1 Introduction

In general, most of Multinational Corporations (MNCs) with worldwide operations face the same problem of standardisation vs. customisation. On the one hand, MNCs have to meet the need for reaping scale economies and cost reductions and on the other hand they have to be close to the customer and locally responsive to different cultures and tastes which usually raise costs. When it comes to human resource management (HRM), the question arises whether to transfer and apply centrally developed HRM policies and practices in all its operations or to delegate decision making authority to the subsidiaries enabling them to develop entirely decentralised approaches. A hybrid approach can be chosen by implementing central HRM policies that can be applied consistently worldwide and to give responsibility to its subsidiaries in e.g. culture sensitive areas which have to be adjusted to local circumstances.

This assignment focuses on training and development issues of a multinational manufacturing company with subsidiaries in 12 countries worldwide and 3,600 employees. It proposes areas where policies should be developed centrally and explains why it should be the central management’s responsibility (Chapter 2). Chapter 3 recommends a way to introduce and to manage adherence to the principles of a centrally developed training policy.

2 Centrally developed HRM policies

Trompenaars (1993) and Hofstede (1980) ranked different cultures on cultural dimensions (see Appendix) in order to show differences that exist by comparing countries or clusters on a worldwide basis. Especially their findings should be taken into account when a company considers transferring HRM policies and practices to foreign subsidiaries (Luthans, et. al., 1997).

In order to determine what can be easily transferred to subsidiaries and what has to be customised in order be successful, it is important to distinguish strategies, policies and practices when it comes to the question of cross-cultural transfers of HRM. In

- 2 -

general, it is easier to transfer HRM strategies and policies to host countries than HRM practices (Tayeb, 2005: 146). Tayeb (1998: 336) states that whereas multinational companies may find it feasible to have company-wide strategies and policies of a global or ethnocentric nature, they might find it necessary to be responsive to local conditions when it comes to HRM practices and therefore adopt a polycentric approach.

Tayeb (2005: 146) illustrates this issue with the following example:

Strategy: “We need to increase employees’ productivity” Policy: “We should give higher rewards to high performing employees, in order to implement this strategy” Practices: a) “In our Japanese subsidiary, performance appraisal should be discrete and based on team productivity records”

This example shows that, whereas strategies and policies developed at headquarters can be transferred to countries with different cultures, the implementation of corresponding practices requires the consideration of cultural differences and preferences and, thus, practices have to be adapted and modified (Tayeb, 2005: 146).

In the following sections, central training and development policies are considered in more detail which can be applied consistently wherever the company operates. Practices derived from these centrally developed policies will be customised to local cultures, education systems etc.

2.1 Training

Cultural issues have a very strong impact on training practices in different countries. In countries where power distance is low (e.g. USA or Sweden), relationships between trainers and trainees are more egalitarian, they use first names, and trainees fell free to challenge what the trainer says. Malaysia, for instance, ranks high on power

- 3 -

distance and, thus, trainers receive more respect. Trainees use surnames and titles and the trainer is regarded as an expert and should not be questioned. (Treven, 2006: 122). Notwithstanding some cultural differences, centrally developed training policies can be applied consistently worldwide.

Overall education policy

Headquarters should define an overall education policy which is applicable to all subsidiaries worldwide. This policy provides a general framework for all training issues and lays down guidelines such as the company’s promise to support everyone who wants take courses of study or who is willing to develop himself. With regard to training and study programs, the policy should require that, for instance, qualification programs offered by local institutions have to lead to nationally recognised qualifications. Further, employees planning to take part in courses offered by external institutions have to demonstrate or to prove that the course has a link to the business or to the company but not necessarily to the current job since the company also fosters promotion opportunities and gives employees the chance to train for higher level jobs. (Tayeb, 1998)

Another central policy could be the determination of a fixed number of annual training days granted to each employee. If the company agrees to pay for a defined study course or training program it should also audit the quality of the outcomes by testing the participants. Moreover, financial issues such as the allocation of budgets for training purposes should be centralised. (ibid)

Further, the overall education policy should define which skills, competences and abilities each group of employees has to possess. These sets of skills are linked to salary grades. If employees lack significant skills, subsidiaries are responsible for choosing the right and most suitable training method.

For instance, in countries such as Mexico which are favourable due to its cheap labour, the need for training is more important than in other countries. Nissan devoted more emphasis to the training of Mexican workers compared to others because they were resistant to high technology and lacked knowledge and discipline. The effectiveness of training was enhanced by Spanish speaking trainers. (Luthans, et. al., 1997: 194)

- 4 -

Hence, central HRM defines “what has to be known” and subsidiaries are responsible for “how will it be delivered”. This concept will be explained in more detail in Chapter 3.

The reason for centralising this policy is the securing of several standards ensuring that all employees are motivated to educate and that training methods and national study programs fulfil an acceptable quality and are linked to the company’s operations. The fixed number of training days ensures that every employee takes part in courses and keeps his knowledge up-to-date.

Distance learning programs

The central HRM should develop distance learning programs that detail specific technical information and know-how which is necessary to have for manufacturing products at all operations. These programs should be in writing form for blue-collar workers since they might not have IT knowledge. E-learning platforms should be offered to white-collar workers because they are using computers permanently.

The development of distance learning programs should be centralised in order to exploit scale economies by offering a standardised program to all employees worldwide. Assuming that the manufacturing process of products is likely to be similar in all operations, there is almost no need to be locally responsive. Expatriate trainers are responsible for translating these programs into local languages (see Chapter 3).

Motivating corporate culture and philosophy

Headquarters should create a culture and philosophy that encourages continuous learning. For example, central policies can be developed which determine how to foster advanced training and further education. Congratulations from headquarters after finishing successfully and a policy that states that the company pays for voluntary training programs could motivate employees. Further, central development opportunities and paths could be predefined. For instance, employees completing a study course successfully are affiliated to a pool of employees. If superior positions are vacant, pool members are promoted and get a better job.

- 5 -