Canadian University of Dubai Allowances and Approach for Compensation Case Study Hello! read the instruction clearly to understand what should happen 1- make an introduction and explanation to the case that is not more than 1,5 pages ( from reading the instruction file ) 2- read the case which i uploaded here 3- the candidate was already chosen by me and written in the file uploaded for instruction 4- read the article 5- read the chapters uploaded here along with the article in order to reference what is necessary to be mentioned 6- give an answer to the question in 1.5 – 2 pages only 7- make sure to reference everything with the pages First to read this article and the book to see what suits from chap 5,7,8,9,10 to answer this question: ( both the article and the book should be referenced with pages when writing ) ” i will upload the book needed here ” – Konopaske, R., Chet, R & John,M.I. (2005) A preliminary model of spouse influence on managerial global assignment willingness. The International Journal of Human Resource Management 16(3), 405-426 – the book, International Human Resource Management 7th Edition By: Peter. J. Dowling, Marion Festing and Allen D. Engle, Sr. Published: © 2017 CENGAGE Learning, Print ISBN: 9781473719026 the question you will answer for the whole assignment: Outline allowances and an approach for compensation for your chosen expatriate. Argue for the advantages and possible disadvantages of your chosen compensation approach info how to write: 12-point font, and double line spacing. In the text, make sure to use specific references such as (Dowling et al, 2017, p. 180; Konopaske et al, 2005, p. 411) ALL OF THIS IS WRITTEN IN THE INSTRUCTION FILE UPLOADED HERE. First to read this article and then read the chapters uploaded to give references to the answer of this question: ( both the article and the book should be referenced with pages when writing ) ” i will upload the chapters needed here ” 1. The article, Konopaske, R., Chet, R & John,M.I. (2005) A preliminary model of spouse influence on managerial global assignment willingness. The International Journal of Human Resource Management 16(3), 405-426 2. the book, International Human Resource Management 7th Edition By: Peter. J. Dowling, Marion Festing and Allen D. Engle, Sr. Published: © 2017 CENGAGE Learning, Print ISBN: 9781473719026 the question you will answer: Outline allowances and an approach for compensation for your chosen expatriate. Argue for the advantages and possible disadvantages of your chosen compensation approach info how to write: 12-point font, and double line spacing. In the text, make sure to use specific references such as (Dowling et al, 2017, p. 180; Konopaske et al, 2005, p. 411) Instructions You are the head of Human Resources at IKEA headquarters, the Netherlands. IKEA has a subsidiary in Mexico. However, staff turnover has been high over the past years. A month ago, the previous HR Manager Division Flatline located in Mexico City resigned. It is now of utterly importance that a new HR manager in Mexico will stay for at least five years. You are in charge of recruiting the successor. After a long recruitment process with a vast number of candidates from within IKEA, you have narrowed it down to three top candidates. Your job is to choose one of these candidates based on the information below and take all possible means to improve the chance of expatriate success. Background on IKEA IKEA was founded by Ingvar Kamprad in Älmhult, Sweden, in 1943 (IKEA is actually an acronym for Ingvar Kamprad Elmtaryd Agunnaryd the name, hometown and home region of the founder). However, even as the Swedish roots are still very important in the company, IKEA is not really a Swedish company anymore. Today IKEA is controlled by a company called INGKA Holding, which, in turn, is controlled by a Dutch stitchting a tax-exempt, nonprofit foundation to which Ingvar Kamprad transferred his ownership shares in 1982. Today IKEA is a multinational group of companies that designs and sells ready-to-assemble furniture (such as beds, chairs and desks), appliances and home accessories. As of November 2018, there are 424 IKEA stores operating in 52 different countries. In the 2016 fiscal year, the company generated a global revenue which exceeded 35 billion Euros. The IKEA headquarters lie in Leiden, the Netherlands. The corporate language is English. You can read further about IKEA here: https://www.ikea.com After reading this case you will argue for your choice of one of the candidates and discuss what steps you have to undertake to prepare the assignment, expatriate and accompanying spouse/family. The chosen candidate : Paloma Hernández References Palomas references emphasize her ability to manage extreme workloads in an international setting. She is an excellent negotiator. As a manager she is known to work hard and demand of her co-workers to do the same. Her superiors and current coworkers describe Paloma as extremely efficient and well liked for her excellent results. Work life experience Three year as HR manager at IKEA New York. Four years at home with her children. Two years of experience as an HR manager at Atlantic Express in New York, a US based logistics company. 7 years of experience as HR strategist at IKEA Mexico. Further Paloma has 4 years of experience as HR strategist at Interjet Airlines in Mexico City. Education Master of business from Universidad Nacional Autónoma de México Private Paloma is 42 years old, born in Tulum and a Mexican citizen. Her husband Michael is also 42 years old, a U.S. citizen and works as an accountant in the public sector in Atlanta. Paloma and Michael have two daughters, Elizabeth 5 years and Alejandra 7 years who go to school/preschool in Atlanta. The past three years Paloma has commuted between New York and Atlanta and her family has remained in their hometown in Atlanta, USA. If Paloma is chosen for the job in Mexico her family will accompany her, and Michael is planning to stay at home the first years until the daughters are settled. Language skills Fluent in Spanish and English. CHAPTER 9 INTERNATIONAL INDUSTRIAL RELATIONS AND THE GLOBAL INSTITUTIONAL CONTEXT Chapter Objectives In this chapter we: l Discuss the key issues in international industrial relations and the policies and practices of MNEs. l Examine the potential constraints that trade unions may have on MNEs. l Outline key concerns that trade unions have with regard to the activities of MNEs. l Discuss recent trends and issues in the global workforce context. 241 242 CHAPTER 9 INTERNATIONAL INDUSTRIAL RELATIONS AND THE GLOBAL INSTITUTIONAL CONTEXT l Discuss the formation of regional economic zones such as the European Union and the impact of opponents to globalization. l Present issues of codes of conduct and nongovernmental organizations as MNEs. l Discuss HR implications of offshoring strategies. INTRODUCTION In this chapter we will use the more traditional term industrial relations to describe the broad field of study that looks at wider issues of work and employment. We recognize that newer terms such as employee relations and employment relations are also used in the literature but prefer to use the traditional term in the global context because this is consistent with international organizations such as the International Organization of Employers and the International Labor Organization.1 Before we examine the key issues in industrial relations as they relate to MNEs, we need to consider some general points about the field of international industrial relations.2 First, it is important to realize that it is difficult to compare industrial relations systems and behavior across national boundaries; an industrial relations concept may change considerably when translated from one industrial relations context to another.3 The concept of collective bargaining, for example, in the USA is understood to mean negotiations between a local trade union and management; in Sweden and Germany the term refers to negotiations between an employers organization which represents the major firms in a particular industry and the trade union covering employees in that industry. Cross-national differences also emerge as to the objectives of the collective bargaining process and the enforceability of collective agreements. Many European unions continue to view the collective bargaining process as an ongoing class struggle between labor and capital, whereas in the USA union leaders take a very pragmatic economic view of collective bargaining rather than an ideological view. Second, it is very important to recognize in the international industrial relations field that no industrial relations system can be understood without an appreciation of its historical origin.4 As Schregle5 has observed: A comparative study of industrial relations shows that industrial relations phenomena are a very faithful expression of the society in which they operate, of its characteristic features and of the power relationships between different interest groups. Industrial relations cannot be understood without an understanding of the way in which rules are established and implemented and decisions are made in the society concerned. An interesting example of the effect of historical differences may be seen in the structure of trade unions in various countries. Poole6 has identified several factors that may underlie these historical differences: l The mode of technology and industrial organization at critical stages of union development. l Methods of union regulation by government. l Ideological divisions within the trade union movement. l The influence of religious organizations on trade union development. l Managerial strategies for labor relations in large corporations. CHAPTER 9 INTERNATIONAL INDUSTRIAL RELATIONS AND THE GLOBAL INSTITUTIONAL CONTEXT Poole notes that because of these historical differences, union structures differ considerably among Western countries. These include industrial unions in Germany and other European countries, which represent all grades of employees in an industry; craft unions in Europe, Australia and the United States which are based on skilled occupational groupings across industries; conglomerate unions in the United States, Canada and The Netherlands which represent members in more than one industry; and general unions in Australia and Europe which are open to almost all employees in a given country. These differences in union structures have had a major influence on the collective bargaining process in Western countries. Some changes in union structure are evident over time; for example, enterprise unions are increasingly evident in industrialized nations. Enterprise unions are common in AsiaPacific nations (especially in Japan), although there are national variations in their functions, and in the proportion of enterprise unions to total unions. The less we know about how a structure came to develop in a distinctive way, the less likely we are to understand it. As Prahalad and Doz7 note, the lack of familiarity of multinational managers with local industrial and political conditions has sometimes needlessly worsened a conflict that a local firm would have been likely to resolve. Increasingly, MNEs are recognizing this shortcoming and admitting that industrial relations policies must be flexible enough to adapt to local requirements. This is evidently an enduring approach, even in firms that follow a non-union labor relations strategy where possible, as IHRM in Action Case 9.1 points out. Although the case is relatively old, the key points made remain relevant to current international industrial relations. KEY ISSUES IN INTERNATIONAL INDUSTRIAL RELATIONS The focus of this chapter is on the industrial relations strategies adopted by multinationals rather than the more general topic of comparative industrial relations.8 Later in this chapter we will cover the emerging topic of offshoring of labor, but first we examine the central question for industrial relations in an international context, which concerns the orientation of MNEs to organized labor. Industrial relations policies and practices of multinational firms Because national differences in economic, political and legal systems produce markedly different industrial relations systems across countries, MNEs generally delegate the management of industrial relations to their foreign subsidiaries. However, a policy of decentralization does not keep corporate headquarters from exercising some coordination over industrial relations strategy. Generally, corporate headquarters will become involved in or oversee labor agreements made by foreign subsidiaries because these agreements may affect the international plans of the firm and/or create precedents for negotiations in other countries. Further, Marginson et al.9 found that the majority of the firms in their study monitored labor performance across units in different countries. Comparison of performance data across national units of the firm creates the potential for decisions on issues such as unit location, capital investment and rationalization of production capacity. The use of comparisons would be expected to be greatest where units in different countries undertake similar operations. For reviews of the literature in this area, see the work of Gunnigle and his colleagues.10 Much of the literature on the industrial relations practices of MNEs tends to be at a more cross-national or comparative level. There is, however, some research on industrial relations practices at the firm level. Empirical research has identified a number of differences in multinational approaches to industrial relations. Indeed, a number of studies have examined differences in the propensity of multinational headquarters to intervene in, or to centralize control over, 243 244 CHAPTER 9 INTERNATIONAL INDUSTRIAL RELATIONS AND THE GLOBAL INSTITUTIONAL CONTEXT IHRM in Action Case 9.1 Advice for companies going global The key to successfully expanding overseas is to become one with the culture of the location, even if it means unionization of employees, Michael R. Quinlan, chairman and chief executive officer of McDonalds Corp., tells conferees at a meeting of the Human Resources Management Association of Chicago. After opening fast-food restaurants in 53 nations, McDonalds has learned that it must follow the established practices of a foreign country to succeed there, Quinlan says. For example, a number of European countries and Australia have very strict unionization standards, and operations there are unionized as a condition of doing business. Acknowledging that McDonalds has had some horrible union fights around the world, Quinlan advises employers considering expansion into other nations to do it their way, not your way. The main implication of dealing with unions is the increased cost of wages and benefits, according to Quinlan. Still, he adds that he does not feel unionization has interfered with employees loyalty to McDonalds, or to the companys philosophy of service and employee motivation. Declaring that unions do not bring much to the equation of the employee/employer relationship, Quinlan says McDonalds is basically a non-union Company and intends to stay that way. Another source of difficulty for McDonalds in its expansion overseas lies in the fact that fast-food restaurants are unfamiliar in most nations. Opening the first McDonalds inside the Communist-bloc, in Yugoslavia, took 12 years, Quinlan notes. He also points out that the companys policy is to staff its restaurants, from crew through management, only with nationals for the 3300 foreign outlets, the corporation employs only 35 expatriate US citizens, and its goal is to have 100 per cent local employees within five years. Source: Reproduced with permission from Bulletin to Management, 42 BTM 66 (Mar. 7, 1991). Copyright 1991 by The Bureau of National Affairs, Inc. (8003721033) www.bna.com. matters such as industrial relations in host locations. Multinational headquarters involvement in industrial relations is influenced by several factors, as detailed below. The degree of inter-subsidiary production integration. According to Hamill,11 a high degree of integration was found to be the most important factor leading to the centralization of the industrial relations function within the firms studied. Industrial relations throughout a system become of direct importance to corporate headquarters when transnational sourcing patterns have been developed, that is, when a subsidiary in one country relies on another foreign subsidiary as a source of components or as a user of its output.12 In this context, a coordinated industrial relations policy is one of the key factors in a successful global production strategy.13 One early example of the development of an international policy for industrial relations can be seen in the introduction of employee involvement across Fords operations.14 Nationality of ownership of the subsidiary. There is evidence of differences between European and US firms in terms of headquarters involvement in industrial relations.15 A number of studies have revealed that US firms tend to exercise greater centralized control over labor relations than do British or other European firms.16 US firms tend to place greater emphasis on formal management controls and a close reporting system (particularly within the area of financial control) to ensure that planning targets are met. In his review of empirical research of this area, Bean17 showed that foreign-owned multinationals in Britain prefer single-employer bargaining (rather than involving an employer association), and are more likely than British firms to assert CHAPTER 9 INTERNATIONAL INDUSTRIAL RELATIONS AND THE GLOBAL INSTITUTIONAL CONTEXT managerial prerogative on matters of labor utilization. Further, Hamill18 found US-owned subsidiaries to be much more centralized in labor relations decision-making than British-owned. Hamill attributed this difference in management procedures to the more integrated nature of US firms, the greater divergence between British and US labor relations systems than between British and other European systems, and the more ethnocentric managerial style of US firms. International human resource management approach. In earlier chapters, we discussed the various international human resource management approaches utilized by multinationals; these have implications for international industrial relations. Interestingly, an ethnocentric predisposition is more likely to be associated with various forms of industrial relations conflict.19 Conversely, it has been shown that more geocentric firms will bear more influence on host-country industrial relations systems, due to their greater propensity to participate in local events.20 MNE prior experience in industrial relations. European firms have tended to deal with industrial unions at industry level (frequently via employer associations) rather than at firm level. The opposite is more typical for US firms. In the USA, employer associations have not played a key role in the industrial relations system, and firm-based industrial relations policies tend to be the norm.21 Subsidiary characteristics. Research has identified a number of subsidiary characteristics to be relevant to centralization of industrial relations. First, subsidiaries that are formed through acquisition of well-established indigenous firms tend to be given much more autonomy over industrial relations than are greenfield sites set up by a multinational firm.22 Second, according to Enderwick, greater intervention would be expected when the subsidiary is of key strategic importance to the firm and the subsidiary is young.23 Third, where the parent firm is a significant source of operating or investment funds for the subsidiary, that is, where the subsidiary is more dependent on headquarters for resources, there will tend to be increased corporate involvement in industrial relations and human resource management.24 Finally, poor subsidiary performance tends to be accompanied by increased corporate involvement in industrial relations. Where poor performance is due to industrial relations problems, multinationals tend to attempt to introduce parent-country industrial relations practices aimed at reducing industrial unrest or increasing productivity.25 Characteristics of the home product market. An important factor is the extent of the home product market26 an issue that was discussed in Chapter 1. If domestic sales are large relative to overseas operations (as is the case with many US firms), it is more likely that overseas operations will be regarded by the parent firm as an extension of domestic operations. This is not the case for many European firms, whose international operations represent the major part of their business. Lack of a large home market is a strong incentive to adapt to host-country institutions and norms. There is evidence of change in the European context: since the implementation of the single European market in 1993, there has been growth in large European-scale companies (formed via acquisition or joint ventures) that centralize management organization and strategic decision-making. However, processes of operational decentralization with regard to industrial relations are also evident.27 Management attitudes towards unions. An additional important factor is that of management attitudes or ideology c… Purchase answer to see full attachment
Canadian University of Dubai Allowances and Approach for Compensation Case Study Hello!
read the instruction clearly to understand what should happen
1- ma
Don't use plagiarized sources. Get Your Custom Essay on
Canadian University of Dubai Allowances and Approach for Compensation Case Study Hello!
read the instruction clearly to understand what should happen
1- make an introduction and explanation to the case that is not more than 1,5 pages ( from reading the instruction file )
2- read the case which i uploaded here
3- the candidate was already chosen by me and written in the file uploaded for instruction
4- read the article
5- read the chapters uploaded here along with the article in order to reference what is necessary to be mentioned
6- give an answer to the question in 1.5 – 2 pages only
7- make sure to reference everything with the pages
First to read this article and the book to see what suits from chap 5,7,8,9,10 to answer this question: ( both the article and the book should be referenced with pages when writing ) ” i will upload the book needed here ”
– Konopaske, R., Chet, R & John,M.I. (2005) A preliminary model of spouse influence on managerial global assignment willingness. The International Journal of Human Resource Management 16(3), 405-426
– the book, International Human Resource Management 7th Edition By: Peter. J. Dowling, Marion Festing and Allen D. Engle, Sr. Published: © 2017 CENGAGE Learning, Print ISBN: 9781473719026
the question you will answer for the whole assignment: Outline allowances and an approach for compensation for your chosen expatriate. Argue for the advantages and possible disadvantages of your chosen compensation approach
info how to write: 12-point font, and double line spacing. In the text, make sure to use specific references such as (Dowling et al, 2017, p. 180; Konopaske et al, 2005, p. 411)
ALL OF THIS IS WRITTEN IN THE INSTRUCTION FILE UPLOADED HERE. First to read this article and then read the chapters uploaded to give references to the answer of this
question: ( both the article and the book should be referenced with pages when writing ) ” i will upload the
chapters needed here ”
1. The article, Konopaske, R., Chet, R & John,M.I. (2005) A preliminary model of spouse influence
on managerial global assignment willingness. The International Journal of Human Resource
Management 16(3), 405-426
2. the book, International Human Resource Management 7th Edition By: Peter. J. Dowling,
Marion Festing and Allen D. Engle, Sr. Published: © 2017 CENGAGE Learning, Print ISBN:
9781473719026
the question you will answer: Outline allowances and an approach for compensation
for your chosen expatriate. Argue for the advantages and possible disadvantages of your chosen
compensation approach
info how to write: 12-point font, and double line spacing. In the text, make sure to use specific references
such as (Dowling et al, 2017, p. 180; Konopaske et al, 2005, p. 411)
Instructions
You are the head of Human Resources at IKEA headquarters, the Netherlands. IKEA has a
subsidiary in Mexico. However, staff turnover has been high over the past years. A month
ago, the previous HR Manager Division Flatline located in Mexico City resigned. It is now of
utterly importance that a new HR manager in Mexico will stay for at least five years. You are
in charge of recruiting the successor. After a long recruitment process with a vast number of
candidates from within IKEA, you have narrowed it down to three top candidates. Your job is
to choose one of these candidates based on the information below and take all possible means
to improve the chance of expatriate success.
Background on IKEA
IKEA was founded by Ingvar Kamprad in Älmhult, Sweden, in 1943 (IKEA is actually an
acronym for Ingvar Kamprad Elmtaryd Agunnaryd the name, hometown and home region
of the founder). However, even as the Swedish roots are still very important in the company,
IKEA is not really a Swedish company anymore. Today IKEA is controlled by a company
called INGKA Holding, which, in turn, is controlled by a Dutch stitchting a tax-exempt,
nonprofit foundation to which Ingvar Kamprad transferred his ownership shares in 1982.
Today IKEA is a multinational group of companies that designs and sells ready-to-assemble
furniture (such as beds, chairs and desks), appliances and home accessories. As of November
2018, there are 424 IKEA stores operating in 52 different countries. In the 2016 fiscal year,
the company generated a global revenue which exceeded 35 billion Euros. The IKEA
headquarters lie in Leiden, the Netherlands. The corporate language is English.
You can read further about IKEA here:
https://www.ikea.com
After reading this case you will argue for your choice of one of the candidates and discuss
what steps you have to undertake to prepare the assignment, expatriate and accompanying
spouse/family.
The chosen candidate :
Paloma Hernández
References
Palomas references emphasize her ability to manage extreme workloads in an international
setting. She is an excellent negotiator. As a manager she is known to work hard and demand
of her co-workers to do the same. Her superiors and current coworkers describe Paloma as
extremely efficient and well liked for her excellent results.
Work life experience
Three year as HR manager at IKEA New York. Four years at home with her children. Two
years of experience as an HR manager at Atlantic Express in New York, a US based logistics
company. 7 years of experience as HR strategist at IKEA Mexico. Further Paloma has 4 years
of experience as HR strategist at Interjet Airlines in Mexico City.
Education
Master of business from Universidad Nacional Autónoma de México
Private
Paloma is 42 years old, born in Tulum and a Mexican citizen. Her husband Michael is also 42
years old, a U.S. citizen and works as an accountant in the public sector in Atlanta. Paloma
and Michael have two daughters, Elizabeth 5 years and Alejandra 7 years who go to
school/preschool in Atlanta. The past three years Paloma has commuted between New York
and Atlanta and her family has remained in their hometown in Atlanta, USA. If Paloma is
chosen for the job in Mexico her family will accompany her, and Michael is planning to stay
at home the first years until the daughters are settled.
Language skills
Fluent in Spanish and English.
CHAPTER 9
INTERNATIONAL
INDUSTRIAL
RELATIONS AND
THE GLOBAL
INSTITUTIONAL
CONTEXT
Chapter Objectives
In this chapter we:
l
Discuss the key issues in international industrial relations and the policies and practices of MNEs.
l
Examine the potential constraints that trade unions may have on MNEs.
l
Outline key concerns that trade unions have with regard to the activities of MNEs.
l
Discuss recent trends and issues in the global workforce context.
241
242
CHAPTER 9 INTERNATIONAL INDUSTRIAL RELATIONS AND THE GLOBAL INSTITUTIONAL CONTEXT
l
Discuss the formation of regional economic zones such as the European Union and the impact of
opponents to globalization.
l
Present issues of codes of conduct and nongovernmental organizations as MNEs.
l
Discuss HR implications of offshoring strategies.
INTRODUCTION
In this chapter we will use the more traditional term industrial relations to describe the broad
field of study that looks at wider issues of work and employment. We recognize that newer
terms such as employee relations and employment relations are also used in the literature but
prefer to use the traditional term in the global context because this is consistent with international organizations such as the International Organization of Employers and the International
Labor Organization.1
Before we examine the key issues in industrial relations as they relate to MNEs, we need to
consider some general points about the field of international industrial relations.2 First, it is important to realize that it is difficult to compare industrial relations systems and behavior across
national boundaries; an industrial relations concept may change considerably when translated
from one industrial relations context to another.3 The concept of collective bargaining, for
example, in the USA is understood to mean negotiations between a local trade union and management; in Sweden and Germany the term refers to negotiations between an employers organization which represents the major firms in a particular industry and the trade union covering
employees in that industry. Cross-national differences also emerge as to the objectives of the collective bargaining process and the enforceability of collective agreements. Many European
unions continue to view the collective bargaining process as an ongoing class struggle between
labor and capital, whereas in the USA union leaders take a very pragmatic economic view of collective bargaining rather than an ideological view. Second, it is very important to recognize in
the international industrial relations field that no industrial relations system can be understood
without an appreciation of its historical origin.4 As Schregle5 has observed:
A comparative study of industrial relations shows that industrial relations phenomena are a very faithful expression of the society in which they operate, of its characteristic features and of the power relationships between different interest groups. Industrial relations cannot be understood without an
understanding of the way in which rules are established and implemented and decisions are made in
the society concerned.
An interesting example of the effect of historical differences may be seen in the structure of trade
unions in various countries. Poole6 has identified several factors that may underlie these historical differences:
l
The mode of technology and industrial organization at critical stages of union development.
l
Methods of union regulation by government.
l
Ideological divisions within the trade union movement.
l
The influence of religious organizations on trade union development.
l
Managerial strategies for labor relations in large corporations.
CHAPTER 9 INTERNATIONAL INDUSTRIAL RELATIONS AND THE GLOBAL INSTITUTIONAL CONTEXT
Poole notes that because of these historical differences, union structures differ considerably
among Western countries. These include industrial unions in Germany and other European
countries, which represent all grades of employees in an industry; craft unions in Europe,
Australia and the United States which are based on skilled occupational groupings across industries; conglomerate unions in the United States, Canada and The Netherlands which represent
members in more than one industry; and general unions in Australia and Europe which are open
to almost all employees in a given country. These differences in union structures have had a
major influence on the collective bargaining process in Western countries. Some changes in
union structure are evident over time; for example, enterprise unions are increasingly evident in
industrialized nations. Enterprise unions are common in AsiaPacific nations (especially in
Japan), although there are national variations in their functions, and in the proportion of enterprise unions to total unions.
The less we know about how a structure came to develop in a distinctive way, the less likely
we are to understand it. As Prahalad and Doz7 note, the lack of familiarity of multinational
managers with local industrial and political conditions has sometimes needlessly worsened a
conflict that a local firm would have been likely to resolve. Increasingly, MNEs are recognizing
this shortcoming and admitting that industrial relations policies must be flexible enough to
adapt to local requirements. This is evidently an enduring approach, even in firms that follow a
non-union labor relations strategy where possible, as IHRM in Action Case 9.1 points out.
Although the case is relatively old, the key points made remain relevant to current international
industrial relations.
KEY ISSUES IN INTERNATIONAL INDUSTRIAL RELATIONS
The focus of this chapter is on the industrial relations strategies adopted by multinationals
rather than the more general topic of comparative industrial relations.8 Later in this chapter we
will cover the emerging topic of offshoring of labor, but first we examine the central question
for industrial relations in an international context, which concerns the orientation of MNEs to
organized labor.
Industrial relations policies and practices of multinational firms
Because national differences in economic, political and legal systems produce markedly different
industrial relations systems across countries, MNEs generally delegate the management of
industrial relations to their foreign subsidiaries. However, a policy of decentralization does not
keep corporate headquarters from exercising some coordination over industrial relations strategy. Generally, corporate headquarters will become involved in or oversee labor agreements
made by foreign subsidiaries because these agreements may affect the international plans of the
firm and/or create precedents for negotiations in other countries. Further, Marginson et al.9
found that the majority of the firms in their study monitored labor performance across units in
different countries. Comparison of performance data across national units of the firm creates
the potential for decisions on issues such as unit location, capital investment and rationalization
of production capacity. The use of comparisons would be expected to be greatest where units in
different countries undertake similar operations. For reviews of the literature in this area, see the
work of Gunnigle and his colleagues.10
Much of the literature on the industrial relations practices of MNEs tends to be at a more
cross-national or comparative level. There is, however, some research on industrial relations
practices at the firm level. Empirical research has identified a number of differences in multinational approaches to industrial relations. Indeed, a number of studies have examined differences
in the propensity of multinational headquarters to intervene in, or to centralize control over,
243
244
CHAPTER 9 INTERNATIONAL INDUSTRIAL RELATIONS AND THE GLOBAL INSTITUTIONAL CONTEXT
IHRM in Action Case 9.1
Advice for companies going global
The key to successfully expanding overseas is to become one with the culture of the location, even if it means unionization of employees, Michael R. Quinlan, chairman and chief executive officer of McDonalds Corp., tells conferees at
a meeting of the Human Resources Management Association of Chicago.
After opening fast-food restaurants in 53 nations, McDonalds has learned that it must follow the established practices of a foreign country to succeed there, Quinlan says. For example, a number of European countries and Australia
have very strict unionization standards, and operations there are unionized as a condition of doing business.
Acknowledging that McDonalds has had some horrible union fights around the world, Quinlan advises employers
considering expansion into other nations to do it their way, not your way.
The main implication of dealing with unions is the increased cost of wages and benefits, according to Quinlan. Still,
he adds that he does not feel unionization has interfered with employees loyalty to McDonalds, or to the companys
philosophy of service and employee motivation. Declaring that unions do not bring much to the equation of the
employee/employer relationship, Quinlan says McDonalds is basically a non-union Company and intends to stay
that way.
Another source of difficulty for McDonalds in its expansion overseas lies in the fact that fast-food restaurants are
unfamiliar in most nations. Opening the first McDonalds inside the Communist-bloc, in Yugoslavia, took 12 years,
Quinlan notes. He also points out that the companys policy is to staff its restaurants, from crew through management, only with nationals for the 3300 foreign outlets, the corporation employs only 35 expatriate US citizens, and
its goal is to have 100 per cent local employees within five years.
Source: Reproduced with permission from Bulletin to Management, 42 BTM 66 (Mar. 7, 1991). Copyright 1991 by
The Bureau of National Affairs, Inc. (8003721033) www.bna.com.
matters such as industrial relations in host locations. Multinational headquarters involvement
in industrial relations is influenced by several factors, as detailed below.
The degree of inter-subsidiary production integration. According to Hamill,11 a high
degree of integration was found to be the most important factor leading to the centralization of
the industrial relations function within the firms studied. Industrial relations throughout a system become of direct importance to corporate headquarters when transnational sourcing patterns have been developed, that is, when a subsidiary in one country relies on another foreign
subsidiary as a source of components or as a user of its output.12 In this context, a coordinated
industrial relations policy is one of the key factors in a successful global production strategy.13
One early example of the development of an international policy for industrial relations can be
seen in the introduction of employee involvement across Fords operations.14
Nationality of ownership of the subsidiary. There is evidence of differences between European and US firms in terms of headquarters involvement in industrial relations.15 A number of
studies have revealed that US firms tend to exercise greater centralized control over labor relations than do British or other European firms.16 US firms tend to place greater emphasis on formal management controls and a close reporting system (particularly within the area of financial
control) to ensure that planning targets are met. In his review of empirical research of this area,
Bean17 showed that foreign-owned multinationals in Britain prefer single-employer bargaining
(rather than involving an employer association), and are more likely than British firms to assert
CHAPTER 9 INTERNATIONAL INDUSTRIAL RELATIONS AND THE GLOBAL INSTITUTIONAL CONTEXT
managerial prerogative on matters of labor utilization. Further, Hamill18 found US-owned subsidiaries to be much more centralized in labor relations decision-making than British-owned.
Hamill attributed this difference in management procedures to the more integrated nature of US
firms, the greater divergence between British and US labor relations systems than between British
and other European systems, and the more ethnocentric managerial style of US firms.
International human resource management approach. In earlier chapters, we discussed
the various international human resource management approaches utilized by multinationals;
these have implications for international industrial relations. Interestingly, an ethnocentric
predisposition is more likely to be associated with various forms of industrial relations
conflict.19 Conversely, it has been shown that more geocentric firms will bear more influence
on host-country industrial relations systems, due to their greater propensity to participate in local
events.20
MNE prior experience in industrial relations. European firms have tended to deal with
industrial unions at industry level (frequently via employer associations) rather than at firm
level. The opposite is more typical for US firms. In the USA, employer associations have not
played a key role in the industrial relations system, and firm-based industrial relations policies
tend to be the norm.21
Subsidiary characteristics. Research has identified a number of subsidiary characteristics to be
relevant to centralization of industrial relations. First, subsidiaries that are formed through acquisition of well-established indigenous firms tend to be given much more autonomy over industrial
relations than are greenfield sites set up by a multinational firm.22 Second, according to
Enderwick, greater intervention would be expected when the subsidiary is of key strategic importance to the firm and the subsidiary is young.23 Third, where the parent firm is a significant source
of operating or investment funds for the subsidiary, that is, where the subsidiary is more dependent
on headquarters for resources, there will tend to be increased corporate involvement in industrial
relations and human resource management.24 Finally, poor subsidiary performance tends to be
accompanied by increased corporate involvement in industrial relations. Where poor performance
is due to industrial relations problems, multinationals tend to attempt to introduce parent-country
industrial relations practices aimed at reducing industrial unrest or increasing productivity.25
Characteristics of the home product market. An important factor is the extent of the home
product market26 an issue that was discussed in Chapter 1. If domestic sales are large relative to
overseas operations (as is the case with many US firms), it is more likely that overseas operations will
be regarded by the parent firm as an extension of domestic operations. This is not the case for many
European firms, whose international operations represent the major part of their business. Lack of a
large home market is a strong incentive to adapt to host-country institutions and norms. There is evidence of change in the European context: since the implementation of the single European market in
1993, there has been growth in large European-scale companies (formed via acquisition or joint ventures) that centralize management organization and strategic decision-making. However, processes of
operational decentralization with regard to industrial relations are also evident.27
Management attitudes towards unions. An additional important factor is that of management attitudes or ideology c…
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