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Copy of Week 3 - Convergence and Divergence of HRM

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Jawad Ahmed

on 11 November 2014

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Transcript of Copy of Week 3 - Convergence and Divergence of HRM

Cultural approach – Considering Hofstede’s, Trompenaar’s and House et al’s work. Considering differences such as Power distance, uncertainty avoidance, individualism & masculinity. Cultural differences influence the way people behave in organisations.


Institutionalist approach – Business environment is socially constructed. Tradition and history is important. Different national systems will impact. Can be often disregarded as ‘too simplistic’
Divergence approach to HRM (1)
International HRM Holborn College
International HRM Holborn College

Question:
What benefits and disadvantages are there to International companies in converging or diverging their IHRM practices?
Some evidence of attempted Convergence through use of IHRM in MNC’s eg. Flexibility, Role of line managers, Training & Development, TQM initiatives, empowerment.

Convergence trends are modified by distinct national differences leading to Divergence.

Legislation, custom and practice play an important part in the style of HRM in different countries leading to Divergence from convergent HR practices.
Convergence or Divergence (1)
International HRM Holborn College

IHRM divergence where HR systems and practices are distinctly different to those of the parent company and region, taking on the host nations cultural or the business’s institutional influences.

Divergence Approach to HRM (2)
International HRM Holborn College
Movement away from common practices toward new practices diverse from the original ones.
or:
Convergence with crossover, where practices intersect with similarity at certain points and in others more diverse.
Can also have:
Convergent ‘trends’ over a period time masking an underlying diversity of practices.
Divergence Introduction
International HRM Holborn College
International firms may convergence approach for their international operations.

IHRM convergence where HR systems and practices are broadly similar to those of the parent company and other companies in parent company region. Globalisation encourages convergence of HR for international firms.
Convergence approach to IHRM practices
International HRM Holborn College
International HRM Holborn College
Convergence
International HRM Holborn College
Characteristics of MNC’s likely to diffuse:
Country of origin (as discussed)
Nature of the international management structure – Domestic or International or global structure – Matrix can help diffusion
How growth has taken place – buying subsidiaries means inherent practices and less diffusion
International HR Concept –
Diffusion of HR practises (6)
Marxist Theory:
Capitalists exploit labour to extract surplus values
The power relationship between employers and workers is the focus
Capitalism will collapse because too many goods will be made in the search for profit
However, capitalism has had problems in the credit crunch/recession – is Marx right?
Convergence Introduction (3)
International HRM Holborn College
Ritzers paper: McDonaldisation – A broad reference to the influence of the consumer brand names instantly recognisable in virtually every country in the world today.

‘Indigenous’ industries, habits and culture are rapidly being driven aside or even to extinction by the juggernaut of the world capitalist economy dominated by a few relatively powerful interests
Convergence Introduction (2)
International HRM Holborn College
Main notion: As nations achieve similar levels of economic development they will become more alike

Kerr et al suggested:
Common to all industrial society is rapid changes in science & technology, methods of production, occupational mobility, continual training, formal education, highly differentiated workforce, urban areas as centres of economic activity, Govt. to create a ‘web of rules’.
Convergence Introduction
International HRM Holborn College
International HRM Holborn College
The process of diffusion:
Managerial hierarchies can lead to ‘formal directives or edicts’ on practices to be adopted at plant level
Also ‘informal ways of influence’ – mobility of key staff across the company
Creating similar ‘Corporate Culture’ to that of the organisation in the parent country
Transnationals have ‘Networks of actors’ sharing expertise and knowledge
International HR Concept –
Diffusion of HR practises (7)
International HRM Holborn College
National business systems effect on HR diffusion

Depends on…. dominance
Economic strength of parent country
Place in a hierarchy of economies

Eg. US led systems of pay, appraisal, employee development & Japanese lean production and Kaizen systems diffused

Reverse-diffusion can occur for weaker economies
International HR Concept –
Diffusion of HR practises (5)
International HRM Holborn College

National business systems effect on HR diffusion

Depends on…. dominance
Economic strength of parent country
Place in a hierarchy of economies

Eg. US led systems of pay, appraisal, employee development & Japanese lean production and Kaizen systems diffused

Reverse-diffusion can occur for weaker economies
International HR Concept –
Diffusion of HR practises (4)
International HRM Holborn College

Training very dependant on such factors (e.g. Germany) therefore diffusion is constrained. More employer-led the easier to diffuse.

Work Conditions - Shift patterns, pay, hours etc. can be more diffusible if there are weak unions and deregulated countries.

Note. Although practices may be initially diffused they can be mutated into a different form in the new environment
International HR Concept –
Diffusion of HR practises (3)
International HRM Holborn College
Diffusion of employment practices:
Are some employment practices more diffusible than others?
In what ways are they amended to fit a new environment?

Depends on
Legal obligations on firms
Institutional constraints and values
Cultural expectations and assumptions
International HR Concept –
Diffusion of HR practises (2)
Week 3 The International HR Concept – Transfer of HR practices in MNC’s and convergence or divergence
Holborn College
Module Leader: John Howell

International Human Resource Management

International HRM Holborn College
Business systems & Diffusion of practice
The process of diffusion
Models and key features of IHRM with Diffusion
Models and diffusion (Guest’s 1997)
Convergence - Kerr and Ritzer
Convergence approach to IHRM
Divergence
Divergence approaches to IHRM
Convergence and Divergence decisions
What have I learnt in this session?
Diffusion of practices

Convergence of IHRM practices amongst firms and a Convergence approach to IHRM

Divergence of IHRM practices amongst firms and a Divergence approach to IHRM
What have I learnt in this session?
international HRM Holborn College
International HRM
International HRM Holborn College
Divergence
International HRM Holborn College
Balancing the standardization and localisation of HRM in MNCs
International HRM Holborn College
Business systems & Diffusion of practice
The process of diffusion
Models and key features of IHRM with Diffusion
Models and diffusion
Convergence - Kerr and Ritzer
Convergence approach to IHRM
Divergence
Divergence approaches to IHRM
Convergence and Divergence decisions
What will I learn in this session?
The International HR Concept – Transfer of HR practices in MNC’s and convergence or divergence
Holborn College
International Human Resource Management
Diffusion
HR practices
of organisation in
‘Host country’
HR practices
of organisation in
‘Host country’
Diffusion
HR Practices
of the organisation in
‘Parent Country’
International HRM Holborn College
Diffusion of IHRM
International HR Concept –
Diffusion of HR practises
International HR Concept –
Diffusion of HR practises (2)
Full transcript