Multinational Corporations and Industrial Relations - Assignment Example

Second Assignment Case Study Question1 Assess the mistakes Donaldson has made. Why have these occurred? Whose responsibility are they? What are the implications of not satisfactorily dealing with the Donaldson problem? Assessment of Mistakes Committed by Donaldson Bert Donaldson, who had been specially selected for the European assignment, was unable to achieve any success. He had been posted to Zurich, in order to form a European team that would facilitate communication among the suppliers of parts. These suppliers had been acquired by Argos Diesel of Europe, a subsidiary of Argos International, located in Dallas. The extent of Donaldson’s failure had driven Waterhouse, the Chief Executive Officer (CEO) of Argos Diesel, Europe to exasperation. Donaldson’s system of interacting with the Zurich staff was regarded as being coarse. Moreover, he had been unable to achieve the team building goals, within the stipulated time frame. Another major fear of Waterhouse was that Donaldson’s fiasco would depict him in poor light. The difficulty in the situation was that it was difficult for Waterhouse to terminate the services of Donaldson, as the latter had a record of proven success in the US. In addition, the CEO of the parent organisation was favourably inclined towards Donaldson. The Floundering Expatriate case study undertakes a detailed discussion regarding certain cross cultural leadership issues. It also discusses communication issues related to the efforts made by Bert Donaldson, who was posted to Europe from the US. Donaldson failed to familiarise himself with European culture, and was singularly unsuccessful in replicating his success in Detroit, while attempting to transform the European subsidiary. A major deficiency noticed in Donaldson was his firm conviction that his or the American way of conducting affairs was correct in all situations. He had scant regard for other cultures and values. His ethnocentricity verged on megalomania, and he was unwilling to accept the existence of other methods to carry out a task. Donaldson was adamant in his insistence that his procedures were the only correct or acceptable ones. Such was his obdurateness that he argued illogically with Waterhouse that the Zurich staff had to adapt their functioning to be in conformity with what was being done in the parent company in the US. Another major deficiency noted in Donaldson was that he ignored the presence of subsidiary cultures in the Swiss culture. These subsidiary cultures had their own set of beliefs, goals, and morals. Reasons for Donaldson’s Mistakes as the CEO Several mistakes occurred in the management duties of Donaldson in Zurich, as he was unfamiliar with the European culture. Moreover, these mistakes transpired due to Donaldson’s inability to adapt himself to the culture and communication mechanism of the European community. He had been posted to the subsidiary of Argos Diesel company. As, he had not been provided with any specific training for adapting himself to the new place or culture, Donaldson faced considerable difficulty in dealing with the novel situations that he had to envisage. In general, the concerned staff at the headquarters of a firm, could envisage difficulty in arriving at a precise evaluation of the circumstances under which the subsidiaries have to function. An expatriate allotted to an assignment has to be appraised. Taking into consideration, the expenditure involved and the importance of their function, the multinational corporations have to monitor and record the performance of expatriates in a rigorous manner[She05]. All the same, the international professionals of industrial relations (IR) and human resources management (HRM) have a crucial function with regard to helping the multinational corporations to arrive at decisions regarding foreign direct investments. This function tends to be indirect, to a certain extent[Col081]. Moreover, considerable intricacy is associated with international performance appraisals. This stems from the absence of a correct procedure for evaluating the performance of remote individuals, who are placed in circumstances that are unfamiliar to the appraiser. Some of the reasons for this intricacy are goal incongruence and information asymmetry between the subsidiary and parent companies[She05]. In addition, the presence of substantial variation in the information available, between the subsidiary and parent locations, results in information asymmetry. The identification of job-related factors, establishment of performance norms, and the devising of procedures are rendered difficult due to certain factors. Some of these are; disparities in economic, legal, physical, societal and technical demands, and variables that pertain to work tasks and the persona of the individual[She05]. Thus, in many instances, it could prove much more difficult and time consuming to develop a market in foreign subsidiaries that at home. In the present case study, overall responsibility for Donaldson’s failures can be attributed to the parent company, Argos Diesel, situated in the US. These mistakes could have been averted, if the Argos Diesel Company in the US, had adopted measures to provide the appropriate training to Donaldson, in the area of international Human Resource Practices. Implications In the absence of systems to identify, develop and manage talent in international operations, corporations tend to be significantly inferior to the organisations with such competence. It is indispensable for a corporation to establish whether it has the required number of employees with the necessary competence and capacity to transit to higher positions[McD10]. This enables organisations to arrive at a decision, as to whether its existing work force can undertake its international missions or whether it has to procure these competencies from the external labour market. It is very important to avert failure in the management of talent in an organisation. Such failure produces extremely adverse effects upon the organisation. As such, the failure of employees at their job translates into the partial failure of the organisation[Mel10]. In the present case study, Donaldson’s failure, while discharging his duties at the Argos Diesel Company, in Zurich, affect the prospects of the organisation. Question 2 What should the company have done to better prepare Donaldson? In this case study, the Argos Diesel Company had not taken any measures to educate or train Donaldson with respect to the culture and systems of the new region where he was to be posted. The following discussion evidences the fact that there is need for international organisations to maintain appropriate systems to facilitate their expatriate managers to identify novel practices and implement them in their work. Some of the international HR practices are; human resource planning, recruitment from the international perspective, selection from the global point of view, transnational training and development, global compensation, employee benefits in the international context, evaluation of performance at the transnational level, international industrial relations, and the safety and health of employees in the global context[Dur10]. In addition, some researchers have suggested that learning how to learn by expatriates has to be accompanied by imparting the training necessary to these individuals that enables them to come forward with isomorphic ascriptions and to address contradictory prospects. The CCT programmes, in the context of enabling expatriates to contribute isomorphic attributions, endeavour to teach such persons the art of making judgements that are similar to that of the individual of the host nation, with respect to the underlying cause of conduct[Lit05]. This is because there is significant pressure upon the multinational corporations to integrate their international operations. Some researchers have opined that US multinational companies acquired considerable organisational capacity, due to their unbridled use of mass production technologies. This has influenced the supervision and coordination of overseas subsidiaries of these companies; the formal and centralised decision making mechanism of the US multinationals; and the characteristic function of HR[Edw02]. This undergoes a change, in sectors that involve strong pressures for international integration. In such instances, multinational corporations are under pressure to adopt diffuse practices to exploit the expertise available in the various sectors of their operations. Such diffusion of practices from subsidiary companies located in different nations, necessitates the presence of structures and systems that can persuade plant managers to identify novel practices and implement them [Edw02]. As such, the majority of the literature, in the area of international HRM and strategic management in multinational companies, indicates the necessity for firms to have such systems, in place. In addition, some scholars have suggested that such orientation in firms addresses the issues related to managing across borders. The Argos Diesel Company should have followed the above described international HRM procedures, in order to avoid any complications in the job performance of Donaldson, in a cross cultural nation. Question Three What does this case suggest about company’s current policy for recruiting and preparing expatriates? Make policy suggestions. Current policy for Recruiting and Preparing Expatriates In the present case study the Argos Diesel company did not follow international HR practices in the areas of recruitment and preparation of expatriates. As such, transnational training and development, evaluation of performance at the transnational level and employee benefits issues had been ignored by the Argos Diesel Company. This resulted in several problems to Donaldson at the new place. The following discussion states that employers should promote repatriation planning. For example, the process of international human resource management consists of procuring, developing, compensating, and retaining people in organisations that operate internationally and outside the territory of a nation. There are several challenges to international human resource management. Some of these are; management of cultural diversity, management of the intricacy of the workforce, management of economic systems that are fundamentally different, and the management of issues that are industrial, legal, and relational[Dur10]. Moreover, employers, as well as managers stand to gain significantly by career and repatriation planning. With respect to managers, protracted postings at places other than headquarters, could render them unfamiliar with the corporate fast track and bring about their exclusion from the long-term plans of the organisation. On the other hand, such planning is crucial for organisations, because re-entry issues constitute an important reason for repatriate turnover[Kon]. Consequently, most of the repatriates face considerable difficulty, in the area of repatriation, due to absence of training in this regard. In addition, cross cultural training (CCT) has been defined as a process of education that stresses upon the promotion of intercultural learning. Such learning has to be via the procurement of affective, behavioural, and cognitive competencies that are essential for establishing efficient exchanges across disparate cultures. It has been acknowledged that CCT is a critical intervention for furthering the cross cultural effectiveness of managers[Lit05]. With its emphasis upon transforming attitudes, instead of the garnering of information, CCT proves to be fundamentally different from traditional training. Policy Suggestions In the context of expatriate adjustment, language and cross-cultural training exercise a major influence. Thus, expatriate failure has, in several instances, been associated with cultural adaptation issues. Some of these issues can be resolved by means of training. Such training has its best effect when it is provided in the initial stages of the assignment. It has been noticed among several expatriate managers that they do not adopt a positive attitude towards the customs and traditions of the host nation. Success as an expatriate depends upon accepting the cultural values of the host nation. A disparaging attitude towards the host country’s culture, whilst attempting to project their native culture to be superior, causes expatriate managers to fail in their mission. The substantial number of failures among expatriate managers, is due to such shortcomings. After several debates and considerable study, a consensus has emerged among researchers. This relates to the indicators of the attainment of success in an international mission. These components are; first, the extent to which there is individual adaptation to the novel host setting. Second, the magnitude of professional competence in realising the business assignments. Finally, the degree of interpersonal adjustment[Lit05]. As such, the intrinsic objective of CCT is to enhance the prospect of success of expatriates who have been entrusted with foreign projects. This is to be achieved by providing the expatriate with the attitudes, knowledge, and skills that are indispensable for successfully adapting to the alien culture, efficient performance in the allotted mission, and effective collaboration with the nationals of the host nation. As such, it is necessary to develop self-maintenance, cognitive, and interpersonal skills, if the CCT programme is to promote the success of expatriate assignments[Lit05]. In other words, it will be necessary for the individual to create methods for acquiring information from new stimuli. Upon the acquisition of the skill that is essential for procuring information about another culture, the expatriate gains expertise in obtaining information from novel situations and the capacity to respond to such new developments. The CCT, per se, trains individuals that have a high degree of adaptability. This salutary achievement results from the imparting of global skills to these individuals, which can be adapted to some typical situation[Lit05]. There have been several instances, wherein expatriates had expected host nationals to behave in some specific manner. However, this had not transpired and the host nationals had responded in a vastly different fashion. This constitutes disconfirmed expectations. It is the aim of CCT to provide individuals with the necessary skill to discern the reason for host nationals to have behaved in an unexpected way. It is also the objective of CCT to enable expatriates to engage in isomorphic attributions in such situations, instead of arriving at hasty conclusions regarding the conduct of host nationals, as such inferences had frequently proved to be erroneous. Moreover, it has been suggested by some scholars that language and cross cultural training constitute a cardinal element of expatriate adjustment. Thus, the issues arising from cultural adaptation have been frequently cites as the reason behind expatriate failure. In this context, it has been opined that training could considerably mitigate the issues related to cultural adaptation. Such training, has the capacity to benefit the expatriate[Kon05]. The effect of such training tends to be most effective, when imparted during the initial stages of the assignment. Furthermore, the process of selecting international managers entails several crucial and exclusive features. For example, it is imperative for international managers to possess effective cross cultural management skills. In addition, such managers should be endowed with unwavering motivation to carry out their activities in emerging markets, without taking into consideration the monetary benefit involved. As such, it is an onerous task to motivate and convince an employee to work in a foreign locale. Moreover, the task becomes much more difficult, when the employee’s family has also to be convinced to shift to the foreign nation where the employee is to function. The organisation has to follow international HRM policies, such as cross cultural training and recruitment of expatriates. Successful completion of such training enables individuals to apply the knowledge, gleaned from the training programme, to the various new situations encountered by them. References She05: , (Shen, 2005, p. 72), Col081: , (Collings, 2008, p. 179), She05: , (Shen, 2005, p. 71), McD10: , (McDonnell, et al., 2010, p. 158), Mel10: , (Mellahi & Collings, 2010, p. 145), Dur10: , (Durai, 2010, p. 654), Lit05: , (Littrell & Salas, 2005, p. 309), Edw02: , (Edwards & Ferner, 2002, p. 107), Kon: , (Konopaske & Werner , 2005, p. 1163), Lit05: , (Littrell & Salas, 2005, p. 308), Kon05: , (Konopaske & Werner, 2005, p. 1161), Read More