A Framework for Assessing International Labor Relations: What Every HR Manager Needs to Know

By Katz, Jeffrey P.; Elsea, Stanley W. | Human Resource Planning, December 1997 | Go to article overview

A Framework for Assessing International Labor Relations: What Every HR Manager Needs to Know


Katz, Jeffrey P., Elsea, Stanley W., Human Resource Planning


Rapid changes in forces affecting the global workforce, differences between countries related to labor-management relations, and increases in the incidence of multinational corporate (MNC) activity have resulted in significant attention to international human resources management (Overman, 1994). Not only are labor relations affected by domestic change, but the impact of global production has added another complex dimension for those firms choosing to compete internationally. Innovative global competitors, such as BSN Group, have developed approaches for effective labor-management relations at the international level. However, even innovators continue to have concerns over loss of managerial flexibility and authority (Campbell, 1989).

International labor relations is concerned with all aspects of the employment relationship in a global context (Poole, 1986a). In every industrialized nation there are three labor relations "actors" with varying levels of common interests: employers and managers; workers and their unions; and the government (Dunlop, 1958). Recently, international joint ventures have begun to replace the wholly owned subsidiary as the most widespread form of U.S. multinational investment (Shenkar & Zeira, 1987). These joint ventures demand heightened attention to labor relations since the constituent owners of the joint venture may have significantly different prior experiences with labor relations in their home countries. The relative lack of familiarity of MNC managers with local industrial and political conditions have oftentimes needlessly worsened conflicts that a local firm could have resolved because of its familiarity with the host country and its labor sector (Prahalad & Doz, 1987).

The fact that labor relations vary greatly from country to country is particularly troublesome to MNC managers who are responsible for the motivation of workforces in two or more countries. Several factors underlie international differences in labor relations, including:

* The impact of technology on union development in the country;

* The impact of local government regulation;

* Ideological divisions within trade union movements;

* Influence of religious organizations on trade union development;

and

* Managerial strategies (Poole, 1986b).

These factors have resulted in significant differences in labor-management relationships. There are, for example, industrial unions representing all grades of employees, craft unions which are based on skilled occupations across industries, conglomerate unions representing members in more than one industry, and general unions which are open to all employees in the country. This diversity, as depicted by Exhibit 1, is a major influence on the collective bargaining process in various countries.

Since labor relations vary greatly from country to country, MNC managers find the human resource approach, or strategy, used in one country to be ineffective or of limited value in another country (Prahalad & Doz, 1987; Bean, 1987). However, labor relations are important because they directly determine labor costs, productivity, and ultimately, profits. If labor and management do not have good relations, the cost of doing business will be higher than otherwise (Hodgetts & Luthans, 1997). Therefore, given the rapidly changing global marketplace and the differences between the expectations of organized labor and management of MNCs, the management of international labor relations will be a major challenge facing MNC managers in the 21st century (Williams, 1994).

The objectives of this paper are threefold. First is the presentation and discussion of comparative labor relations models which track the globalization trend over the past 35 years. Second is the presentation of a comparative framework for the analysis of international labor relations, including the primary factors for comparing labor relations, and examples of labor relations in three countries. …

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