Question

Chapter 17 – Managing Global Human Resources

What are four intercountry differences that affect HRM? Give several examples of how each intercountry difference may affect the HRM practices of an US based company when sending employees to work in another country.

Answer 1

The four intercountry differences that affect HRM are cultural factors, economic factors, labour cost factors and industrial relations factors.

Cultural factors- Culture of every country is different which reflects in the way people of that country run the business and behave at the workplace. The difference should be identified and adapted for expansion in the new country effectively. The elements of culture that can be different in different countries are sense of space and respect, greeting and addressing habits, appeases and dressing styles, language and communication styles, time consciousness, work motivation factors, beliefs and attitudes etc. Some examples that can be seen in cultural differences from the US are- power distance can be seen lesser in the US than in countries like China, Russia and France. The US is the country with the highest individualism which is lower in Asian countries like India. US works with a flexbility and adaptivity to change in comparison to countris like Russia, Japan and France which are rigid and resistant to change.

Economic factors- These include the way the country and its people manage economic developments. Some countries see profit earning as their main goals of doing business while others focus more on efficiency and productivity. The way the economic factors affect the HR management of the country also depends on the economic condition and economic freedom of the country. For example, the highest in economic freedom are countries like Hong Kong, Singapore, Australia, Canada whereas the ones at the lower side are Iran, Zimbabwe and North Korea.

Labour cost factors- These are costs of the company on the labour including their wages, benefits and insurance. Labour cost is an important aspect when considering the HRM of the new country. How much the business can pay its employees and at what rate is the labour in the country available to work for. Many times the decision to expand in a country is taken based on the labour cost of that country. In comparison to the US, the labour available in India is at $0.48 per hour, in Vietnam it is available at $0.39 per hour, in Pakistan it is available at $0.32 per hour and in Bangladesh, it is available at $0.23 per hour. This change of labour cost can make the change in the production cost hence changing the whole HRM policies.

Industrial relations factor- This includes the relations between the employer, union and employee and affects the HRM to a great extent. The channel of this relation and the importance given to trade unions can differ in each country. For a country with less union based approach, it can be different to work in a country where trade unions are considered an important element by law. For example, the countries that have powerful trade unions and influence the HRM of the companies running there are China (All- India Federation of Trade Unions); South Africa (Congress of South Asian Trade Unions, France (General Confederation of Labour) and Germany (IG Metall).