11-4c Comparative Labor Relations

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Leaders of the Ford Motor Company and the United Autoworkers Union shake hands on reaching a new, collective bargaining agreement.

labor union

a formal organization representing a group or groups of employees

collective bargaining agreements

a contract comprehensively setting forth employee terms and conditions of employment at a given workplace or group of workplaces relatively powerless vis-à-vis their employer and thus are potentially subject to unfair treatment. However, if these employees can group together and form a labor union, or a formal organization representing a group or groups of employees, these employees collectively may have the ability to stand toe-to-toe with the employer.

The primary goal of labor unions is to engage in negotiations with employers with an aim toward reaching collective bargaining agreements, or agreements comprehensively setting forth employee terms and conditions of employment at a given workplace or group of workplaces. Collective bargaining agreements or contracts typically establish work policies like rates of pay, amounts of vacation time, and seniority rights of employees. They typically last three years, after which a new round of negotiations results in a new contract. Collective bargaining agreements also typically have extensive grievance procedures whereby employees with complaints regarding the administration of the labor contract can have their grievances effectively heard.

As pointed out earlier in the chapter, relations between labor and management are governed and conducted very differently around the globe. In Canada, as discussed earlier, labor relations are primarily regulated not by the national government, but rather by provincial governments like the Province of Ontario. In contrast, in the United States virtually all private sector labor relations activities are regulated by the federal government—specifically by the National Labor Relations Board (NLRB), which “is an independent federal agency created by Congress in 1935 to administer the National Labor Relations Act, the primary law governing relations between unions and employers in the private sector. The statute guarantees the right of employees to organize and to bargain collectively with their employers, and to engage in other protected concerted activity with or without a union, or to refrain from all such activity.” Canadian provincial regulations generally make it much easier for employees to form and join unions and harder for employers to replace workers who go on strike, than do federal regulations in the United States. Not surprisingly, labor unions have been considerably more successful in recent years in Canada than in the United States, and far more employees are covered by collective bargaining agreements in that country. Nevertheless, the relatively

pro-union nature of Canadian labor regulations pales in comparison to their counterparts in Scandinavian countries. In Sweden, for example, union membership and collective bargaining participation rates are over 71 percent, compared to less than 10 percent for private-sector workers in the United States.

Perhaps the most interesting labor relations system in the world exists in Germany. In Germany, multi-employer bargaining, or a situation where a number of employers join together to bargain with a given labor union, is much more common than in the United States. The most prominent feature of German labor relations, though, is codetermination, which actually allocates seats for employees on corporate boards of directors. In larger German companies (those with more than 2,000 employees), employees and unions are allowed to select one-half of the members of German corporate boards of directors or supervisory boards. This gives workers a direct say in corporate management far greater than in most any other country in the world.

Reality Che C k lO-4

Do you know anyone who is a member of a labor union? Does this union represent any workers in other countries?

multi-employer bargaining

negotiations in which a number of employers jointly bargain with a given labor union

co-determination

employee representation on corporate boards of directors

tives C e P s R al Pe C i H t e

Stranded by a Volcano

About five years ago, Iceland’s well-known Eyjafjallajkull Volcano had a major eruption resulting in the stoppage of all air travel to and from Europe for about a week and stranding thousands of air travelers. Indeed, more than 40,000 Americans were stranded in Great Britain alone. For those of the 40,000 plus stranded Americans that were members of a labor union and covered by a collective bargaining agreement, their jobs were likely still very secure when they got home. Most collective bargaining agreements, as noted above, have employee grievance procedures and also protect employees from discharge or discipline unless the employer has “good cause.” Taking any action against an employee missing work due to a natural disaster would almost definitely not fall into that category and be something the employee could thus “grieve” via the labor contract. But today, however, the vast majority of American workers are not covered by collective bargaining contracts/represented by labor unions. Instead, they are subject to the doctrine of “employment at will” that essentially says they can be fired or disciplined by their employer for any reason and at any time whatsoever. While one U.S. employment expert said she hope employers did “the right thing” under this “very compelling circumstance,” there was nothing illegal about employers firing/disciplining employees who didn’t show up to work because of the unprecedented Icelandic volcano, particularly given the fact that some employers may have been looking for excuses to down-size their workforces in any event.

Questi O ns

1) Why is not disciplining employees the arguable

“right thing”/ethical thing to do? Argue the opposite. April 20, 2010 Yahoo News, http://news .yahoo.com. 2) How does new technology, such as remote e-mail, laptop computers, Skype, and so forth, impact stranded employees in ways that didn’t exist twenty years ago?

Source: Liz Wolgemuth, “Why Stranded Workers Could Get Burned by Volcano”, April 20, 2010, Yahoo News, www.news.yahoo.com.

PaKos Photography/Alamy

The Eyajafalljokull Volcano in Iceland erupts.

Summary

The deployment and management of human resources on a global scale has become an increasingly important part of international business. Cultural differences around the world play a critical role in how international HRM is conducted, as do legal and regulatory contexts, such as a country’s rules regarding immigration. Offshoring and outsourcing involve critical corporate decisions to move an organizational function to another country via subcontracting a certain production function to a third party, or not. The market for human resources today is clearly a global one, with employers facing strategic decisions regarding where to hire and where to deploy employees.

These and related factors directly affect how employees are paid, evaluated, and trained in different countries throughout the world. For example, today it may be possible for companies to use the Internet to essentially “virtually staff” various operations. To the extent, though, that employees are physically moved to work in countries other than their native one, special compensation packages may be necessary. Moreover, employee training and development styles also differ in various countries. For example, training and development in the United States centers on the individual, while in Japan it focuses on the group. Moreover, performance appraisal systems vary widely in different national cultures.

In addition, there are considerable cultural differences in performance appraisal schemes throughout the world. In Mexico, for example, employers tend to be very gentle with respect to giving employees negative feedback. Also, there are different cultural norms throughout the world with respect to executive pay, even putting aside worldwide cost of living differentials.

In addition, international trade accords, such as NAFTA, have brought increased scrutiny in the United States with respect to the labor standards that exist in countries that are our formal trading partners. Finally, labor unions play a more prominent role in many countries around the world than they do in the United States. Germany, for example, is notable for its practice of having labor union officials directly representing workers on corporate boards of directors.

Key terms

outsourcing, p. 273 offshoring, p. 273 parent country nationals, p. 274 host country nationals, p. 274 third country nationals, p. 274 expatriates, p. 274 expatriate failure, p. 275 repatriation, p. 275 training, p. 275 development appraisal, p. 275 performance appraisal, p. 278 balance sheet approach, p. 279 labor union, p. 282 collective bargaining agreements, p. 282 multi-employer bargaining, p. 283 co-determination, p. 283

Chapter Questions

1. What are some of the potential problems global businesses face when they outsource or subcontract their manufacturing work to companies in other countries, for example, a

U.S. sneaker company outsourcing the manufacturing of its sneakers to a separate company in China or Vietnam? 2. What do you see as the pros and cons of using the Internet for the “virtual staffing” of given corporate operations? 3. Why is it often very difficult for supervisors, in any culture, to give employees a negative performance appraisal? 4. If you were president of the United States and trying to negotiate better labor standards for NAFTA at least from the U.S. perspective, what new provisions might you try and negotiate?

Mini Case: THE EXPANSION OF GLOBAL SEXUAL HARASSMENT

Some may be surprised to know that the implementation of laws prohibiting sexual harassment in the workplace is relatively recent, beginning with Title VII of the Civil Rights Act of 1964 in the United States. The global workplace has followed with many countries writing similar sexual harassment provisions into the law. Recently, global protection from sexual harassment has evolved dramatically.

Over the past two years, Hong Kong, India, Israel, Japan, Singapore, South Korea, and Vietnam have all passed provisions to prevent sexual harassment from occurring. Just this year, Israel expanded its sexual harassment law to include photographs, film, or recordings published without consent. Japan passed legislation to provide counseling to victims of sexual harassment. Singapore has gone as far as to criminalize the act of sexual harassment through the Protection from Harassment Act of 2014. Although the United States was perhaps the first to protect employees from sexual harassment in the workplace, this is now a right that employees can expect globally.

Questions:

1) How will the expansion of sexual harassment laws globally affect company policies and procedures? 2) How will companies handle the increase in possible lawsuits stemming from sexual harassment legislation?

Mini Case based on Ellen Pinkos Cobb, “Sexual Harassment Law Evolving Globally,” Society for Human Resource Management, December 3, 2014.

Should Employees or Labor Union Representatives Have the Right to Seats on Corporate Boards of Directors?

POInT COUnTerPOInT

As noted in the chapter, in Germany, labor unions have the right to appoint one-half of the members of corporate boards of directors or supervisory boards in large German corporations. In the United States, some collective bargaining contracts provide for a union representative (usually one out of fifteen or so board members) on corporate boards. The question is: Is having union/employee representatives on corporate boards of directors a good idea?

point Union and employee representation on corporate boards helps companies better deal with their employees. Employees’ voices are heard, and employees with such a voice are likely to be more sensitive to corporate needs for flexibility such as perhaps, the need to move some corporate operations to a lower-cost location. Employee representation of this kind puts corporations in better touch with the concerns of perhaps its most significant stakeholder group—its employees. COUnTerPOInT Corporations should primarily be managed for the benefit of their owners/shareholders, not for the single stakeholder group of employees. Union and employee representatives on corporate boards have an inherent conflict of interest in that they are seeking benefits for workers more than benefits for shareholders. To the extent that such representatives are on corporate boards, they should be there by way of the company’s consent as in a consensual labor contract, rather than by having the government force them to be included on the board as in Germany.

What Do You Think?

Which viewpoint do you support and why? Find several articles in nonpartisan publications that assess the effects of employee representation and/or the lack thereof.

interpreting global buSineSS newS

1) Various governments have recently been considering putting limitations on top corporate executive pay and/or taxing corporate executive bonuses very highly (for example, at a 70 percent tax rate). What are the implications of this on the market for top executive talent?

2) The United States is virtually the only country that permits employment-at-will. This means that in other countries employers may terminate for cause only. What kind of implications might this have on companies operating in the United States and abroad? 3) President Barack Obama recently issued an executive action granting nearly five million undocumented immigrants’ work authorization. What effects do you think this will have on the workplace in the United States? What global effects might this have? 4) The recent global economic downturn has caused many companies to cut back or consider cutting back their training and development budgets. What might the implications of such actions be, both in the short term and the long term?

portfolio projeCtS

explore Your own Case in Point: understanding the nature of Your Company After reading this chapter, you should be prepared to answer some basic questions about your favorite company. 1) Are any employees of your company represented by labor unions covered by collective bargaining agreements? Are any of these employees outside the United States? 2) Does your company have any operations in places with collectivist cultures like Taiwan,

South Korea, or Latin America? How are its performance appraisal and compensation packages in these locations different from those in countries with individualistic cultures like the United States and Britain?

3) Does your company employ expatriates in any overseas operations it might have? If so, what resources does the company provide to train expatriates before they go to the foreign location? Does the company also provide training or support for expatriates during the repatriation phase? 4) To what extent, or in what ways, does your company use the Internet in training and developing its employees?

develop an international strategy for Your own small Business: Hiring employees overseas Assume that eventually you will need to hire employees to work in operations in your target country. Identify the types of employees that might work best for you in these operations: host country nationals, parent country nationals, or third country nationals. Develop a plan to identify and recruit your employees and then provide them with needed training and development.

Chapter noteS

1 Thomas L. Friedman, The World Is Flat: A Brief History of the Twenty-First Century (New York: Farrar, Straus & Giroux, 2005). 2 OECD statistics (2008), www.oecd.org.statsportal. 3 R. Schwartz, “Job Losses Pose a Threat to Stability Worldwide,” New York Times (February 14, 2009), A1; OECD Statistics (2008), 30–37. 4 G. Hofstede, Culture’s Consequences: International Differences in Work-Related Values (Beverly Hills, CA: Sage Publications, 1984). 5 Greg Keller, “French Businesses Loath to End 35-Hour Work Week,” http://www.usatoday.com/news/world/2008-09-03-3294170250_x.htm (Associated Press, September 3, 2008). 6 Paul Saffo, “A Looming American Diaspora,” Harvard Business Review (February 2009), p. 27. 7 Stephane Fitch, “New Brittania,” Forbes Magazine (May 21, 2007), 136–138. 8 Max Ehrenfreund, “Your Complete Guide to Obama’s Immigration Executive Action,” Washington Post, www.washington.com (November 20, 2014). 9 Robert L. Minter, “Preparation of Expatriates for Global Assignments: Revisited,” Journal of Diversity Management 3 (Second Quarter, 2008), 37–42. 10 M. Gowan, S. Ibarreche, and C. Lackey, “Doing the Right Things in Mexico,” Academy of Management Executive 10 (1996), 74–81. 11 Mercer Cost of Living Survey, Worldwide Rankings, 2013, www.mercer.com. 12 M. Walker and M. Esterl, “Germany Weighs Executive-Pay Curbs,” Wall Street Journal (November 13, 2008), A6. 13 International Labour Organization, World of Work Report 2008: Income Inequalities in the Age of Financial Globalization (Geneva: International Labor Office, 2008), p. 17.

CH 12

Global Marketing

matt griggs/Alamy © C Miller Design/Getty Images

After studying this chapter, you should be able to:

LO-1 Distinguish between marketing research and marketing intelligence systems.

LO-2 Distinguish between standardization and adaptation.

LO-3 Describe how new products are developed and how existing products are managed for international markets.

LO-4 Explain the four different methods of promoting products marketed internationally and provide some advantages and disadvantages of each.

LO-5 Define channels of distribution and physical distribution and indicate the role of each of these for marketing products internationally.

LO-6 Discuss the objectives and decisions involved in international pricing.

LO-7 Discuss aspects of customer service required for goods and services that are globally marketed.

Cultural Perspective

Vinchel Must Learn to Market Its Wines Internationally

Vinchel, a winery located in Chelyabinsk, Russia, in the southeastern part of the Ural Mountains, was founded in 1969. Anatoly Bondarev is Vinchel’s current general director.

For its first two decades of business, the firm was owned by the state because Russia was a communist republic. Under the Soviet system, state planners determined how much and what types of wine the company could produce. The government decided which markets would be used for the company’s output, so there was no need for Vinchel to design a marketing plan.

Then, in the early 1990s, Russia threw off communism and the government no longer controlled companies. Bondarev and Vinchel’s other executives were forced, for the first time in the firm’s history, to develop a comprehensive program to market its wines in Russia, Western Europe, and the United States.

Bondarev realized that the focus upon marketing would require Vinchel to obtain more information about the wine market and the new environment in which the company now had to operate. He and his executive team would have to develop appropriate marketing strategies to achieve their sales goals. Understanding the basic concepts of effectively managing Vinchel’s international customers was an additional responsibility that would now have to be assumed.1