Unit 6.2 International organisational structures

6.2 International organisational structures

The main organisational forms explored and compared in that literature tend to be:

•        centralised, hierarchical modes with direct control

•        polycentric modes (multiple centres of authority)

•        network modes.

These choices often interlock with a series of staffing choices concerning host-country nationals (HCNs) and parent-country nationals (PCNs) in the international HR field (for example, Dowling and Welch, 2007). These, in turn, lead to HR choices about international deployment and assignments, the management of expatriates and other international postings (Scullion and Collings, 2007). The underlying managerial problem is how to manage global coordination in international organisations. Additionally, and prior to that choice, is another – namely, how to design the most effective organisational structure for the variety of international circumstances. Many of the issues facing international business are HRM issues. These relate, most especially, to gaining competitive advantage through the acquisition and deployment of skilled and interlinked workforces.

A number of analysts, such as Bartlett and Ghoshal (1995), have suggested that there are observable stages in the ‘evolution’ of the internationalisation of firms. These include, for example, a domestic firm with an international division. A second step might be the creation of a series of offices and operations in a range of countries, perhaps in the form of relatively self-standing subsidiaries. A step beyond could be to a ‘regionalisation’ form, which gathers together a number of country offices and operations into semi-autonomous territories such as Europe, Asia–Pacific, and so on. A ‘global firm’ means that a stage is reached where national borders become even less relevant and the world is viewed in effect as one market. Each of these stages and organisational forms carries different strategic HR implications. In the global form, for example, the firm will conduct its R&D and locate its marketing and production functions wherever in the world it judges optimal in terms of access to talent, resources and markets. Although human resources can be hired from anywhere, according to this model, there is likely to be a strong emphasis on, and commitment to, building corporate identity. This will require provision of cross-postings and management development events, and possibly a corporate university.

The final stage proposed by Bartlett and Ghoshal is the idea of a ‘transnational firm’. This is similar in many ways to the global firm stage, but is distinct in that although such firms may develop global products, services and brands, they also work very hard to ‘localise’. Localisation and adaptation to local circumstances and opportunities is a hallmark of such an organising and marketing strategy. Simultaneously, these firms emphasise knowledge sharing and global integration but also local responsiveness.

Unit 5 - International HRM and the impacts of multinational corporations (MNCs).

A final key issue in terms of international HRM concerns the activities and impacts of multinational corporations (MNCs).

There are three main theories:

•  MNCs will tend to adopt common practices regardless of the country they are in.
• Organisations will tend to adopt the local practices of the country in which they operate.
• Organisations face conflicting pressures and will exhibit elements of both localisation and globalisation/homogeneity; this is referred to as duality theory.

To test these theories Brewster et al. (2008) analysed the CRANET data from 22 European countries and 12 non-European countries. They found that, in the main, foreign-owned MNCs did behave differently from local firms. Typically, MNCs spent more on training, were more likely to evaluate training needs systematically and to adopt the stance of more sophisticated HR practices. Equally, in the main, MNCs tended not to simply transfer or impose the HR practices of their country of origin. Rather, they tended to vary their practices depending on the relative strengths of home-country versus host-country institutions. In part this was judged to reflect the impact of national regulations. In other words, what international organisations do is an outcome ‘of the relative strengths of competing forces regulating their behaviour – formal laws, informal norms and practices, ownership structures, and relations with stakeholders’ (Brewster et al., 2008, p. 333). 

As Brewster et al. go on to note, ‘supporters of globalisation can gain some support from our findings, but so too can those who argue for the importance of localisation’.

Country specific to multinational organizations managing across geographic boundaries

HR management has to be adapted to the context of each country.

Unit 5.8 The politics of evaluation

5.8 The politics of evaluation

So far we have presented the notion of evaluating HR policies and practices as if it were primarily a technical process. In reality any evaluation process has important social and political dimensions.

Measurement is often highly subjective. For example, the views expressed by a supervisor about the impact of a training programme on their subordinates may depend on who asks them. Employees leaving an organisation for reasons primarily to do with their personal circumstances may use an exit interview as an opportunity to voice frustrations about the way they were managed. An evaluator sifting through company documents may more readily focus on those that support their own existing ideas about the way processes are working.

The interpretation of evaluation results may be highly subjective. What, for example, is the impact on the organisation of low morale among employees? It may be seen by some managers as an unavoidable and essentially unimportant short-term response to necessary change, and by others as a significant threat to the organisation’s ability to deliver excellent customer service. High staff turnover may be seen by some as an expensive drain of much-needed employee talents, and by others as a good opportunity to recruit staff more suited to the new organisational direction.

The values and goals of key stakeholders in the evaluation process may not be the same. For example, different senior managers may accord different levels of relative importance to employee job satisfaction and costs. A trade union may interpret the results of a pay system evaluation very differently from the management team. Employees may mistrust the purpose of an evaluation process, fearing it may adversely affect their jobs. Managers may fear facing uncomfortable truths. Some may fear exposure of information detrimental to their interests.

Such differences in values, goals and interests can often motivate individuals to seek to control the nature of any evaluation or to place obstacles in the way of effective data collection.

Unit 5.7 Who should carry out the evaluation?

5.7 Who should carry out the evaluation?

The most common issues that influence the choice of parties to carry out an evaluation of HR practices are:

·         Cost: An internal evaluation – that is, one done by existing HR or other employees in the organisation – may seem less expensive but the cost in terms of using up staff time when they could be working on other projects has to be calculated. There are actual resource costs to be taken into account, and also the less explicit emotional costs of employees feeling that they are, or need to be, evaluated in what they do.

·         Competency: The skills required to carry out an evaluation are many. It should not be just a box-ticking exercise. Competency in using the different evaluation methods and models is important, as is the recognition of specific organisational, national and international nuances. A different kind of competence is required around the potential issue of knowing the people you are evaluating (in the case of an internal evaluation). This may be an advantage or disadvantage; how do you disassociate yourself from knowing the people and systems of the organisation in which you work?

·         Credibility: Would an evaluation feel more credible or less credible if it was carried out by external consultants or more senior members of the organisation? Why? Perhaps the creditability comes more in the process and follow up.

·         Time urgency: Would it be more time efficient to employ a group of evaluation specialists from outside the organisation who could come in and perform the evaluation as a discrete project? How quickly does the evaluation need doing and why? What type of evaluation is it? The learning in this unit tells us that a ‘quick and dirty’ evaluation exercise is unlikely to yield the required results.

All of these criteria are affected by whether an evaluation is carried out internally or by external consultants. The next activity will help you to explore some of the issues associated with both.

Unit 5.5 Evaluation criteria

5.5 Evaluation criteria

If you are to judge the effectiveness of an HR programme, you need to be clear about the standards against which you judge success. You need to ask: ‘How well are we doing in relation to key criteria?’

If a company introduces a new talent management programme and wishes to judge its effectiveness, what criteria might it use?

At the strategic level it will be concerned with the following:

1.         The importance accorded to the role of the talent management process. For example, in developing and placing the right people in business critical roles.

2.         The fit between the goals of the programme and the wider business strategy (strategic integration). For example, the organisation may consider how well the criteria used in identifying and developing talent support its key drivers of success or reinforce messages about strategic goals. To give another example, if a key strategic goal concerns the development of effective joint venture partnerships, is the talent management process delivering and retaining people with the right skills, such as collaborative cross-boundary working?

3.         The fit between the programme and good practice principles. For example, how well does the programme help the organisation to build and retain human capital?

4.         The fit between the programme and other management systems and practices (internal integration). For example, does the talent management process work effectively with the reward and performance management processes?

Unit 5.3 Gathering data

Record keeping

• Recorded measures can multiply over time with the original reasons for keeping the records being lost.
• When relied on alone as a source of information, changes in recorded measures can be hard to interpret.

Interviews

• Can be costly in terms of resources.
• Can be hard to analyse objectively.
• If only a small number of interviews are carried out, the results may be untypical.
• Interviewees are sometimes reluctant to reveal their real opinions, especially to an internal evaluator.

Focus groups

• If participants work together they may feel constrained not to express their real views.
• Expert facilitation is needed.

Archival data

• It is time consuming to identify, locate and analyse all relevant documents.
• Documents may present a distorted picture of the past.

Observation

• The act of observation may change behaviour.
• It can be time consuming, stressful for those observed and ethically problematic.
• What is observed may be untypical.

Questionnaire surveys

• It can be hard to get good response rates unless those targeted find the questionnaire user friendly and interesting to complete.
• It can be hard to address complex issues in this way.
• It may require outside expertise to carry out questionnaires effectively.
• It may take quite some time between commissioning and feedback.

Benchmark data

• It can be hard to judge what might be relevant comparisons to make.
• It can be easy to rely on key statistics without understanding the context of the organisations with which you are making comparisons.
• It may be difficult to access appropriate comparative data.

5.3 An alternative classification of evaluation approaches

5.3 An alternative classification of evaluation approaches

Hansen (2005) sets out a different and more detailed approach to classifying approaches to evaluation, summarised in Table 5.1.

Table 5.1 A typology of evaluation models

 (Source: adapted from Hansen, 2005, p. 449)

Hansen (2005) distinguishes between six broad approaches to evaluation:

•        Results models, also referred to as ‘summative evaluation’, focus on the outcomes of policies, practices and programmes. Hansen distinguishes between two versions of the results approach. The goal attainment model examines outcomes in relation to the original goals and intentions. The effects approach is broader and seeks to examine the full range of effects brought about by the practices, polices or programmes. 

•        Economic models have a particular focus on costs in relation to outcomes. 

•        Process models focus on the processes by which results are achieved and are diagnostic in orientation. They might involve a continuous monitoring process or, in many cases, a diagnostic process when goals are not achieved. 

•        Systems approaches focus more holistically on the operation of the whole system. This might involve a local assessment of the system in relation to original objectives or by comparison with the operation of similar systems in other settings or organisations.

 

•        Actor models draw criteria for assessment from key actors. A client-oriented model draws criteria from the client or clients who commissioned the evaluation. A stakeholder model draws assessment criteria from key stakeholders. A peer review model considers quality in relation to professional standards, often through peer assessment.

 

•        Programme theory models look at the underlying theory behind a practice, policy or programme and seek to assess whether that theory is borne out. For example, an organisation that establishes an employee engagement programme based on a theory concerned with linkages between employee engagement and customer service may set out to evaluate whether those linkages work in practice.

Hansen (2005) suggests that the choice of evaluation approach can usefully be guided by the answers to three questions:

1.            What is the purpose of evaluation? Purposes that focus on control are more likely to be served by result models and the quantitative measurement of effects, driven by criteria derived from strategic goals. Meanwhile, purposes that focus on learning will be better served by process approaches with assessment criteria derived from stakeholder requests.

2.            What is possible? Not all objects of evaluation allow for all forms of evaluation. For example the objectives of an SHRM policy may be unclear or contested, making outcome evaluation difficult. Take the example of a set of diversity policies. One group of senior managers may be entrenched in their view that the objective is to ‘comply with the law at minimum cost’ while another might take the view that the purpose is to ‘maximise the availability of talent to the organisation’. To give another example, a programme theory approach requires that there is a well-articulated theory underlying the practices to be evaluated.

3.          What is the problem to be solved by the evaluated practice policy or programme? In particular programme theory approaches may be unrealistic when problems are highly complex and interwoven with multiple systems and processes.

Other factors likely to affect the design of evaluation include:

•        the process of negotiation with key stakeholders in the evaluation

•        the forms of evaluation that are seen as legitimate and appropriate in the organisation

•        the response repertoire of evaluation sponsors and evaluators.

Unit 5.2 The context of evaluation

5.2 The context of evaluation

It is important to evaluate the fit of SHRM practices not just in relation to their strategic context but also to the social context in which the organisation operates. Different industries, for example, have quite different approaches and this shapes the expectations of employees and managers.

National cultures and political and economic institutions are also a highly important context. For example, a recent study (Fey et al., 2009) found important differences between countries in the relationship between different HR practices and performance. Fey and colleagues gathered data on the performance and SHRM practices of 241 firms across Russia, Finland and the USA. Cultural differences were important. They found a strong link between organisational performance and communications practices in Finland but not in Russia while the USA fell in the middle.

Calibrating data about performance across different international or national divisions of an organisation or even across different managers in different departments of one organisation can be difficult. How can we be sure, for example, that the same criteria are being used for the evaluation of the performance of an employee in the marketing department and employee in the accounting department? You may have ideas or direct experience that would help you suggest how this might be tackled.

Unit 5.1 - Approaches to evaluation

Unit 5.1 Approaches to evaluation

There are two main approaches to the evaluation process: strategic and operational.

Strategic evaluation is concerned both with the strategic fit of HRM and the extent to which generic good HR practice supports the organisation’s strategic capabilities. ‘Fit’ here has two senses.

The first sense concerns the fit between HR policies, practices and capabilities, and the organisation’s strategy and environment (external fit).

The second is the fit between the different policies, practices and capabilities themselves: how the different aspects of HRM work synergistically to support strategic goals (internal fit).

Strategic evaluation may also concern the extent to which HR policy is accorded strategic importance and the extent to which ‘good practice’ approaches are used to support the development of strategic capability.

 

Operational evaluation concerns how well HR practices are designed and delivered, and it may focus on outcomes or processes. Outcome evaluation is concerned with the effectiveness of HR practice; that is, the extent to which the goals of those practices are achieved. Process evaluation looks at the way in which existing HR practices are carried out. How do the processes work? How do HR practices contribute towards HR goals? Are processes cost efficient?