International Business Ethics and HRM• Especially problematic when multinationals operate in host countries that have: Different standards of business practice Economically impoverished Inadequate legal infrastructure Governments are corrupt, and Human rights are habitually violated
Contd.• Three main responses to the question: – The ethical relativism believes that there are no universal or international rights and wrongs, it all depends on a particular culture’s values and beliefs - when in Rome, do as the Romans do. – The ethical absolutism believes that when in Rome, one should do what one would do at home, regardless of what the Romans do. This view of ethics gives primacy to one’s own cultural values. – In contrast, the ethical universalism believes that there are fundamental principles of right and wrong which transcend cultural boundaries and multinationals must adhere to these fundamental principles or global values.
WORLD OF WORRY Bribery and corruption top the list of the most frequent ethical problems encountered by international managers. The World Bank estimates that about $80 billion annually goes to corrupt government officials.
RULE OF ETHICS• Universal ethical principles can be seen in the agreements among nations who are signatories to: The United Nations Declaration of Human Rights The OECD Guidelines for Multinational Enterprises (adopted by the Organization of Economic Cooperation and Development) The Caux Roundtable Principles of Business• They indicate the emergence of a trans-cultural corporate ethic and provide guidelines that have direct applicability to a number of the central operations and policies of multinationals including the HRM activities of staffing, compensation, employee training and occupational health and safety.
Continued… US Foreign Corrupt Practices Act, 1977 The United Nations adopted the UN Declaration Against Corruption and Bribery in International Commercial Transactions, in December 1996. Prevention of Corruption Act, 1988 (INDIA)
Enforcement of Codes of Conduct• The attitudes of senior management play a crucial role in developing, implementing and sustaining high ethical standards.• HR professionals can help multinationals to institutionalize adherence to ethics codes through a range of HR activities including training and the performance–reward system
The Role of HR in implementing Corporate Ethics Programs HR has a special role to play in the formulation, communication, monitoring, and enforcing an enterprise’s ethics program. The 2003 SHRM/ERC survey found that 71% of HR professionals are involved in formulating ethics policies for their enterprise. 69% are a primary resource for their enterprise’s ethics initiative. However, the SHRM respondents did not regard ethics as the sole responsibility of HR.
Continued… HR is well positioned to make an important contribution to creating, implementing and sustaining ethical organizational behavior within a strategic HR paradigm. key factors for integrating responsibility for ethics into all aspects of organizational life: expertise in the areas of organizational culture, communication, training, performance management, leadership, motivation, group dynamics, organizational structure and change management When recruiting and selecting expatriates, ability to manage with integrity could be a job-relevant criterion.
Continued… The pre-departure training of expatriates and the orientation program should include an ethics component. This might include formal studies in ethical theory and decision making as well as interactive discussion and role playing around dilemmas which expatriates are likely to encounter. In designing training programs to meet the challenges of multinational business, HR professionals must raise not only the issue of cultural relativities but also the extent to which moral imperatives transcend national and cultural boundaries. Insufficient attention may result in unacceptable ethical compromises.
Mode of Operation and HRM Emphasis on IJVs Contractual modes such as licensing and management contracts present challenges for IHRM that have yet to be fully identified and explored International projects often involve host-government agencies and present specific HR challenges
Ownership IssuesSmall and medium-sized firms (SMEs): International activities place stress on limited resources especially staff Key individuals often represent the SME’s stock of international competence Retaining key staff critical Converting tacit knowledge into organizational knowledge a challenge
Ownership IssuesFamily-owned Firms: Not just a sub-set of SMEs Management succession presents special HR planning concerns The globalization of family-owned firms has been a remote topic in international business studies
Ownership IssuesNon-Government Organizations: As active internationally as for-profit firms, yet receive less attention, e.g. Red Cross These organizations share similar management and HR concerns Often operate in high risk areas of the globe Anti-globalization rallies and protest Global terrorism
Safety, Security & Counter-Terrorism In-facility emergency and disaster preparedness In-facility Security Industrial espionage, theft and sabotage Cyber-terrorism Out-of-facility fire and travel Risks.
RECENT TRENDS @ 2012 Managing talent in a rightsizing environment Social Media: Blurring the line between real and virtual Talent analytics and predictive modelling Coaching will define talent management Web software & cloud computing, changing HR technology landscape Boundary less engagement
Continued… Employee as volunteers Career direction Owning the talent supply chain Emergence of RPOs Exclusive inclusion HR transformation