Dia 1

IHRM trends and future

Introduction

•international business ethics

•mode of operation

•SMEs

•family-owned firms

•NGOs.

•short discussion of theoretical developments andresearch issues in the field of IHRM

International business ethicsand HRM (1)

•Operationalization of MNEs ethics program adds layersof complexity

–the existence of universal ethical standards and global values?

–Problematic when operations in host countries

•have different standards of business practice

•are economically impoverished

•have inadequate legal infrastructure

•where governments are corrupt

•where human rights are habitually violated.

•The question of ethical relativity arises not only in the context ofdifferent home- and host-country employment practices but also inthe central operations and policies of multinationals.

International business ethicsand HRM (2)

•Ethical relativism or global values?

–Global organizations face a challenge: should they apply theirown values everywhere they do business, irrespective of thecultural context and standard of local practices?

–For the ethical relativist, there are no universal or internationalrights and wrongs, it all depends on a particular culture’s valuesand beliefs.

–Unlike the relativist, the ethical absolutist (or imperialist) believesthat when in Rome, one should do what one would do at home,regardless of what the Romans do. This view of ethics givesprimacy to one’s own cultural values.

(cont.)

International business ethicsand HRM (3)

•Ethical relativism or global values? (cont.)

–existence of universal ethical principles seen

•In the United Nations Declaration of Human Rights

•In a number of international accords such as the Guidelines forMultinational Enterprises adopted by OECD

•the Caux Roundtable Principles of Business.

•moral authority of transnational codes?

•emergence of a transcultural corporate ethic?

 Give guidelines that have direct applicability to a number of thecentral operations and policies of multinationals including the HRMactivities of staffing, compensation, employee training andoccupational health and safety.

International business ethicsand HRM (4)

•Ethical relativism or global values? (cont.)

–claim that there are global values and universal principles thatshould be followed in international business vs the view ofsituations where variations in business practice are permissible.

–moral free space in a world of universal moral norms.

Self-regulation initiatives:international corporatecodes of conduct

•The need for international accords and corporate codesof conduct grown commensurately with the spread ofinternational business.

•Translating ethical principles and values into practice inthe international business domain is an enormous taskin the absence of a supranational legislative authority.

•A number of mechanisms to facilitate the incorporationof ethical values into international business behaviorhave been suggested.

(cont.)

Self-regulation initiatives:international corporatecodes of conduct (cont.)

–the Caux Roundtable Principles for Business Conductdeveloped in 1994 by Japanese, European and North Americanbusiness leaders meeting in Caux, Switzerland.

–first international ethics code for business

–aimed to set a global benchmark against which individual firmscould write their own codes and measure the behavior of theirexecutives.

–two basic ethical ideals: kyosei and human dignity.

Self-regulation initiatives:international corporatecodes of conduct

•The Japanese concept of kyosei means living and working togetherfor the common good – enabling cooperation and mutual prosperityto co-exist with healthy and fair competition.

•Human dignity = sacredness or value of each person as an end, notsimply as the means to the fulfillment of others’ purposes or evenmajority prescription.

•Aim to operationalize the twin values of living and working togetherand human dignity by promoting free trade, environmental andcultural integrity and the prevention of bribery and corruption

•Original in Minnesota principles developed by the Minnesota Centerfor Corporate Responsibility in the USA

Self-regulation initiatives:international corporatecodes of conduct

•Johnson and Johnson’s Credo meets the standards ofthe Caux Principles, the UN’s declaration of fundamentalhuman rights and the OECD Guidelines for MultinationalEnterprises.

•A common difficulty with codes of ethics is enforcement.

•The attitudes of senior management play a crucial role indeveloping, implementing and sustaining high ethicalstandards.

•HR professionals can help multinationals toinstitutionalize adherence to ethics codes through arange of HR activities including training and theperformance–reward system.

Government regulation: new globaldevelopments on thecriminalization of bribery

–Bribery and corruption top the list of the most frequent ethicalproblems encountered by international managers.

–The World Bank estimates that about US $80 billion annuallygoes to corrupt government officials.

–Bribery involves the payment of agents to do things that areinconsistent with the purpose of their position or office in order togain an unfair advantage.

–Bribery can be distinguished from so-called gifts and ‘facilitating’or ‘grease’ payments. The latter are payments to motivateagents to complete a task they would routinely do in the normalcourse of their duties

–While most people do not openly condone bribery, many arguefor a lenient approach based on the view that bribery isnecessary to do business (the ethical relativist’s argument).

Bribery

–undermines equity, efficiency and integrity in the public service

–undercuts public confidence in markets and aid programs

–adds to the cost of products and

–may affect the safety and economic well-being of the generalpublic.

Bribery

–Internationally wide movement to criminalize the practice of bribery.

–In 1977, the USA enacted the Foreign Corrupt Practices Act (FCPA) toprohibit US-based firms and US nationals from making briberypayments to foreign government officials.

–In addition, payments to agents violate the Act if it is known that theagent will use those payments to bribe a government official.

–The Act was amended in 1988 to permit ‘facilitating’ payments butmandates record-keeping provisions to help ensure that illegalpayments are not disguised as entertainment or business expenses.

–1996, the UN adopted the United Nations Declaration AgainstCorruption and Bribery in International Commercial Transactions, whichcommitted UN members to criminalize bribery and deny tax deductibilityfor bribes

International business ethicsand HRM (cont.)

•Government regulation: new global developmentson the criminalization of bribery (cont.)

–Given the seriousness of offences against the OECDConvention, it is imperative that enterprises involved in globalbusiness take active steps to manage their potential exposure

–the OECD Convention currently addresses the supply side ofcorruption in the public sector,

–HR professionals have an important role to play in instituting astrategic plan for legal compliance and developing corporatecodes for voluntary compliance.

–HR professionals can provide training in understanding thedifference between corrupt bribery payments, gifts and allowablefacilitation payments and developing negotiation skills to handleproblem situations that may arise in sensitive geographicalregions and industries.

–HR professionals can also implement performance managementprograms to support efforts to reduce corruption.

International business ethics andHRM (cont.)

Table 11-1: World corruption index

The emerging role of HR inoperationalizing corporate ethicsprograms

•the HR role

•of ethical stewardship

•to play in the formulation, communication,monitoring and enforcement of an enterprise’sethics program.

•along with finance and law appropriate locus ofresponsibility for an enterprise’s ethics program

•71 per cent of HR professionals are involved informulating ethics policies for their enterprises and69 per cent are a primary resource for theirenterprise’s ethics initiative.

The emerging role of HR inoperationalizing corporate ethicsprograms

•HR is well positioned to make an important contributionto creating, implementing and sustaining ethicalorganizational behavior within a strategic HR paradigm.

•HR professionals have specialized expertise in the areasof organizational culture, communication, training,performance management, leadership, motivation, groupdynamics, organizational structure and changemanagement – all of which are key factors for integratingresponsibility for ethics into all aspects of organizationallife.

•At the same time, the findings suggest that responsibilityfor ethical leadership should cut across all functions andmanagerial levels, including line and senior managers.

Challenges for the HR function ofthe multinational firm

•ethical issues more complex because of the different social,economic, political, cultural and legal environments in whichmultinationals operate.

•Consequently, multinationals will need to develop self-regulatorypractices via codes of ethics and behavioral guidelines forexpatriate, TCN and local HCN staff.

•Firms which opt consciously or by default to leave ethicalconsiderations up to the individual not only contribute to thepressures of operating in a foreign environment (and perhapscontribute to poor performance or early recall of the expatriate), butalso allow internal inconsistencies that affect total globalperformance.

Challenges for the HRfunction of the MNE

•When recruiting and selecting expatriates, their ability tomanage with integrity could be a job-relevant criterion.

•The pre-departure training of expatriates and their orientationprogram should include an ethics component: formal studies inethical theory and decision making as well as interactivediscussion and role playing around dilemmas which expatriatesare likely to encounter.

•In designing training programs to meet the challenges ofmultinational business, HR professionals must raise not onlythe issue of cultural relativities but also the extent to whichmoral imperatives transcend national and cultural boundaries.

Challenges for the HRfunction of the MNE

•It is also important for the HR department to monitor thesocial (ethical) performance of its expatriate managers toensure that as managers become familiar with thecustoms and practices of competition in the host country,they do not backslide into the rationalization that‘everybody else does it’.

•The development of a truly international community is stillin its infancy

•there is not yet agreement about what should constitute aglobal ethic to resolve the conflicts which arise in such acommunity.

•there is an emerging consensus about core humanvalues which underlie cultural and national differencesand the content of guidelines and codes which help tooperationalize the ethical responsibilities ofmultinationals.