Importance of Culture in Human Resource Management strategies of Multinational companies
Labor Relations
An important aspect crucial for Human resource management in multinational corporations is effective labor relations because of their direct correlation to “labor costs, firm productivity, profits and the level of sustainable competitive advantage” (Katz and Stanley, 1997). Labor relations differ nationally and regionally which necessitates different strategies to motivate workers from different cultures and communities. International labor relations entail all the labor relations “actors” including “employers and mangers; workers and their unions; and the government” (Dunlop, 1958; Katz and Stanley, 1997). The national variance of labor relations could be a problem for multinational managers because if labor and the management do not share harmonious relations the cost of conducting business will elevate (Hodgetts & Luthans, 1997).
Labor practices across borders
Labor relations greatly impact the performance of multinational corporations and are produced due to differences in “culture, economies, politics, and laws” in different regions and countries. Understanding the differences of governmental involvement in labor relations of different countries is necessary for managers to “fit” the firm in the appropriate environment which directly facilitates the alignment of the organization’s “strategy, structure and human resources” (Katz and Stanley, 1997). There are several differences in the labor relations of countries for instance the U.K., .S. and Japan.
Labor relations in the United Kingdom
Unions are powerful in the U.K. and strikes are common as compared to the United States. However, the labor agreement in the U.K. is not a legally binding document but only a document to create understanding of the terms and conditions of employment (Katz and Stanley, 1997). The UK government is “les intrusive” and the labor agreement is not enforceable in a court of law as a result of which strikes could be prolonged and could impact the productivity of goods and services (Hanami & Blanpain, 1987). Violation of the agreement is not a punishable offense and bargaining structure is on regional, local or industrial based.
Labor relations in the United States
Labor relations in the U.S. are based on collective bargaining and include “wages, hours and conditions of employment” (Katz and Stanley, 1997). Governmental intervention is at the “macro industry and enterprise levels” so that the government makes important decisions and policies which impact labor relations, and increases political intervention in labor policies and relations.
Labor relations in Japan
The unions of Japan are weak and most unions and organizations share a collaborative relation (Katz and Stanley, 1997). Government intervention is not very strong and disputes are solved “amicably” sometimes with the help of “third party mediators”. The most crucial impact of the government is at the capital flow of the Japanese economy at the macro level which is a major factor in ensuring the productive economy of Japan (Uno, 1987). Most Japanese unions function as autonomous units (Brown, 1989) and Japan differs from European countries in its industrial democracy which is “not closely tied to political philosophy” but more stressed on “operating philosophy” which is a crucial factor in achieving “higher worker performance” (Katz and Stanley, 1997).
Thus, there are several national and regional factors which impact the strategies of multinational corporations which is why the regional dimension is becoming extremely important. Multinational companies are required to “think global and act local” by integrating the specific cultural practices of the country in which they choose to function, as this is deciding factor in determining the success or failure of a businesses as can be seen from the two case studies. Additionally, knowledge of labor relations of different countries and regions is vital to multinational corporations because labor relations could hinder organizations in 3 crucial ways (Katz and Stanley, 1997); by impacting the wage levels of workers and employees which in turn has a direct impact on labor costs which could become noncompetitive; by restricting the ability of organizations to modify levels of employment as they consider appropriate; and by obstructing the global assimilation of Multinational Corporation functions (Dowling & Schuler, 1991).Therefore, organizations are required to be aware of the political dynamics involved in the labor relations of companies since this plays a vital role in the costs and productivity of the business.