Tag: E-Business & Computerized Accounting Bangalore University B.com Notes

When a large corporation decides to enter a foreign market, it must usually secure a number of licenses, permits, registrations, or other government approvals. Certain types of business may be even be impossible or illegal unless the corporation is first able to obtain a change or adjustment to the nation’s laws or regulations. Since the power to authorize the foreign corporation’s activities is vested in the hands of local politicians and officials, and since corporations have access to large financial resources, it should not be surprising that some corporate executives resort to financial incentives to influence foreign officials. While certain financial incentives, such as promises to invest in local infrastructure, may be legitimate, any form of direct payment to the foreign official that is intended to influence that official’s public decisions will cross the line into bribery.

Bribery is one of the archetypal examples of a corporation engaged in unethical behavior. A number of problems can be attributed to business bribery. First, it is obviously illegal all countries have laws that prohibit the bribery of government officials so the foreign company engaging in bribery exposes its  directors, executives, and employees to grave legal risks. Second, the rules and regulations that are circumvented by bribery often have a legitimate public purpose, so the corporation may be subverting local social interests and/or harming local competitors. Third, the giving of bribes may foment a culture of corruption in the foreign country, which can prove difficult to eradicate. Fourth, in light of laws such as the U.S. Foreign Corrupt Practices Act (FCPA) and the Organization of Economic Cooperation and Development (OECD) Convention on Anti-Bribery (discussed in greater detail below), bribery is illegal not only in the target country, but also in the corporation’s home country. Fifth, a corporation that is formally accused or convicted of illicit behavior may suffer a serious public relations backlash.

Despite these considerable disincentives, experts report that worldwide business corruption shows little signs of abating. Transparency International (TI), a leading anticorruption organization based in Berlin, estimates that one in four people worldwide paid a bribe in 2009. It appears that the total number of bribes continues to increase annually. The World Economic Forum calculated the cost of corruption in 2011 at more than five percent of global GDP (US$2.6 trillion) with more than $1 trillion paid in bribes each year.

In 1997, the Organization for Economic Cooperation and Development (OECD) established legally binding standards for defining bribery in international business transactions. Similar to the FCPA, the OECD Anti-Bribery Convention focuses on the bribery of public officials. Like the FCPA, the OECD also potentially creates the opportunity for companies to circumvent the regulations by hiring consultants or agents. Notably excluded from the scope of the OECD Convention is a prohibition against bribing private parties. Despite such loopholes, the OECD Convention was an important step in the right direction. By 2012, forty-three countries had ratified the agreement and begun its implementation.

Sweatshops

The term sweatshop refers to a factory that is guilty of some sort of labor abuse or violation, such as unsafe working conditions, employment of children, mandatory overtime, payment of less than the minimum wage, unsafe working conditions, abusive discipline, sexual harassment, or violation of labor laws and regulations.

HR’s role in cultivating an ethics-friendly corporate environment can be placed into four broad categories.

Organizational integrity is a many-legged stool that more and more businesses are determined to build. The concept has taken hold in the wake of what’s been perceived, with justification, as a period of swashbuckling recklessness in business behavior, and in recognition of the resulting overlay of new regulatory and compliance measures intended to drive greater business discipline.

The legs of the stool consist of clear financial controls, models for effective management and governance, corporate reputation, security, compliance, employee morale and productivity, respect for customers and other stakeholders, and an ethical framework to guide both individual and collective business behavior. Surmounting the legs are policies and processes that support all of these attributes.

First, HR professionals must help ensure that ethics is a top organizational priority. Pat Wright, head of Cornell University’s Center for Advanced Human Resource Studies, has stated that, in the wake of business scandals, HR leaders will take on a “Bigger role in monitoring the culture of the organization in terms of its ethical status,” according to Human Resources Report. But monitoring alone won’t suffice. HR executives must either take on the mantle of ethics champion or ensure that some other capable person in the organization does so. Such a champion will need to be highly experienced and respected, having enough organizational clout to make a difference.

Second, HR must ensure that the leadership selection and development processes include an ethics component. After all, leaders at all levels of the organization need to both model ethical behavior and communicate ethical standards to employees, suggests research conducted by Ethics Resource Center . Selection procedures can filter out people who, despite making their numbers, are known for cutting ethical corners. And leadership development should include not only ethics theory but real-life examples, perhaps from mentors, on how managers have handled ethical dilemmas in the past.

Among the most difficult aspects of ensuring ethical leadership may be convincing top management, including board members, that they too should receive ethics training. A Conference Board survey of over 80 ethics, HR and legal officers found that only about a quarter had held training programs for their boards of directors. Yet, over half (55%) of these respondents said their boards are “Not engaged enough” in major ethical decisions associated with their organizations.

Promoting gender diversity among top leadership might have a positive impact on ethics, at least among Canadian firms, suggests a report by The Conference Board of Canada. It showed that 94% of boards with three or more women make sure of their organization’s adherence to conflict-of-interest guidelines, while only 68% of all-male boards do the same. The same survey indicated that boards with larger numbers of women also are more likely than all-male boards to ensure that codes of conduct are followed in their organizations.

The third major HR responsibility is ensuring that the right programs and policies are in place, keeping in mind that the U.S. government is developing a stricter set of sentencing guidelines. A news release notes that under the U.S. guidelines first promulgated in 1991, “An organization’s punishment is adjusted according to several factors, one of which is whether the organization has in place an effective program to prevent and detect violations of law.” In light of recent scandals, the U.S. Sentencing Commission has “sent to Congress significant changes to the federal sentencing guidelines for organizations, which should lead to a new era of corporate compliance.” This amendment would strengthen the criteria that companies are required to use when developing their compliance programs.

HR professionals should, of course, be aware of these guidelines and how they’re evolving. But even more challenging is the need to customize programs to the specific risks in a given corporate culture. “Getting it to work is not simple,” said Ed Petry, executive director of the Ethics Officer Association, in Workforce Strategies.

Finally, HR must stay abreast of emerging ethics issues. This doesn’t mean just following legislation, which tends to be reactive rather than proactive. It means looking at the entire social and business environment and spotting conflicts of interest and other ethics problems before they develop into full-blown scandals. A combination of tools can help with this. Obviously, employers need to pay close attention to the questions and concerns that are flagged via employee hotline services and other feedback systems. To gauge what’s happening outside the company, HR can turn to environmental scanning techniques that help them see how new developments ranging from emerging technologies to global culture clashes could result in ethical problems down the road.

The general distribution of responsibility is like this:

Board of directors: Guide the definition and development of the desired culture, ensuring that it aligns with business goals and meets the needs of all stakeholders.

CEO and senior management team: Define the desired culture and cultivate it through leadership actions including setting objectives, strategies, and key results that prioritize culture-building; and designing the organization and its operational processes to support and advance the company’s purpose and core values.

Human Resources department: Design employee experiences that interpret and reinforce the desired culture. Also, implement strategies and programs that enable the rest of the organization to fulfill their culture responsibilities, such as offering training programs that develop leader capacity for culture-building and employee engagement; and developing culture guidebooks, processes such as performance management, and systems such as rewards and recognition programs that nurture the desired culture.

Compliance, Risk, and Ethics department: Provide input to the CEO and senior management team on the definition of the desired culture from the perspective of ethics and risk. Also, ensuring that execution on the desired culture across the organization aligns with the company’s risk management strategies through tools such as ethics decision trees, processes such as a whistleblower program, and systems such as compliance monitoring that align with the desired culture.

Middle managers: Deliver employee experiences that interpret and reinforce the desired culture. Also, implementing culture-building strategies, cultivating employee engagement with the desired culture, and fulfilling the culture-building responsibilities of employees.

Employees: Provide input to the CEO and senior management team on the definition of the desired culture and culture-building programs and tactics by providing insights on how the desired culture aligns with or differs from the actual culture, customer perspectives, and employee needs and expectations. Employees should provide feedback on existing culture-building efforts and ideas for new ones. Also, creating, adhering to, and enforcing routines and norms that interpret the desired culture; and aligning their attitudes and behaviors with the desired culture.

International project management (IPM) is the management of projects that involve multi-national resources and teams working together to attain the project goals.

International project management is the management of projects internationally or across borders and cultures, therefore international project management requires a specific set of skills to ensure success when managing international projects. In particular, the importance cultural awareness plays in international projects and how the Hofstede 5-D model can be used in an international project management framework.

With globalization, businesses tend to be no longer confined within their national boundaries. They expand internationally to achieve the basic goals like:

• Increasing their market share.
• Reducing the overall cost by leveraging international talents and resources.

Project Team Roles

Project Manager

The project manager plays the chief part in the project and is responsible for its success and quality. His job is to make sure that the project proceeds and completes within the specified time frame and the ascertained budget, and accomplishing its goals at the same time. Project managers ensure that resources are sufficient for the project and maintain relationships with contributors and stakeholders.

A project manager is entrusted with various duties and responsibilities like:

• Managing deliverables according to the decided plan
• Developing a project plan
• Leading and managing the team
• Deciding the methodology used in the project
• Establishing a project schedule and determining each phase
• Providing regular updates to upper management
• Assigning tasks to team members

Project Sponsor

The project sponsor is the driver and in-house champion of the project. He has a vested interest in the successful outcome of the project. They are typically members of senior management those with a stake in the project’s outcome. Project sponsors work closely with the project manager. They legitimize the project’s objectives and participate in high-level project planning. Also, they often help resolve conflicts and remove obstacles that occur throughout the project, and they sign off on approvals needed to advance each phase.

Project sponsor duties:

• Make key business decisions for the project
• Approve the project budget
• Ensure availability of resources
• Communicate the project’s goals throughout the organization

Project Team Member

Project team members are mainly the people who work on various phases of the project. They could be in-house staff or external consultants and maybe working on a full-time or part-time basis. Their roles can differ according to each project.

The responsibilities of the members can be summed up as the following:

• Provide expertise
• Contribute to overall project objectives
• Complete individual deliverables
• Work with users to determine and meet business needs
• Document the process

Composition of Project Teams

The project team’s compositions may differ based on the organization’s culture, scope, and location. Some of the examples of the team compositions are given below:

Dedicated

This is the simplest structure for a project manager. In this composition, all or most of the members are appointed to work full-time on the project. The project team has to report directly to the project manager, and the lines of authority are well-defined so team members can concentrate on the project’s objectives. Dedicated project teams are usually seen in organizations, where most of the resources of the organization are involved in project work, and project managers have independence and power.

Part-Time

Some projects are assigned to a team as additional temporary work, with the rest of the organization’s members carrying out their regular functions. The functional managers have control over the team members and the resources assigned to the project. On the other hand, the project manager continues with other management duties. Also, Part-time team members can be assigned to more than one project at one time. Part-time project teams are mostly seen within functional organizations. Matrix organizations use both dedicated and part-time project teams.

Some compositions vary based on organizational structure, like a partnership-based project where one lead organization appoints a project manager to coordinate the efforts of the partners. Some vary based on the geographic location of their members, like virtual teams. Virtual teams fulfill the needs for projects where resources are situated onsite or offsite or both, depending on the activities.

The success of a project cannot be accredited to a single person. It is the contribution of every member of the team and people associated from outside. It is imperative to keep an account of how many people are related to your project and which role should be assigned to each one of them. A proper training and thorough knowledge of the subject can guide you with the same.

International Project Management and Cultural Dimensions

The application of Hofstede’s 5-D model was originally used for International Business and Marketing applications, because it is quite effective in understanding a country’s cultural differences and social norms and gaining insights into the subtle differences and needs of different cultures, we can quickly see the value in its application in international project management, particular from an engagement perspective.

International Project Management Uses for Cultural Dimensions

The model could be used to select the most aligned countries when evaluating and considering which countries should be involved in the project, for example if you are embarking on an international change project, it might be unwise to start with a country with a high Uncertainty Avoidance score, it might make your life as an international project manager easier and the project more successful to start in a country that is open and embraces change. Then move in some senior managers to the countries with high Uncertainty Avoidance to show confidence in the change project.

But quite often, you may not have the luxury of selecting which countries will be part of the project, in this situation analysing the country’s cultural dimensions will give you great insight into how best to manage within this culture for the greatest change of success.

From an international project management perspective, let’s consider an international project that includes Australia and China. A quick comparison using the 5-D model highlights the areas of close alignment and the areas of stark difference.

Close Alignment: We can see quite quickly that the Masculinity of both countries are pretty close, masculinity is slightly more important in China than Australia, but not by much. We can infer that both country’s consider masculinity slightly important and it is probably wise to not lead with talking about your feelings and it is safe to say that males would dominate the workforce and generally competitive in nature.

Reasonable Variances: It is also clear that Uncertainty Avoidance scores differ, but not but a great amount. Interestingly we note that China has a lower score and is less concerned with uncertainty. This might suggest that there are slightly more informal business rules, possibly based more on personal relationships and in the case of China short term changes are of less concern as long as the long term strategy is the key focus. It might be wise to relate how the changes this project will help to enable the long term goals.

A global project is pretty much what it says on the tin. it is a project that is based in multiple countries across the world. With global projects, multiple people or project teams are spread across different countries, each working on a single project at the same time.

Key Aspects of Handling a Global Project Team

Cultural Differences

This issue especially takes the front seat when it comes to a global project team. For example, the Chinese are very non-expressive people. Therefore, if you use too many hand gestures while you speak to a group of Chinese team members, it will cause them to lose focus and get distracted. Similarly, starting work on time and finishing on time is a concrete principle in Europe, especially Germany and France, whereas in India, people are a bit more relaxed when it comes to adhering to time. [Also read: How Cultural Differences Play an Important Role in ITIL Implementation].

Holidays are an important aspect of cultural differences. The project managers need to take into account the religious and national holidays of different countries while planning the project. They need to understand the impact of these holidays on the project schedule and ensure that they are factored in while creating timelines. In the US, people might be okay with being contacted for an important piece of information while they are on vacation, whereas in the UK, people tend to get offended when they are called on work matters during vacation.

Hofstede’s ‘power distance’ is another critical cultural factor. Employees in western countries are comfortable with putting forward their opinions and questions and having a discussion with their superiors, whereas in India or China, people might be hesitant to challenge authority. Therefore, it is the project manager’s responsibility to ensure that the team members have completely understood what is expected of them and they are in agreement to perform the tasks required from them.

Language Barrier

English is the business language in most countries. However, in countries like Germany, France, China, Japan, and a few others, business is done in their respective native languages. English itself is spoken in varying accents all around the world. The project manager needs to be mindful of these differences in language and accent while considering that team members from countries whose native language is not English might not be as comfortable as the native speakers. Additionally, he or she needs to advise his team to avoid slang and humor because the other side may not understand its subtleties and may even find it offensive.

For example, phrases such as “Roger that” and “Houston, we have a situation” are very common in the US, while someone in China or India may not understand the phrase.

It might help to learn the basic greetings of the team members’ language such as “Hello”, “Goodbye” and “Thank you”. They will appreciate the effort and will form a bond with your team though they are not physically present in the same office building. Ensure that you learn the right pronunciations of the names of your team members. People tend to take offense at their names not being pronounced the right way. The way you greet people at the end of a phone conversation or email is important too.

In some cases, when the English of the team member or a vendor is impossible to comprehend, it is advisable to use an interpreter, even if it may need extra time to complete conversations. Although it is not a comprehensive solution since the interpreter might not understand the technical terms involved in the project, it is something that needs to be worked around.

Make sure all meeting discussions and conversations are documented and sent to each of the team members involved. Some people are better at reading and writing English than listening and speaking. Therefore, a written document will help them assimilate the information and come up with questions if they have any so that everyone in the team is on the same page.

Technology

The importance of technology cannot be overstated when it comes to managing a global project team. Email and telephone used to be the most common modes of communication, whereas today, there are many more efficient and cost-effective applications such as Skype, Cisco WebEx, Citrix GoToMeeting, etc. which offer several options such as video, screen sharing, document sharing, and meeting recording facilities. As far as technology is concerned, it is important to keep it a level playing field.

For example, even if you have 4 members sitting in one office and the rest joining in from different parts of the world, make sure these 4 members log in using their individual computers. This way, the rest of the team who are not physically present in the room would not feel less important.

Time Zones

Navigating time zones is an inevitable issue when it comes to managing global projects. For example, it is a challenge to even fix a meeting that involves team members from the US, UK, India, and Australia. Scheduling a meeting at a time that is comfortable for all team members who are in four different time zones is a herculean task. Additionally, the different daylight savings slots in different countries complicate it further.

The project manager could use a meeting planner and ensure that the meeting is scheduled at a time that is comfortable for everyone in the team. For example, you could schedule a meeting for 4 pm in London which is 8.30 pm in Bangalore and 8 am in San Francisco. This time slot would work for everyone. Furthermore, before you schedule the meeting, ensure that the team members are comfortable with the time slots and have the necessary equipment to be a part of the meeting if they are dialing in from their home.

Project initiatives and requests can originate either in head office or the business units

Decision to implement: each project request or initiative is examined against a set of criteria (scorecard) to determine whether it is suitable for global or local implementation. This decision is made jointly by the head office and representatives of the units, who examine the extent to which the project is aligned with the corporate strategy, its ability to succeed on a global basis (review of needs in the business units), the amount of implementation resources available, etc. The project is then rated and inter-unit collaboration initiated.

Planning processes: global projects are planned at head office. The requirements of the local units are ascertained and the scope of the project is mapped according to core and business unit activity.

Core activity includes definition and implementation of the solution which constitutes the greatest common denominator for all the business units. For example: the core activity in a global system integration project will include the system specifications and development based on the requirements common to all the local units.

After implementation of the core activity, individual projects are executed in each of the units.

This distinction eliminates rework. The joint, global portion of the project only needs to be executed once and is followed by simultaneous implementation of individual local projects in the business units.

Multi-year work planning: the strength of an organization lies in its ability to forecast and plan the project portfolio one to three years in advance. Advance planning allows resources and budgets to be prepared at both a global level (collaboration between the head office and the business units) and locally, in each of the individual units.

Implementation and controls: the people executing a global program are the key to its successful implementation. The good relations and regular communication between them can counteract any partitions, conflicts of interest or politics inside the organization. It is important that the project management team is deployed to reflect the project structure, including a local project manager for both the core activity and each local project. These then report to the manager of the global program, who collates and synchronizes all information. The program projects can either be managed sequentially or concurrently, depending on the nature of the project and the availability of resources. Defining clear-cut areas of responsibility and organizational structure supports the efficient management of individual processes, retains knowledge and professionalism, streamlines communication between the head office and the business units and ensures that resources are utilized throughout the organization.

Closure: the closure of a global program is important for two main reasons. When projects are conducted on a sequential basis, clear closure of each project makes overall management of the program easier to monitor. Secondly, closure is used to tie up loose ends and learn lessons for the future.

Project management is challenging at the best of times and managing international projects only compounds these complexities and increases these challenges, some of the challenges and global issues of international project management that will need to be considered will differ greatly depending on the countries your project will involve.

Differing Standards

The problem with standards in a global sense and very much so in international project management is that they are not standard. Standards differ from country to country and consideration will need to be given as to which standards will be used will multiple standards be required. Some key areas of consideration are:

• Political & Legal Systems
• Accounting Standards
• Quality Standards and Unit Of Measure
• Language Barriers
• Time Zone Changes
• Economic Conditions

Cultural Differences

Of these international project management challenges, one of the most difficult to provide a framework of understanding is the cultural differences of each country, while some countries are well aligned, others can be completely different in their cultural and social norms, an obvious example of this is the differences between western countries like Australia or America and Asian Countries such as China and Japan. These differences can greatly impact international projects and require a specific international project management approach to solve these challenges of international projects.

If a project manager was delivering an international project across multiple countries and did not consider these social and cultural differences, it would be difficult to gain buy-in, support and the project would be carrying significant risks of failure, or significant costs to recover. These are the additional considerations and risks that must be managed with international project management and if you are involved in an international project then I urge you to consider the cultural differences and how they might impact your project. A great tool and ideal starting point is Hofstede’s Cultural Dimensions model.

Hofstede Cultural Dimensions

Hofstede identified 5 key areas of cultural differences and called these the 5 cultural dimensions or 5-D model, the model allows you to compare any 2 or more countries with each other and quickly shows what cultural differences exist, which are aligned and which are uniquely different, each of the 5 categories below are scored on a scale of 0 to 120.

• Power Distance
• Individualism
• Masculinity
• Uncertainty Avoidance
• Long-Term Orientation

Power distance is that gap between equality and the acceptance of the distribution of power. A flat management structure would be seen as having a low Power Distance as their is greater enfaces on equality. In an international project management environment in a country of high Power Distance you might only engage with the most senior of stakeholders and everyone else would not be privy to the project or engaged in the process.

Individualism

Measures the importance of personal achievements and needs against the needs of the group. In a culture of high individualism it might be necessary to engage closer with key personnel and allow the to provide more input and take ownership of certain parts of the project while recognising their individual skills and achievements.

Masculinity

Masculinity vs femininity is the score that measures a country’s need for competitiveness and the importance for male and female roles. In a country with high masculinity a male project manager might face less resistance than a female or at lease do not blur the boundary with male and female roles.

Uncertainty Avoidance

This is the degree as to which country’s are more acceptance of being flexible and accepting of uncertainty, scores of high Uncertainty Avoidance will generally suggest lots of rules and well documented procedures. These country’s will struggle with the uncertainty of change and may required longer times and additional costs to ensure change is managed effectively.

Long Term Orientation

Measures the preference of the long term horizon over the short term. Long Term Orientation is seen more commonly in Asian countries with their Confucius background, countries with high Long Term Orientation may see little value in the importance of sticking to short term deadlines and milestones.

International Project Management And Cultural Dimensions

The application of Hofstede’s 5-D model was originally used for International Business and Marketing applications, because it is quite effective in understanding a country’s cultural differences and social norms and gaining insights into the subtle differences and needs of different cultures, we can quickly see the value in its application in international project management, particular from an engagement perspective.

International Project Management Uses For Cultural Dimensions

The model could be used to select the most aligned countries when evaluating and considering which countries should be involved in the project, for example if you are embarking on an international change project, it might be unwise to start with a country with a high Uncertainty Avoidance score, it might make your life as an international project manager easier and the project more successful to start in a country that is open and embraces change. Then move in some senior managers to the countries with high Uncertainty Avoidance to show confidence in the change project.

But quite often, you may not have the luxury of selecting which countries will be part of the project, in this situation analysing the country’s cultural dimensions will give you great insight into how best to manage within these culture for the greatest change of success.

From an international project management perspective, lets consider an international project that includes Australia and China. A quick comparison using the 5-D model highlights the areas of close alignment and the areas of stark difference.

Close Alignment – We can see quite quickly that the Masculinity of both country’s are pretty close, masculinity is slightly more important in China than Australia, but not by much. We can infer that both country’s consider masculinity slightly important and it is probably wise to not lead with talking about your feelings and it is safe to say that males would dominate the workforce and generally competitive in nature.

Reasonable Variances – It is also clear that Uncertainty Avoidance scores differ, but not but a great amount. Interestingly we note that China has a lower score and is less concerned with uncertainty. This might suggest that there are slightly more informal business rules, possibly based more on personal relationships and in the case of China short term changes are of less concern as long as the long term strategy is the key focus. It might be wise to relate how the changes this project will help to enable the long term goals.

Key Differences

The graph highlights the key differences between to two countries being Power Distance, Individualism and Long Term Orientation with widely opposing scores. These high variances suggest these cultural differences are complete opposites between the two countries and careful consideration will need to be given as to how to effectively manage these if the project is to be successful.

Power Distance

On inspection of the graph we can see that the Power Distance between China and Australia differs considerably and that China has a much higher score for Power Distance than Australia. This usually means that Chinese company’s respect seniority and their is a strong hierarchal management chain. This is quite the opposite to Australia, with many flat management styles that empowers individuals to make decisions and work autonomously.

If you are faced with this at an international project management level it might be necessary to show respect to their management and don’t expect too much involvement from the employees down the line, even if they are directly effected by the project. Project Meetings will often be closed door and it is important that the Project Manager is equally seen to have a great deal of power and respect.

Individualism

Another key differentiator between Australia and China in our international project is the level of Individualism of the 2 countries. Again these are polar opposites and each country will require a different management style to effectively engage with the project stakeholders.

In Australia, we can see a high level of Individualism, which might suggest that many team members will want to voice their opinions and have their thoughts considered in the project. They are more likely to require praise and acknowledgement for good work and a more self centred approach to work.

The opposite will be true for China, where collectivism is more important that the individual and this might mean that closer consideration needs to be given to tradition and implement change slower with a focus on the group benefits. Engage with elders in the group and respect their wisdom.

Long Term Orientation

The Long Term Orientation scores of these comparison country’s are greatly different and completely opposite and will require equally differing approaches to our international project management approach.

In Australia with their short term orientation will be looking for short term wins with rapid change expected. They would expect equality and project managers should lead by example. There will be the constant focus on the next reporting period which is usually monthly and quarterly financial reporting.

However in China their high Long Term Orientation will show more respect to their elders and an expectation that project managers are well educated with years of experience. The focus will be maintained on long term strategies (often years into the future) over short term wins. The secret is commitment and a respect for tradition and respecting age as well as position in both society and business.

HR in MNCs

HRM is a strategic function concerned with recruitment, training and development, performance appraisal, communication and labor relations. HR policies guide the various functions of HRM. The need for a particular type of HRM is determined by the need for standardization or adaptation. Managing human resources in an international context is more complex than in a domestic set up because of the many differences between headquarters and the subsidiaries. The HR policies of certain companies seem to discriminate on the basis of religion, race, caste, sex or nationality. Companies like Ford and Volvo, however, strive to maintain equality in work and pay.

Staffing is an important aspect of HRM. The staffing policies of MNCs are determined by their approach to globalization. MNCs with an ethnocentric approach fill all top management positions with home country nationals to ensure that home country practices are replicated in subsidiaries. Companies that adopt a polycentric approach to globalization, fill all senior management positions with local nationals to ensure maximum adaptation to local conditions. Companies that adopt a geocentric approach to globalization, identify managers irrespective of their nationality for various international assignments to ensure that best practices are identified and replicated in all the units of the organization. Managers belonging to a particular country and working in another country are called expatriates. The selection, training, period of stay abroad, compensation and repatriation of expatriates are delicate issues that have to be managed by the HR department. On their repatriation, they must be provided suitable challenging assignments that give them the autonomy they have become accustomed to. Since maintaining expatriate managers is expensive, a company must develop local talent.

Companies can identify and develop local talent through in-house Management Development Programs (MDP). These programs will help improve the coordination between employees with diverse cultural, religious and educational backgrounds. Performance appraisal is another activity where there can be differences of opinion between headquarters and subsidiaries.

Subsidiary managers must be involved in setting of unambiguous targets and the establishment of criteria for measuring performance. Performance Management attempts to link performance appraisal to employee training and development, and possibly to compensation. There are three theories concerning the autonomy of subsidiaries in decision-making.

They are: limited autonomy, variable autonomy and negotiated autonomy. According to the theory of limited autonomy, the degree of autonomy will depend on the MNC’s approach to globalization. The theory of variable autonomy states that the degree of autonomy varies with the degree of internationalization of the company.

Companies that adopt an export strategy can afford to have centralized decision-making, whereas strategic business units (SBUs) will require decentralized decision-making. According to the theory of negotiated autonomy, the degree of autonomy of a subsidiary will depend on its ability to negotiate with headquarters.

HRM plays an important role in maintaining harmonious industrial relations. Companies are often intimidated by the strength of the union and the political support it enjoys. Certain companies like Volvo ensure cordial relations with the labor union by actively participating in their development. But certain other companies, like Bata have had frequent labor relations problems in India.

Roles & responsibilities are as follows:

Professional Development: Building up the employees professionally by enrolling them into conferences, seminars etc.

Training: To help new hires get acquainted with the company and also the company to get to know their employee well.

Appraisals: HR work just don’t stop at hiring employees but also their timely performance analysis and promotion appraisals. HR also needs to motivate their employees.

Resolving Conflicts: The HR should be available at the disposal of the conflicting parties and hear out their issues without being judgmental.

Maintaining Work Culture: It’s the one the most important responsibility of the HR that is to maintain a healthy and happy environment within the company. The company employees should be able to freely communicate and voice their opinions in the professional yet happy environment.

ome of the most common challenges multinational companies are facing in terms of HR management include:

Cultural Divide: Main goal of HR management in multinational companies is to build global employee community with unique company culture and values. This can be tricky because diverse languages, cultures and customs can hinder the alignment of HR policies in different company branches.

HR Disconnect: Multinational companies need to implement the same policies and procedures on recruiting, hiring, benefits and compensation in all of their branches and business units across the globe.

Legal compliance: Every country has its own labor law and HR department of each foreign subsidiary needs to fully align company policies with it.

Industrial Relations in MNCs

Managing human resources effectively in companies that do business globally requires cultural awareness and the ability to respond quickly in dynamic environments. Human resource professionals typically handle the recruiting, interviewing, hiring, training and developing of employees that businesses need to achieve their business goals.

They also establish the policies and procedures designed to ensure a fair, safe and productive work facility. Managing individuals in international settings requires motivating and inspiring employees to work collaboratively, even when they don’t reside in the same location.

Fostering Global Collaboration

As companies become more international, human resource professionals have become more generalist. They tend to know less about day-to-day, internal operations and focus more on ensuring personnel work effectively together as teams. They care about competitive advantage, profitability and economic survival during tough financial times.

Their role may have been restricted to hiring employees, managing benefits and handling disciplinary action in the past, but human resource professionals now deal with controlling health care costs, reducing employee attrition and participating in the community, as well.

One major difference between domestic and international HRM is the need to address different countries’ labor laws. Another is to be sensitive to cultural issues that might not seem like a big deal to workers in one country, but might easily offend employees in another.

Working with Managers

Years ago, human resource professionals in traditional small business settings focused on completing administrative tasks, such as recruiting and hiring personnel, often without input from department managers.

As companies become more global, human resource professionals act as business partners to interview and orient new employees to the workplace. A complex business operation typically requires specialized personnel, so human resource professionals must work cooperatively with managers on the production lines.

Providing Ongoing Training

Human resource professionals working for multinational companies can maintain a productive environment by ensuring that an internationally diverse employee pool has the skills and knowledge to work together, explains Strategy + Business magazine. They make arrangements for training courses that enable employees to get the proper credentials for performing their function. This also ensures that companies adhere to all government regulations.

For example, all companies must be certain that employees follow the standards for that assure a safe and healthy workplace setting. In Europe, work councils composed of both employers and employees might mandate training not covered by other trade union agreements.

Building and Managing Teams

Human resource professionals who support international business operations typically must to ensure that diverse teams work well together, explains the Society for Human Resource Management. By conducting team-building workshops, promoting acceptance of cultural diversity and motivating employees to achieve strategic goals, they help their company build strong teams.

By recognizing that in some countries individual recognition plays a larger role than others, human resource professionals can create awareness about how teams can function effectively across borders to maintain company profitability.