INTERNATIONAL HUMAN

RESOURCE MANAGEMENT

Ethical Issues & Policies

June 11, 2008 1

 Impotant Issues in IHRM
There are several important issues in IHRM which
organizations which are operating at the international
level must face. These include, for example:

– Attitudes of Employees and Work Ethics

– Recruitment & Selection Policy
– Compensation Policy
– Training and Development Policy
– Ethical Issues (e.g. bribery and corruption) & Corporate Social
Responsibility
– Dealing with the host country‘s Bureaucracy and Government
– Host country‘s Legal Framework (relating to Labour etc.)

June 11, 2008 2

 Attitudes of Employees and Work Ethics
 Employee attitudes to work – and the level of motivation displayed –
vary, depending on country, culture and industry

 In some places and industries, employee motivation and loyalty to

the organization can be comparatively quite high (and job turnover
low), in other places and industries, motivation to perform work
tasks may be comparatively lower (and job turnover correspondingly
higher)

 In developing countries, organizations which operate at the

international level are often faced with the situation that local
executives and managers lack decision-making skills or are
hesistant to make independant decisions or take the initiative
(cultural reasons)

June 11, 2008 3

 Recruitment & Selection Policy
Compensation Policy
 Organizations will try to recruit and select the best
possible employees for their available staff positions

 Salary is a very important factor in attracting high quality

employees; other factors such as the work environment
and job activities, training and development programmes
and measures, and career prospects in the organization
are other important considerations

 In situations where there is a shortage of highly-qualified

skilled labour and a growing demand for it (e.g. China,
India), the compensation policy will have to be modified
accordingly and possibly frequently in order to attract
and/or retain employees
June 11, 2008 4
 Training & Development Policy
 Training and Development of employees is a very important tool of
human resource management and a means of realizing the
organization‘s objectives, goals and mission

 Many organizations are reluctant to invest considerably in training

and development programmes because they apprehend a
„poaching“ of personnel by other organizations which would reap
the benefits for free (observed in developing countries where FDI is
flowing to and copmpetition for skilled and qualified human
resources is increasing)

 Training skills are especially important in relation to international

joint ventures because here the potential for conflict is greater due
to the larger number of organizations involved

June 11, 2008 5

 Dealing with Bureaucracy in Host Countries
• Dealing with bureaucracy can be a very tricky issue for
organizations which are operating internationally

• Interaction between organizations and local bureaucracies opens

the way for unethical practices such as payment of bribes in order to
get „things moving in the right direction“ for the organization, e.g.
granting of permits and licenses, and other requisite formalities

• The Berlin-based NGO Transparency International (

www.transparency.org) publishes a yearly Corruption Perception
Index for bureaucracies across the globe (Pakistan 2005: 144 out of
158)

• To deal with the scourge of corruption in host countries, the services

of local employees who „know how to get things done“ are
frequently availed. Often, organizations first enter into joint ventures
before forming subsidiary units to reduce their risks in the face of
rampant corruption
June 11, 2008 6
 Ethical Issues & Corporate Social
Responsibility (1)
 Ethics and corporate social responsibility are differently
interpretated, complex and controversial subjects in the context of
organizations which are operating internationally in diverse social,
economic, political, cultural and legal environments

 Ethical issues and considerations arise in particular when the

business practices in the host country differ markedly from those in
the home country

 Three types of „ethical responses“ have been identified: ethical

relativism (the ethical standards in the host country should be
followed), ethical absolutism (the ethical standards of the home
country should be followed), and ethical universalism (this presumes
that there is a universal ethical standard of right and wrong which
transcend cultural boundaries and that these must be followed by
the organization (distinction between morally wrong and culturally
different)
June 11, 2008 7
 Ethical Issues & Corporate Social
Responsibilty (2)
 Corporate Social Responsibility is basically about an organization
promoting non-economic objectives, i.e., instead of just focussing on
maximizing value for shareholders, organization (specifically
business corporations) attempt to play the role of „good citizens“,
balancing the interests of shareholders with those of society at large

 Corporate Social Responsibility can be a complex issue at the

domestic level, but at the international level it takes on a much
larger significance

 Areas where organizations operating internationally can

demonstrate their social responsibility include, for example,
observance of basic human rights, adoption of adequate workplace
working conditions and health and hygiene standards, payment of
adequate wages and salaries, equal employment opportunities,
avoidance of child labour, adequate education and training, allowing
unionization and protection of the environment
June 11, 2008 8
 Ethical Issues & Corporate Social
Responsibility (3)
 Ethical issues and corporate social responsibility are closely related
to the human resource function in organizations which are operating
internationally and in diverse contexts:

 Minimize the exposure of employees to corrupt conduct by assisting in

the development, publication, and implementation of appropriate codes
of conduct
 Ensure training programmes cover areas which are of ethical concern
(e.g. bribery, human rights, justice, and the common good)
 Align performance appraisal and compensation systems so that they
support the ethical stance taken
 Be conversant with the type of requests that may be made of staff
operating internationally, and provide them the necessary training so
that they have the requisite negotiating skills to handle possible problem
situations
 Ensure that employees understand the difference between corrupt
bribery payments, gifts and permissable facilitation payments
June 11, 2008 9