Why might the effectiveness of different reward systems vary from country to country?

International HRM involves managing an international workforce including local staff, expats, cross-cultural teams, commuters, specialists in knowledge transfer, across borders and within them.

National culture provides as important explanation for the variance in the utilization of different compensation practices in different countries.

There is no one best way for HR functions to operate in international firms.

The central issues for MNC’s is not to identify the best international policy, but rather to find the best fit between the organization’s environment, its overall strategy, its subsidiaries’ strategies, in HRM and in its implementation.

-->Factors the firms should consider (as these could influence incentives for local workforce):

-          Sociocultural (customs, norms, values, language, literacy rate, religious beliefs, status symbols, demographics, life expectancies)

-          Economic (economic development, per capita income, climate, GNP trends, monetary and fiscal policy, unemployment rates)

-          Technological (regulation on technology, energy availability and cost, natural resource availability, patent and trademark protection, transport links)

-          Political-legal (form and nature of government, tax laws, government stability, trade regulations, foreign policies, legal systems)

Culture is very important in reward distribution. 5 dimensions of national culture(Hofstede):

1      Power-distance e.g. hierarchical vs. more demographic

2      Uncertainty avoidance e.g. high rules, bureaucracy and stability vs. encouraging diverse views

3      Individualism e.g. high domain concern vs. low domain concern

4      Masculinity e.g. preference for more masculine traits vs. low preference

5      Long-term orientation e.g. preference for longer term results vs. quick results

Payment and reward system implication of cultural factors mentioned above:

-          Individual performance related pay has a positive correlation with masculinity and negative correlation with uncertainty avoidance.

-          Group performance related pay has a positive correlation with individualism and a negative correlation with power distance.

Legal factors also vary from country to country in terms of benefits ad rights available. This makes one fit policy impossible as legal factors affect policy implementation, and reward systems would have to be altered to be in line with local legal regulations.

What MNC’s Could Do?

-First, they suggest that MNCs operating in countries with high levels of Uncertainty Avoidance may be advised to offer more certainty in compensation systems, for example, seniority-based or skill- based compensation.        

-Second, as MNCs strive for greater productivity through the use of individual incentive compensation, a country's culture should be taken into account. More specifically, the results of the pay-for-performance study suggest that individual incentive compensation practices have a better fit in countries with higher levels of Individualism.



-Third, MNCs should consider country culture in the use of social benefits and social programs. social programs.



-Fourth, as North American MNCs expand abroad, they need to consider country culture in their use of share options and stock-ownership plans. The results suggest that share options and stock-ownership plans may be more congruent in countries with higher levels of Individualism, and lower levels of Uncertainty Avoidance and Power Distance. In addition to cultural constraints on the use of options and owner- ship plans, however, there are also legal prohibitions on the use of these forms of compensation in many countries.

It may be that certain HR practices are closely related to other HR practices, and that these inter- relationships are constant across cultures and companies. For example, it could be argued that MNCs that put heavy emphasis on hiring locally are always more concerned with professional training of their employees, while MNCs that transfer parent company nationals to the foreign affiliates are always more concerned with cross-cultural training of their personnel.

For MNCs that strive to operate as one firm, these results might suggest that they develop broad-based general HR policies, such as recognition of performance contributions in remuneration schemes, and then allow their foreign affiliates to establish more specific HR practices, for example, individual remuneration based on performance, rather than team remuneration based on performance. Impacting these considerations, of course, is the degree to which culture changes and the relative impact of culture in relation to other factors, such as national laws, economic conditions, and social customs.

image source http://www.synergynaukri.com/

Performance Management-what is it and why do we engage in it?

Why engage in PM? 

v  Improve job matching- employees are given tasks and jobs that are based on their skills and abilities. Evaluating workers gives them a sense of what they can do and how well they can do it.

v  Communication of organisation values and objectives- gives guidance to employees on how to satisfy the desires of the organisation by showing employees what is valued and incidental. It can also be a powerful means of communicating organisation culture and norms of behaviour with regard to outcome and process.  
 

v  Provides feedback/indication of areas for self-improvement- identify key areas for further development 
 

v  Training and career development- PM acts as a guide  
 

v  Pay and promotion for performance- any organisation that allocates pay based on performance must measure who has succeeded. Performance evaluation provides necessary measures.  
 

v  Information for hiring strategies, especially validation of entry requirements- decisions on whom to hire? 
 

v  Validation of other HR practices- permits organisations to validate the efficacy of many HR practices. E.g. are we reaping benefits from company or external training programs?  
 

v  Retentions and reductions on work force- e.g. if there are mandatory probation periods and occasional decisions about reductions in force, for which performance evaluation data are important inputs.  
 

v  Legal defence- hiring, promotion and discharge decisions can be challenged in court. An org needs a well-documented paper trail of performance appraisals that will pass scrutiny as being valid/ non-discriminatory.  
 

v  Effects on those doing the evaluating- the extent that managers can influence the performance of their subordinates, reminds managers about what their priorities should be in hiring, developing , managing and rewarding subordinates. PM forces organisations to give candid feedbacks to their employees.  

Key characteristics of different performance evaluation systems 
-WHO/WHAT is evaluated? Evaluate the team/the work group or the division? 
-WHO performs the evaluation? Supervisor? Peers, subordinates, in part, customers? 
-Time frame- short to long? What is the time frame in which data will be collected before evaluations made? Twice a year?  Once?  
-Objective/formulaic versus subjective/impressionistic evaluation : measuring hard results such as revenue generated per month or more subjective means like the superiors thoughts/ evaluations  
-Relative versus absolute performance e.g. sales volume, units produced per week, etc. or is it on a relative basis compared to others in the organisation which possess similar capability levels? 
-Forced distribution versus unspecified percentages 
-Multi-source verses single source evaluation 
-Multi-criterion versus single summary statistic is data gathered from a single source or multiple sources and combined into a single rating statistic of overall performance? 
-fine versus coarse performance distinctions 

What Performance Appraisal instrument can we use?

•       BARS
•       BOS
•       Trait Based Scales
•       360 degree feedback 

In sum/Conclusion points

-Performance evaluation serves many diverse and sometimes competing functions in organisations.  
-Recall the key dimensions to consider in the design of a performance evaluation system. 
-Recall that performance evaluation systems affect and should be evaluated from the perspective of at least four different constituents- those evaluated, those doing the evaluation, management in general and outside constituents such as government and unions.  

NOTE- from the point of view of those being evaluated, PROCEDURAL JUSTICE is important 

-finding an ideal performance evaluation system is impossible but Greenberg's five factor analysis provides useful insights on what to look for in a performance evaluation system. In particular the form and content of P.E systems should reinforce both organisation. strategy and culture. 

-in trying to strike a balance among the various functions, dimensions and constituencies involved in performance appraisals, firms have found a variety of tactics to be useful : 

1. Comparative performance evaluation which enables the evaluator to control for  the effects of unmeasured, environmental influences on performance 

2.using course summary measures, blurring distinctions in the middle of the distribution and only rewarding/ punishing the extremes.  

3. Marshalling a diversity of inputs in the evaluation process- e.g. systems that rely on evaluation committees or 360 degree feedback  

- When designing the system need to ask - what is the main goal? Am I aiming to produce a formal assessment e.g. pay for promotion decisions or to provide feedback that will aid an employee’s development? Is performance evaluation even necessary –especially at the level of the individual employee.  

What defines a great HR leader? Insight: Randy Macdonald

Randy MacDonald assumed his current post with IBM in 2000. In August 2009, MacDonald received the Distinguished Human Resources Executive Award from the Academy of Management.  In 1998, he was named a Fellow of the National Academy of Human Resources. 

How has Randy achieved such great success for IBM? 

As soon as he was appointed senior VP of HR, he began his work by identifying "core" activities from "non core".  The latter consisted of activities related to administrative tasks such as payroll. He shifted his focus to key issues such as being more proactive and not just reactive to change. Finding appropriate employees for job roles, keeping them well motivated and retaining these employees were core activities. 

What specific steps did Mr MacDonald take to drive change in the HR function at IBM?
-Fostering new skills that IBM needed at the front lines. i.e.  creating "Global Enablement Teams" whereby people in mature markets were allocated to help and mentor people in the growth markets. Growth market leaders learn from major markets, and equally important, vice versa.

-Emphasis on Team work

-Creating a results-focused culture- shifting the mind sets and attitudes of employees: don't just wait for the boss to tell you what to do, delegate up, be proactive and build a strong performance culture. Emphasis on the importance of meeting professional and personal goals.

HR's focus at IBM today is on finding and developing more innovative employees, who are in it not just for today, but for the long term. 

HRM Prezi's-Spread the knowledge!

Interested in finding out more about:

-International HRM?Check out:
http://prezi.com/sv1qs9xnl9yc/international-hrm-presentation-id290/?kw=view-sv1qs9xnl9yc&rc=ref-24418343

-Performance Management?

Check out:

http://prezi.com/kw0nm3x_uvna/performance-management-presentation-id290/?kw=view-kw0nm3x_uvna&rc=ref-24418343

What goes on behind an Assessment Centre?

I'm sure many of you are looking for jobs(one of the most difficult and timely processes us students have to go through toward the end of our studies!) -often the final stage of the recruitment process in many companies around the world consists of an Assessment Centre.

So what is an Assessment Centre (AC) ?

It is a standardised evaluation of behaviour based on multiple methods. This selection method scores very highly on predicability (i.e. being a true indicator) of job performance in the future.

Key Features:

-Networking opportunity

-group of candidates

-many exercises(e.g multiple interviews, case study)

-tests multiple competencies

-multiple assessors

Benefits to an employer?

-in depth assessment

-assessment of many measures enhances accuracy

-can assess a candidates full future potential

-provides a consistent and structured process

Benefits to a candidate?

-demonstrate a variety of skills and abilities

-realistic experience of what your role will be like on the job

-opportunity to network with current employees

-opportunity for detailed feedback: what are your strengths? which areas can you develop further in?

Shared benefits to employers and candidates?
-fair and consistent selection method
-an objective process
-assess fit with social and cultural structure of an organisation

PS: got an interview coming up? Worried about blanking out on those scary brain teaser questions? Fear not, Oliver Wyman provides a great insight on how to break down the problem into core components and find the solutions! http://www.oliverwyman.com/careers/63.htm 

Image source: http://www.urthebrand.co.uk/assessment-centres.aspx

HR and Technology Advancements

As HR helps to build a stronger workforce through better recruiting, training and retention programs, the workforce helps drive the efficiency of the business as a whole. A more productive, efficient and agile business can respond better to competitive and market shifts, being more profitable. 

However, many traditional HR organisations struggle to allocate their resources. they are often hinered by a multitude of manual, paper based processes and transactions(e.g. tax, payroll and benefits information). these are costly, time consuming to manage and prone to errors. Consequently, this can make it hard for HR departments to focus on adding value to the bottom line in face of these issues.

In order to improve efficiency, we have seen an emerging trend in recent years to an e-HR business model, moving traditionally performed HR tasks, tools and processes into internal intranets or the internet via a portal. 

Organisations are seeking e-HR solutions that can help automate tasks and streamline workflow and improve the efficiency of the workforce by providing self-service tools, training and information. By automation of processes, HR can better align itself with business objectives of the enterprise and focus on some higher value business services and employee needs such as Training and development. 

picture source:ere.net

Company leaders and Academic Commentators: An interesting read...!

Synopsis extracted from www.strategy-business.com :

What do the chief information officer of Toyota Motor Sales, the executive vice president of retail banking at PNC Financial Services, and the chief personnel officer of ThyssenKrupp have in common? All of them, along with the 12 additional executives and academics featured in this strategy+business Reader, recognize the value of human capital as a critical enabler of business results. They are devoting significant resources, creativity, and brainpower to capturing the people advantage.

The interviews in this book were conducted as a collaborative effort between Booz & Company and Booz Allen Hamilton. They provide a unique insider’s view of how leading companies, such as Novartis, Saudi Telecom, Barclays, Kraft, and E.ON, are separating the wheat from the chaff in human resources management. Leaders from both the human resources function and the C-suite reveal how to ensure that investments in workforce-enhancing practices, including employer branding, leadership development, and corporate universities, will reliably contribute to bottom-line results.

The insights of these expert practitioners are bolstered by the ideas of leading academic commentators, including C.K. Prahalad, Jay Conger, and John Boudreau. And they are woven together in a special introduction and overview written by Walter McFarland of Booz Allen Hamilton and Richard Rawlinson and Laird Post of Booz & Company.Capturing the People Advantage reflects the increasingly widespread conviction in global corporations that people are a primary asset and competitive advantage, and that a compelling people strategy is required to fully realize their value.

Download the free pdf from : http://www.boozallen.com/media/file/Capturing_the_People_Advantage.pdf