IHRM Recommendations - Improving Subsidiary Performance - Essay Example

IHRM Recommendations: Improving Subsidiary Performance Introduction Jim Grant has pointed out that considerable problems related to human resources exist within Medical Precision Systems' three subsidiaries in France, Sweden and the United Kingdom. The primary issue facing the firm's overseas operations involves expatriate management experiencing considerable dilemmas in regards to cross-cultural awareness and failure to adequately communicate with the domestic labour pool in the subsidiary operations. The Bath, UK operation, which was acquired in 1992, involved MPS inheriting an organisation which was highly unionised, causing considerable issues in this facility. Within this operation, Joe Mendes reports that attempts to integrate a performance management system are meeting with worker and union resistance, generally obstructing forward productivity in this subsidiary. Our subsidiary in France is plagued with excessive staff holidays, which tends to disrupt production and overall facility productivity, requiring a more effective performance management system and a method by which to boost productivity. In Sweden, Gary Alder reports that high unionisation, a workforce which offers resistance to performance management targets, and American expatriate managers who are not adapting management policies befitting Swedish cultural ideals are causing significant barriers to effective HRM and productivity. Because of the problems with expatriate managers and foreign labour expectations, a series of recommendations are offered to better streamline and enhance the international human resources policies of Medical Precision Systems. Brief Analysis of MPS' Current Position MPS has made a marked effort to expand into international territory, with all three of the firm's subsidiary operations having been acquired or established no less than ten years ago. Under the ultimate strategy of transforming MPS into a transnational entity, clearly a tremendous improvement effort is required to ensure that MPS reaches its target of global expansion with minimal disruption to the business' objectives for growth and profitability. Currently, under the phases of internationalisation proposed by Adler & Ghadar (1990), MPS has reached a level of multi-domestic or international operations, not yet categorised as a multi-national firm. Multinational, or global firms, require that management (regardless of their point of host origin) share a common set of values and beliefs. As of this date, MPS' subsidiary operations remain focused on improving local responsiveness and attempts to transfer American, domestic learnings to those of the overseas labour forces. Clearly, significant steps to improve the firm's overseas divisions are required from a human resources perspective. Our business has adopted an ethnocentric mindset in our subsidiary operations, as performance management tactics undertaken by expatriate leadership in the United Kingdom and Sweden fail to recognise local culture and labour influence. Further, Lloyd & Hartel (2001) support ethnocentric thinking as the utilisation of staff from HO for the fulfilment of important management positions. Perlmutter's (1969) model of IHRM indicates that ethnocentric mindsets tend to herald home-country business activities, where transparent attempts to integrate American performance management policies are meeting with socio-cultural obstacles and an overall failure to meet performance targets. Recommendations for Moderate Change Though MPS' domestic policies in relation to human resources management meet with considerable accolades in our HO, these policies are meeting with considerable foreign staff resistance. Therefore, the business' primary objective is to reinforce expatriate leadership to promote more workable performance management targets designed to satisfy the local labour expectations regarding attainable organisational goals. In our Bath, UK operation, Joe Mendes reports a lack of cultural connectivity in relation to American versus British expectations for performance. Mendes faces considerable pressure from a highly unionised subsidiary organisation, in many respects an uncontrollable element of this business division, requiring Mendes to undertake advanced training in effective management of union environments. Further, Andy Smith, domestic expatriate manager for Lyons, France division, reports slowdowns to productivity, citing excessive holidays and a failure by domestic labour forces to readily adopt cellular feedback systems, preferring a line manager with more traditional management competency, including technical proficiency and authoritative methodology. Though the cellular feedback system has been a domestic success in Alabama, Smith must recognise that such systems require modification in order to become policies relevant to local expectations. This same ethnocentric mindset is clearly visible in the Swedish subsidiary, as Gary Alder faces an organisational environment that is highly resistant to performance management targets, while utterly rejecting the 'gung ho' mentality so eagerly accepted by MPS' American labour population. Thus, the first order of business is to streamline the IHRM policies not from a multinational perspective, rather than on an individual basis as required by each foreign subsidiary. In all three of MPS' subsidiary operations, performance management issues are clearly the primary area needing significant improvement. The differences between overseas subsidiaries (i.e. cultural differences) generally prevent multinational companies from adopting 'uniform approaches to managing their human resources' (Keating & Thompson, 2004: 595). In this particular instance, it is MPS leaderships' attempts to integrate Americanised performance management systems, in all three subsidiaries, which is causing the majority of friction, albeit for different reasons. As such, new targets must be identified and implemented, as deemed appropriate by local labour expectations, regarding what constitutes organisational performance leading to remuneration and recognition for meeting performance goals. MPS identifies its performance management system as a series of processes which are used to identify, encourage, measure, improve, evaluate and reward employee performance (Mathis & Jackson, 2003: 338). In the HO, the PM system provides opportunities for employees to be actively involved in meeting performance objectives as it relates to the organisational strategy of MPS as a whole, multinational business unit. However, in the United Kingdom subsidiary, strong union mentalities prevent the acceptance of our domestic agenda in relation to performance targets. In France and Sweden, attempts to integrate performance management systems using cellular feedback mechanisms or team-oriented philosophies are meeting with similar negativity. Therefore, the key issue is to integrate a PM system designed to build a positive organisational environment. The first step is to identify, from the strategic perspective of the HO, what overseas performance targets are both realistic and suited to the indigenous culture. In essence, a system of change practices is required and must be successfully promoted by MPS' domestic expatriate leadership. In the Bath operation, Mendes must develop a stronger skill-set in terms of building relationships with the labour force and their union representation. A primary goal of this subsidiary operation involves the implementation of activities which promote cross-cultural connectivity and then building on the outcome of these policies to build a positive mentality regarding performance-related objectives. For instance, when Mendes strongly supported weekend workers to boost productivity, the unionised employee population exhibited considerable resentment. Therefore, a stern recommendation is for Mendes to actively promote the role of the UK labour force in meeting organisational targets, and implementing performance management expectations to include additional remuneration for volunteerism in relation to weekend productivity. Currently, the financial position of MPS allows for flexibility of performance-related targets and compensation so as to appease this rather stringent union mentality. In France, excess holidays and resistance to performance management policies regarding cellular feedback, is causing considerable detriment to strategic objectives for productivity. Local legislation regarding excessive holidays is an uncontrollable variable in terms of staffing requirements and objectives for profitability, suggesting that Smith identify methods of generating and eliciting quality feedback while maintaining a more authoritarian leadership mentality. In our domestic organisation, MPS has found significant success with similar feedback mechanisms, however the business (as a whole) must recognise that its current ethnocentric viewpoint on the superiority of domestic policies is flawed. This suggests that our expatriate leadership team begin a performance management and feedback system appropriate for the local labour force. The first step in building a positive PM system in all three subsidiaries is to identify specific characteristics of the existing performance management policies that are meeting with resistance by the indigenous labour pool. Clearly, the Lyons, France subsidiary requires less-traditional PM tactics, with the idea of increasing staff motivation through team-building, and replacing it with a more authoritarian line management approach. It has been established that French employees see little to no value in cellular feedback mechanisms, suggesting that the humanistic approach to building positive motivation cannot be generated by these attempts which have found tremendous success domestically. Performance management targets, in relation to increased remuneration for meeting these targets, involves establishing a voluntary holiday programme in which workers are offered a sizeable increase in compensation for their willingness to participate during times where higher productivity is required. The intention of a well-designed performance management system is to build staff motivation to meet organisational targets. In France, less emphasis should be placed on building esteem and teamwork, with considerably more emphasis required on methods to build staff willingness to comply with production necessities. The most significant issue faces the operation headed by Alder in the Swedish subsidiary, as the American value system and the Swedish norms are meeting with substantial opposition. The Swedish employees have illustrated a significant enthusiasm for our domestically-inspired performance management and feedback systems, which illustrates that this overseas labour force is more willing to adopt the policies which have been tried-and-tested at HO. This creates a substantial opportunity for building relationships between the domestic employees and MPS' expatriate manager, Gary Alder. However, in order to build this camaraderie, Alder must make a noted effort to minimise his public display of animosity toward the works council meetings. Non-cooperative efforts require shedding the ethnocentric viewpoint regarding the superiority of our domestic policies, and establish, publicly, an enthusiasm for the EU and Swedish-mandated works council. The Swedish subsidiary will likely meet with a significant mutual cooperation once our expatriate leadership abandons negativity regarding works council meetings. It is quite clear that the employees of the Swedish operations are willing to adopt many performance management targets, as willingness to work toward the firm's more traditional PM targets is meeting with increased innovation. In this subsidiary operation, the majority of issues are borne of the ethnocentric viewpoint regarding MPS' value systems in relation to teamwork and increased camaraderie. HR professionals are cited as catalysts of change, as well as 'enforcers of cultural transformations' (Harris & Holden, 2001: 77). In Sweden, Alder must recognise his monumental role in building motivation to perform to strategic expectations, and show a marked improvement in relation to promoting positive compliance to non-domestic policies. In essence, Alder himself is the key element to enhancing the Swedish subsidiary. Conclusion The most significant influence, utilising the Four Influences Model proposed by Edwards & Ferner (2000), is the lack of compatibility between the parent country and our foreign subsidiaries. It is clear that our expatriate leadership team is finding significant barriers to effective performance outcomes due to an inability to connect with the indigenous culture. It has been established that neither the British, French or Swedish labour force is content with adopting the American ideals of teamwork and cultural training, which is an aspect of our existing IHRM policies that must be somewhat abandoned in order to build cross-cultural connectivity in these subsidiary operations. Hofstede (1991) offers a cultural dimensions template which identifies the relationship between foreign beliefs and values in comparison to American domestic beliefs. On Hofstede's template, France ranks quite high in power distance, or 'the extent to which less- influential members of organisations accept and expect power to be distributed unequally' (Clearlycultural.com). The French subsidiary appreciates stronger leadership characteristics, with less need for humanistic and motivational activities related to performance management systems, promoting an opportunity for Smith to drive a more productive organisational culture simply by becoming the authoritarian leader generically-accepted by French workers. In this instance, MPS' expatriate manager must be the catalyst for positive change. The changes proposed are relatively minute, however they involve methods of re-assessing the appropriateness of domestically-inspired policies and for expatriate leadership to begin building cultural sensitivity. The ultimate strategic goal of MPS is to move to phase four of internationalisation, or becoming a global organisation. In order for this to occur, cultural sensitivity is monumental to meeting this objective, which requires that our expatriate leadership team begin a campaign of transferring learning while still making attempts to satisfy host-country expectations. Building a new performance management system, on an individual case-by-case basis, will allow the business to meet its strategic objectives for productivity and profitability, while also being locally responsive to the needs of the labourers. Cultural adaptability, diversity acceptance, and cultural awareness are prized as top IHRM skills for expatriate managers (Mathis & Jackson), suggesting that future expatriates must maintain these qualities in order to balance a multinational business agenda and remain locally responsive. Bibliography Adler, N. & Ghadar, F. (1989). 'Strategic human resource management: A global perspective'. In R. Reiperl (ed.), Human Resource Management: An International Comparison. Walter de Gruyter, New York: 235-265. Clearlycultural.com. (2006). 'Power Distance Index'. http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/power-distance-index/ Harris, H. & Holden, L. (2004). 'Between autonomy and control: Expatriate managers and strategic IHRM in SMEs'. Thunderbird International Business Review. 43(1), 77. Keating, M. & Thompson, K. (2004). 'International human resource management: Overcoming disciplinary sectarianism'. Employee Relations. Bradford. 26(6), 595. Lloyd, S. & Hartel, C. (2004). 'Predicting IGRM Strategy and Practice Decisions: Development of the IHRM Orientation Typology'. Cross Cultural Management. Patrington: 11(4), 60. Mathis, R. & Jackson, J. (2003). Human Resource Management. 10th ed. Thomson South-Western, United Kingdom: 338, 588. Appendices A: Employee Selection Factors for Successful Expatriate Managers Read More