RELATED TO HR IN USA Every organization wants to attract the most qualified employees and match them to jobs for which they are best suited However, many enterprises are too large to permit close contact between top management and employees Human resources, training, and labor relations managers and specialists provide this connection In the past, these workers performed the administrative function of an organization, such as handling employee benefits questions or recruiting, interviewing, and hiring new staff in accordance with 235 International Law Related to Immigration and HR 236 International Human Resource Management policies established by top management Today’s human resources workers manage these tasks, but, increasingly, they also consult with top executives regarding strategic planning They have moved from behind-the-scenes staff work to leading the company in suggesting and changing policies In an effort to enhance morale and productivity, limit job turnover, and help organizations increase performance and improve business results, these workers also help their firms effectively use employee skills, provide training and development opportunities to improve those skills, and increase employees’ satisfaction with their jobs and working conditions Although some jobs in the human resources field require only limited contact with people outside the human resources office, dealing with people is an important part of the job There are many types of human resources, training, and labor relations managers and specialists In a small organization, a human resources generalist may handle all aspects of human resources work, and thus require an extensive range of knowledge The responsibilities of human resources generalists can vary widely, depending on their employer’s needs In a large corporation, the director of human resources may supervise several departments, each headed by an experienced manager who most likely specializes in one human resources activity, such as employment and placement; compensation, and benefits; training and development; or labor relations The director may report to a top human resources executive (Executives are included in the Handbook statement on ‘top executives’.) 11.8.1 Employment and Placement Employment and placement managers supervise the hiring and separation of employees They also supervise employment, recruitment, and placement specialists, including recruitment specialists and employment interviewers Employment, recruitment, and placement specialists recruit and place workers Recruiters maintain contacts within the community and may travel considerably, often to college campuses, to search for promising job applicants Recruiters screen, interview, and occasionally test applicants They also may check references and extend job offers These workers must be thoroughly familiar with the organization and its human resources policies in order to discuss wages, working conditions, and promotional opportunities with prospective employees They also must stay informed about equal employment opportunity (EEO) and affirmative action guidelines and laws, such as the Americans with Disabilities Act Employment interviewers—whose many job titles include human resources consultants, human resources development specialists, and human resources coordinators—help to match employers with qualified jobseekers Similarly, employer relations representatives, who usually work in government agencies, maintain working relationships with local employers and promote the use of public employment programs and services 11.8.2 Compensation, Benefits and Job Analysis Compensation, benefits, and job analysis specialists conduct compensation programs for employers and may specialize in specific areas such as pensions or position classifications For example, job analysts, occasionally called position classifiers, collect and examine detailed information about job duties in order to prepare job descriptions These descriptions explain the duties, training, and skills that each job requires Whenever a large organization introduces a new job or reviews existing jobs, it calls upon the expert knowledge of the job analyst Occupational analysts conduct research, usually in large firms They are concerned with occupational classification systems and study the effects of industry and occupational trends on worker relationships They may serve as technical liaison between the firm and other firms, government, and labor unions Establishing and maintaining a firm’s pay system is the principal job of the compensation manager Assisted by staff specialists, compensation managers devise ways to ensure fair and equitable pay rates They may conduct surveys to see how their firm’s rates compare with others, and they ensure that the firm’s pay scale complies with changing laws and regulations In addition, compensation managers often manage their firm’s performance evaluation system, and they may design reward systems such as pay-forperformance plans Employee benefits managers and specialists manage the company’s employee benefits program, notably its health insurance and pension plans Expertise in designing and administering benefits programs continues to take on importance as employer-provided benefits account for a growing proportion of overall compensation costs, and as benefit plans increase in number and complexity For example, pension benefits might include a 401K or thrift savings, profit-sharing, and stock ownership plans; health benefits might include long-term catastrophic illness insurance and dental insurance Familiarity with health benefits is a top priority for employee benefits managers and specialists, as more firms struggle to cope with the rising cost of health care for employees and retirees In addition to health insurance and pension coverage, some firms offer employees life and accidental death and dismemberment insurance, disability insurance, and relatively new benefits designed to meet the needs of a changing workforce, such as parental leave, child and elder care, long-term nursing home care insurance, employee assistance and wellness programs, and flexible benefits plans Benefits managers must keep abreast of changing Federal and State regulations and legislation that may affect employee benefits Employee assistance plan managers, also called employee welfare managers, are responsible for a wide array of programs These include occupational safety and health standards and practices; health promotion and physical fitness, medical examinations, and minor health treatment, such as first aid; plant security; publications; food service and recreation activities; car-pooling and transportation programs, such as transit subsidies; employee suggestion systems; child care and elder care; and counseling services Child care and elder care are increasingly significant because of growth in the number of dualincome households and the elderly population Counseling may help employees deal with emotional disorders, alcoholism, or marital, family, consumer, legal, and financial problems Some employers offer career counseling as well In large firms, certain programs, such as those dealing with security and safety, may be in separate departments headed by other managers 11.8.3 Training and Development Training and development managers and specialists conduct and supervise training and development programs for employees Increasingly, management recognizes that training offers a way of developing skills, enhancing productivity and quality of work, and building worker loyalty to the firm, and most importantly, increasing individual and organizational performance to achieve business results Training is widely accepted as an employee benefit and a method of improving employee morale, and enhancing employee skills has become a business imperative Increasingly, managers and leaders realize that the key to business growth and success is through developing the skills and knowledge of its workforce 237 International Law Related to Immigration and HR 238 International Human Resource Management Other factors involved in determining whether training is needed include the complexity of the work environment, the rapid pace of organizational and technological change, and the growing number of jobs in fields that constantly generate new knowledge, and thus, require new skills In addition, advances in learning theory have provided insights into how adults learn, and how training can be organized most effectively for them Training managers provide worker training either in the classroom or on site This includes setting up teaching materials prior to the class, involving the class, and issuing completion certificates at the end of the class They have the responsibility for the entire learning process, and its environment, to ensure that the course meets its objectives and is measured and evaluated to understand how learning impacts business results Training specialists plan, organize, and direct a wide range of training activities Trainers respond to corporate and worker service requests They consult with on site supervisors regarding available performance improvement services and conduct orientation sessions and arrange on-the-job training for new employees They help all employees maintain and improve their job skills, and possibly prepare for jobs requiring greater skill They help supervisors improve their interpersonal skills in order to deal effectively with employees They may set up individualized training plans to strengthen an employee’s existing skills or teach new ones Training specialists in some companies set up leadership or executive development programs among employees in lower level positions These programs are designed to develop leaders, or “groom” them, to replace those leaving the organization and as part of a succession plan Trainers also lead programs to assist employees with job transitions as a result of mergers and acquisitions, as well as technological changes In government-supported training programs, training specialists function as case managers They first assess the training needs of clients and then guide them through the most appropriate training method After training, clients may either be referred to employer relations representatives or receive job placement assistance Planning and program development is an essential part of the training specialist’s job In order to identify and assess training needs within the firm, trainers may confer with managers and supervisors or conduct surveys They also evaluate training effectiveness to ensure that the training employees receive helps the organization meet its strategic business goals and achieve results Depending on the size, goals, and nature of the organization, trainers may differ considerably in their responsibilities and in the methods they use Training methods include on-the-job training; operating schools that duplicate shop conditions for trainees prior to putting them on the shop floor; apprenticeship training; classroom training; and electronic learning, which may involve interactive Internet-based training, multimedia programs, distance learning, satellite training, other computer-aided instructional technologies, videos, simulators, conferences, and workshops 11.8.4 Employee Relations An organization’s director of industrial relations forms labor policy, oversees industrial labor relations, negotiates collective bargaining agreements, and coordinates grievance procedures to handle complaints resulting from management disputes with unionized employees The director of industrial relations also advises and collaborates with the director of human resources, other managers, and members of their staff, because all aspects of human resources policy—such as wages, benefits, pensions, and work practices—may be involved in drawing up a new or revised union contract Labor relations managers and their staffs implement industrial labor relations programs Labor relations specialists prepare information for management to use during collective bargaining agreement negotiations, a process that requires the specialist to be familiar with economic and wage data and to have extensive knowledge of labor law and collective bargaining trends The labor relations staff interprets and administers the contract with respect to grievances, wages and salaries, employee welfare, health care, pensions, union and management practices, and other contractual stipulations As union membership continues to decline in most industries, industrial relations personnel are working more often with employees who are not members of a labor union Dispute resolution—attaining tacit or contractual agreements—has become increasingly significant as parties to a dispute attempt to avoid costly litigation, strikes, or other disruptions Dispute resolution also has become more complex, involving employees, management, unions, other firms, and government agencies Specialists involved in dispute resolution must be highly knowledgeable and experienced, and often report to the director of industrial relations Conciliators, or mediators, advise and counsel labor and management to prevent and, when necessary, resolve disputes over labor agreements or other labor relations issues Arbitrators, occasionally called umpires or referees, decide disputes that bind both labor and management to specific terms and conditions of labor contracts Labor relations specialists who work for unions perform many of the same functions on behalf of the union and its members EEO officers, representatives, or affirmative action coordinators handle EEO matters in large organizations They investigate and resolve EEO grievances, examine corporate practices for possible violations, and compile and submit EEO statistical reports Other emerging specialties in human resources include international human resources managers, who handle human resources issues related to a company’s foreign operations; and human resources information system specialists, who develop and apply computer programs to process human resources information, match job seekers with job openings, and handle other human resources matters Work environment Human resources work usually takes place in clean, pleasant, and comfortable office settings Arbitrators and mediators may work out of their homes Although most human resources, training, and labor relations managers and specialists work in the office, some travel extensively For example, recruiters regularly attend professional meetings and visit college campuses to interview prospective employees; arbitrators and mediators often must travel to the site chosen for negotiations Many human resources, training, and labor relations managers and specialists work a standard 35- to 40-hour week However, longer hours might be necessary for some workers—for example, labor relations managers and specialists, arbitrators, and mediators—when contract agreements are being prepared and negotiated 11.9 LABOUR AND EMPLOYMENT LAW IN UK The charity Age Concern has argued that UK age discrimination legislation contravenes European law by allowing employers to retire employees against their wishes Age Concern has brought a court action in the hope of getting the legislation declared unlawful (through a case commonly known as the ‘Heyday’ case) The Employment Appeal Tribunal (EAT) has now ordered that all age discrimination claims brought by employees aged 65 or over who have been forced to retire must be put on hold pending the outcome of the Heyday case The decision of the ECJ is not expected until 2009 This order has 239 International Law Related to Immigration and HR 240 International Human Resource Management worrying implications for employers who now face a long period of uncertainty in relation to the lawfulness of mandatory retirement 11.9.1 Abolition of Statutory Disciplinary and Grievance Procedures Earlier in 2007, a Government appointed review recommended the repeal of the statutory dispute resolution procedures and made a number of other significant recommendations to improve dispute resolution in UK workplaces In response, the Government is pushing ahead with the Employment Bill The Bill, once implemented, will repeal the existing statutory dispute resolution procedures and the related provisions which can render a dismissal ‘unfair’ just because of a breach in procedure In place of them, employers and employees alike will be expected to comply with codes of practice for resolving disputes developed by the Advisory, Conciliation and Arbitration Service (ACAS) If either party unreasonably fails to follow the codes of practice, employment tribunals will be able to increase or reduce compensation by up to 25 per cent, depending on who was at fault Amongst other proposed amendments contained in the Bill, it is also proposed to extend ACAS’s power to conciliate 11.9.2 Collective Redundancy Consultation Clarified The EAT has made it clear that an employer must consult over the business reasons for making redundancies when a business is closing, as part of the obligation to collectively consult on ways in which the redundancies can be avoided This overturns previous case law dating back to 1993, which the EAT found was no longer good law in light of subsequent changes to legislation As a result, if more than 20 people are likely to lose their jobs in a 90-day period, employers should not take a firm decision to close part of the business until the proposed reasons for such redundancies have been discussed with a recognised union or elected employee representatives 11.9.3 Increased Holiday Entitlement From October 2007, the statutory minimum annual leave entitlement increased from weeks to 4.8 weeks (subject to a cap of 28 days) A further increase to 5.6 weeks is due in April 2009 11.10 LAW RELATED TO HR IN FRANCE 11.10.1 Employer Under French employment laws it is required that an employee in France be employed by an employer registered to business in France (ex SARL, etc.) The employment law is clear that direct employment of a French national in France by a foreign company is not permitted except in the limited exception of one sales employee, engaged in direct sales, working from the home of the employee French employment agreements are advised 11.10.2 Engaging Consultants Engaging services as a “consultant” in France must be viewed with great caution under French employment law In the event an employment bond is found, the “consultant” may file a labor claim in court, claiming the sums he or she deems to be entitled In addition, labor authorities may file charges that statutory contributions have not been paid on behalf of the “consultant” 11.10.3 Employment Agreement A written employment agreement must be executed in the French language, detailing the required terms and conditions Any probationary period, compensated post employment non-competition or other restrictive covenant must be clearly stated An employment agreement must be registered at the appropriate Labor Office upon commencement of employment 11.10.4 Terminating the Employment Relationship The termination of an employment contract by the employer (other than for “faute grave”) must carefully follow a prescribed procedure, involving pre-termination meeting with right of accompaniment, notices in the French language and specific waiting periods Notice of termination (or payment in lieu) and severance is generally by CBA provision, or contract if more favorable Unjust termination (ex without a carefully documented performance case or redundancy basis) can give rise to claim for damages, often involving many months of salary Further damages can arise if the termination was found to be “brusque and abrupt” 11.10.5 Post Employment Non-competition Recent court decisions in France now make it clearly required that a period of post employment non-competition must be supported by substantial payment to the former employee for the restrictive provision to be found valid under French employment law 11.10.6 35 Hour Work Week France has introduced a mandatory 35 hour work week For employees not subject to close monitoring of hours (ex sales) additional remunerated time off in compensation is required 11.11 CONTRACT LAW RELATED TO HR IN THAILAND The rights and duties of the employer and the employee are generally governed by the Labor Protection Act (“LPA”) and the Civil and Commercial Code (“CCC”) Generally, under Tailand employment laws an agreement between the employer and the employee cannot be less than the minimum standards or requirements set by law A “noncompetition” clause agreed between the parties is governed by the Unfair Contract Terms Act A written employment agreement is highly recommended, and Thai employment agreements must be carefully drafted 11.11.1 Terms of Employment The maximum probationary period permissible under Thai employment law is 120 days All employers are required by labour law to provide at least 13 official public holidays per year, and six vacation days after one full year of service Apart from salary, all benefits arising from employment are regarded as assessable income subject to withholding tax at a progressive rate Under Thailand labor law an employee is entitled to annual sick leave of 30 working days per year, with full pay In addition to sick-leave, a pregnant woman is entitled to 90 days of maternity leave (inclusive of holidays), including 45 work days at full pay 11.11.2 Termination of Employment Employment termination with cause (in which event the employer can terminate employment without notice and/or compensation) is governed by the provisions of Section 241 International Law Related to Immigration and HR 242 International Human Resource Management 583 of the Civil and Commercial Code and Section 119 of the LPA, and includes gross negligence, willful disobedience, dishonesty or criminal act When there is employment termination without cause, it is compulsory under employment laws that the employer make severance payment (in addition to notice) to the employee according to the length of unbroken service: From 120 days but less than year the amount is 30 days year but less than years the amount is 90 days years but less than years the amount is 180 days years but less than 10 years the amount is 240 days 10 years and over the amount is 300 days 11.11.3 Special Leave Under Thailand labour laws employees must have the right to take sterilization leave, for which period full wage must be paid by the employer 11.11.4 Relocation of the Business Under Thailand employment laws, material relocation of the place of work by the employer gives the employee the right to refuse assignment and claim 50% of the customary severance for not-for-cause dismissal Check Your Progress State whether the following statements are True or False: Immigration law regarding the citizens of any country is regulated by Immigration and Nationality Act Citizens of the member countries of EU have right to work or self-employment in the UK Employment laws in the US are more restrictive than the employment laws in Europe The ILO is the only tripartite UN agency in that it brings together representatives of governments, employers and workers to jointly shape the employment and labour policies 11.12 EMPLOYMENT AND LABOUR LAW IN CHINA 11.12.1 Entity Formation In China -PRC doing business considerations will direct the selection of either a wholly foreign owned enterprise (“WFOE”) or a representative office Under PRC law a WFOE is permitted to engage in production or commercial activities in China - PRC as approved and specified in the business license and has the right to import and export for its business purposes The China representative office may not perform any profit-making functions but may liaison for business purposes, introduce products, conduct market research; and conduct technological exchanges The signing of contracts by the parent company with local PRC companies with the China representative office being involved in the negotiation is permissible 11.12.2 Employment Relationship Most foreign corporations choose not to directly employ local Chinese employees Under China - PRC employment law a foreign investment enterprise such as a WFOE can enter into any employment contract with local PRC staff, while a representative office must employ local staff through an authorized foreign enterprise service corporation such as FESCO Under China PRC employment laws a WFOE can enter into individual labour contracts with each individual PRC employee and is required to submit the labour contracts for certification by the local labour bureau The local staff working in a representative office is technically speaking not employees of the representative office, but employees of the foreign enterprise service corporation seconded to the representative office This peculiar feature does not carry much practical significance in terms of the actual performance of work by employees 11.12.3 Employment Contract China - PRC employment law requires direct employment by WFOE will be under a written agreement in the prescribed Chinese language, following the form prescribed by the local labour administration, and including at least the minimum seven items dictated by Article 19 of the Labour Act Employment through authorized foreign enterprise service corporation will be under the standard terms of the “blue book” contract of the corporation, although the representative office may, and should, submit additional terms for review and inclusion by the corporation 11.13 TERMINATING THE EMPLOYMENT RELATIONSHIP Under China - PRC employment Law generally the WFOE may terminate the direct relationship with thirty days of notice and specifically defined cause Termination in China for less than cause subjects the employer to legal action in a very fluid legal environment By comparison, termination of a FESCO engagement also requires thirty days of notice, but offers substantially greater company legal protections under China PRC employment law 11.13.1 Stock Option Plans While stock options may be granted to employees in the PRC - China, national currency may not be transferred abroad for their exercise 11.13.2 Compensated Social Activities By statute in PRC - China, time spent in social activities in the workplace (political study, promoting family planning, etc.) must be considered compensated time by the employer 11.13.3 Probationary Period A probationary period of up to six months may be included in a PRC - China employment agreement, avoiding the 30 day notice of termination requirement during the period 11.14 LABOUR LAW IN NETHERLAND 11.14.1 Employment Relationship in the Netherlands The Dutch Civil Code contains general rules on Netherlands employment contracts In practice, it may be difficult to distinguish under the law between employment contracts 243 International Law Related to Immigration and HR 244 International Human Resource Management on the one hand and comparable personal services on the other hand Under employment laws the distinction, nevertheless, is an important one, because many of the statutory provisions for Netherlands employment contracts are binding on the parties, deviations from these being void 11.14.2 The Netherlands Employment Agreement Under Netherlands employment law a Netherlands employment agreement need not be in writing, although the employer is obliged to provide the employee with a notification in writing, containing the essential parts of the employment agreement Under employment laws some obligations however, are valid only if accepted in writing An important example of that latter is provided by so called non-competition clauses, which are allowed under Netherlands employment law Non-competition clauses may be annulled or moderated by the competent court, if equity demands so The Netherlands probationary period has to be agreed in writing in the employment agreement as well 11.14.3 Terminating the Netherlands Employment Agreement Under Netherlands employment law in the absence of mutual agreement or cause, an employer may not terminate a Netherlands employment contract for an indefinite period without a permit from the Director of the (local) “RBA” (labour office) The Director has to balance the interests of the employer and the employee If the permit is refused, the employment agreement cannot be terminated in a valid way, and the employer should continue to pay to the employee his salary, etc Especially in complicated cases, the Director may need quite some time (varying from two months or even longer) before rendering his decision Although there are some applicable guidelines, it is often quite hard to predict whether a permit will be granted or not Notwithstanding the fact that an employer has terminated the contract of an employee in compliance with Dutch employment law, a compensation may be due, if the dismissal is found to be “clearly unreasonable” This may be the case if the reason for termination of employment is false or insufficient; it may also be the case if the financial effects of the termination of employment would otherwise be a burden on the employee A Netherlands employment contract can also be terminated by judicial order at any time The Netherlands termination of employment proceedings will take approximately months, and the court can award termination of employment damages to the employee, depending on the duration of the employment, the age of the employee and the reason for the termination If the contract is terminated by judicial order, no notice period has to be observed and no permit from the Director of the RBA has to be obtained 11.14.4 Probationary Period Under employment laws, for an indefinite period Netherlands employment agreement, two months is the maximum probationary period Specification of a greater period will result in there being no probationary period at all 11.14.5 Reinstatement If the employer seeks termination of employment in Netherlands by judicial order, the court may order reinstatement and that the parties make a good faith effort to make the employment succeed An employer found not to make such an effort can incur substantial financial penalties 11.15 LET US SUM UP Of the host of legal issues facing global businesses, perhaps none is more significant than the issues regarding the individual employees who keep the business running on a daily basis International Labor & Employment Law is a comprehensive book to help businesses understand the laws that govern labor & employment around the world and to create a successful workforce transcending traditional barriers Employment laws in Europe are different and generally more restrictive than in the U.S In addition, laws and regulations are in a considerable state of flux in the UK, Germany, and the other European member states throughout the continent In the UK, the Government has recently introduced Regulations prohibiting discrimination on the grounds of religious belief and has indicated that it will be unlawful to discriminate against employees on grounds of age by 2006 The rest of the EU is also active in new employment-related regulations 11.16 LESSON END ACTIVITY Study the immigration law of any Asian country and compare it with European immigration law 11.17 KEYWORDS Immigration law: It refers to national government policies which control the phenomenon of immigration to their country International migration: It is a multi-directional phenomenon in which many countries are both emigration and immigration countries at the same time Migrant Workers: According to the Convention, the term “migrant worker” refers to a person who is to be engaged, is engaged or has been engaged in a remunerated activity in a State of which he or she is not a national This definition therefore encompasses both documented and undocumented migrants Refugees and Asylum-seekers: According to the 1951 Convention Relating to the Status of Refugees, a refugee is someone who is outside his/her country of origin; has a wellfounded fear of persecution because of his/her race, religion, nationality, membership in a particular social group, or political opinion; and is unable or unwilling to avail him/ herself of the protection of that country, or to return there, for fear of persecution A person may be granted refugee status immediately, i.e at the time of admission in a country other than his/her own Or he/she can fill in an application for refugee status after having arrived in such a country: until the application has been considered, he/she is considered as an asylum-seeker 11.18 QUESTIONS FOR DISCUSSION Discuss the role of ILO is protecting migrants’ interests Discuss and compare the immigration law in the US and UK What is the contract law related to HR? Discuss the labour and employment law in the US Describe various laws related human resource in China 245 International Law Related to Immigration and HR 246 International Human Resource Management Check Your Progress: Model Answers CYP 1 Immigration Law refers to national government policies which control the phenomenon of immigration to their country Immigration law, regarding foreign citizens, is related to nationality law, which governs the legal status of people, in matters such as citizenship The 10 countries with the largest migrant populations (2000) Number of migrants (thousands)Percent of total populationUnited States of America 34.98812,4 % Russian Federation13.2599,1 %Germany7.3499,0 %Ukraine6.94714,0 %France6.27710,6 %India6.2710,6 %Canada5.82618,9 %Saudi Arabia5.25525,8 %Australia4.70524,6 % CYP False, True, False, True 11.19 SUGGESTED READINGS P L Rao, International Human Resource Management, Excel Books, New Delhi, 2008 Briscoi, Schuler and Claus, International Human Resource Management, Routledge, 2008 Breuester, Sparrow and Vernon, International Human Resource Management (3rd edition) P J Dowling and D.E Welch, International Human Resource Management, Thomson, London, 2004 MODEL QUESTION PAPER MBA Second Year Sub: International Human Resource Management Time: hours Total Marks: 100 Direction: There are total eight questions, each carrying 20 marks You have to attempt any five questions What is International HRM? What are the issues involved in it? What are the main similarities and difference between domestic and international HRM? Discuss the role of cultural understanding for HR functions in international organisations “Performance Management is the most important responsibility of HR executives” Comment What approaches multinationals follow for handling international taxation? What are the characteristics of multinationals that give labour unions cause for concern? “The concept of learning organisation is on outgrowth of Anglo-Saxon management culture.” Discuss Discuss and compare the immigration law in the US and UK [...]... Briscoi, Schuler and Claus, International Human Resource Management, Routledge, 2008 Breuester, Sparrow and Vernon, International Human Resource Management (3rd edition) P.J Dowling and D.E Welch, International Human Resource Management, Thomson, London, 2004 LESSON 2 PERSPECTIVES AND APPROACHES OF IHRM CONTENTS 2.0 Aims and Objectives 2.1 Introduction 2.2 International Human Resource Management Approaches... Domestic Division (Paint) Marketing Domestic Division (Tools) Production International Division Subsidiary Japan Subsidiary Italy Marketing Human Resource Finance Subsidiary Australia Finance Human Resources Source: Dowling et al (2001 International Resource Management p 38) Figure 2.4: International Division Many firms at this stage of internationalization are concerned about maintaining control of the... Employees Source: Adapted from P.V Morgan, 1986, International human resource management Figure 1.1: Model of International HRM 1.6 DIFFERENCE BETWEEN DOMESTIC AND INTERNATIONAL HUMAN RESOURCE The complexities of operating in different countries and employing different national categories of workers are a key variable that differentiates domestic and international HRM, rather than any major differences... the company, because now the international operations are put on the same level as domestic operations 29 Perspectives and Approaches of IHRM 30 International Human Resource Management Chief Executive Officer Head Quarters departments Production Marketing Human Resource Finance Operating divisions South America Africa Europe Australia Far East Production Marketing Human Resource Figure 2.6: A Global... Bartlett and Ghoshal’s Model 2.10 Implications for Human Resource Management Policy 2.11 An Integrated Strategic Framework 2.12 Flexible Organisation: The EU Model 2.13 Context of Management and Organizations in Europe 2.14 Let us Sum up 2.15 Lesson End Activity 2.16 Keywords 2.17 Questions for Discussion 2.18 Suggested Readings 22 International Human Resource Management 2.0 AIMS AND OBJECTIVES After studying... in them to implement proven home office human resource policies and practices This is known as the ethnocentric approach The decision to use PCNs leads into exportation of management issues and activities At this point the HR department becomes actively involved in the personnel aspects of the firm’s international operations 26 International Human Resource Management Chief Executive Officer Home office... environment 31 Perspectives and Approaches of IHRM Chief Executive Officer Production Vice-President International Vice-President Global Products Europe Human Resources Finance Marketing Americas AsiaPacific Product A Product B Product C Australia Human Resources Source: Dowling et al (2001) International Resource Management (p 43) Figure 2.7: The Matrix 2.7 NEW TYPES OF MULTINATIONAL STRUCTURES In large,... involved in international operations, and there is some evidence to suggest that business failures in the international arena may often be linked to poor management of human resources It is worthwhile examining in greater detail what is meant by the statement that international HRM is more complex than domestic HRM Dowling (1988) has summarized the literature on similarities and differences between international. .. ethnocentric and polycentric approaches of international management 2.3 THE PATH TO GLOBAL STATUS In addition to the strategic imperatives, mindsets, and staffing approaches outlined above, IHRM is affected by the way the internationalization process itself is managed Most 23 Perspectives and Approaches of IHRM 24 International Human Resource Management firms pass through several... receptive audience in Japan, where such an approach is not considered credible The field of international Human Resource Management has been characterized by three broad approaches Early work in this field emphasizes cross-cultural management approach and examining human bahaviour within organizations from an international perspective A second approach developed from the comparative industrial relations
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