The purpose of this research is to discuss aspects of personnel management with regards to both public and private employers in the international sector. Since the field of personnel management is so broad, the research will discuss aspects of personnel which are of special concern to international agencies and employers. Among these will include: biculturalism, establishment of wage and benefit levels, problems of adjustment, political considerations and management attitudes.
In order to discuss the special aspects of personnel management in the international sector, a brief overview of personnel practices in U.S. corporations is presented as follows.
Selection Process: Within major U.S. corporations, the personnel function is a centralized one. Even in a company which espouses decentralized management, such as IBM, centralizes the personnel function within each subsidiary. In recruiting higher-level employees, most corporations maintain a resume file of high-talent employees and send recruiters around to colleges to interview promising candidates. Upon the initial selection for interviewing, most candidates will be given a preliminary interview by the Personnel Officer, who will then go over their applications and check their references. Some corporations have their potential management employees undergo extensive testing. Upon selection, the process of orientation begins.
Management Goals/Policy: Policy in the personnel area has been defined as “the organizational intentions in recruiting, selecting, promoting, developing, compensating, organizing, motivating, and otherwise leading and directing people in the working organization.” Corporations differ according to the intent or ultimate objective behind their personnel policies. IBM, for example, is known as having an extremely paternalistic system. It prides itself on providing job security, top wages, and a comprehensive system of benefits, including a wholly-supported company pension plan within the United States. Xerox Corporation is also known for a paternalistic system of benefits; however, social responsibility is stressed and higher level personnel are expected to manifest a sense of social responsibility through community activities. Kaiser Steel has adopted the Scanlon Plan in order to implement “reasonable sharing of productivity and labor cost savings coupled with stability of employment or income to assure progress for the Company, the employees, and the public interest.” Thus, this company emphasized employee productivity and provides incentives for this.
Procedures: The actual implementation of personnel action differs within each company. Standard, however, are such practices as employee evaluation of performance, standards of discipline, usually involving a process of oral, then written notification; appeals and grievance procedures, merit increases, etc. In general, as much effort as possible is made to ensure that the personnel function operate impartially and efficiently, threading a path between the welfare of the employees and the needs of management.
Design-Making: With the increase in size and complexity of the major U.S. corporations, efforts have been made to decentralize the decision-making process as far down as possible in order to implement management by exception. In doing this, efforts have been made to introduce collaborative forms of leadership, because:
if we push decision making down in an organization
as far as we possibly can, we tend to get better
decisions, people tend to grow and to develop more
rapidly, and they are motivated more effectively.
Most forms of collaborative decision-making stem from the philosophy of Joe Scanlon, who advocated: “broad decentralization and genuine delegation, clear to the bottom of the organization.” Companies have found that encouraging collaborative decision-making reduces employee turnover and dissatisfaction and provides excellent methods for training and spotting potential managers.
IBM has encouraged the collaborative decision-making process, reasoning: “It’s the only possible way we can operate . . . in the light of our fantastic expansion and growth.” IBM has had a record, until very recent years, of doubling itself every four years. IBM has restricted the New York Headquarters decision-making process to its staff executives there as follows:
a) carrying out strategic planning;
b) making major decisions;
c) handling over-all controls;
d) providing advice and assistance to area
managers (but with a minimum of centralized
e) acting as liaison with the parent company.
When a corporation moves into the international or multi-national (the terms here will be used interchangeably) sphere of operations, different aspects of industrial relations must come into play and personnel operations within the U.S. operation may require modification to deal with the differences in the international arena.
The development and requirements of the overseas manager position are crucial to companies expanding abroad. A manager who has demonstrated ability in the domestic operation may prove ineffective when confronted with a completely different culture and set of business practices. Development of subordinate managers among the foreign nationals working in the overseas branch may prove extremely difficult due to these cultural differences. Increasingly, multinational corporations are attempting to fill management positions abroad with qualified nationals from the host company.
The top executives of the multinational corporations spend considerable time and care in choosing managerial slots abroad. At Exxon:
the chairman, the president, and seven other inside
directors constitute a committee which meets weekly
to review the executive development programs in each
of the company’s major operating units . . . more
than 3,000 executives are reviewed at successively
higher levels . . .
Some of the multinationals, including IBM, have very open personnel practices with respect to promotion of top echelon executives from the host countries of their overseas operations. The case of Jacques G. Maisonrouge is a case in point. He started in the French IBM affiliate, was moved to the European operations of IBM’s international subsidiary, IBM World Trade Corporation. After the European operations center, he was transferred to the New York headquarters, then in 1964 was named President of IBM World Trade Corporation. In a 1967 interview with the New York Times (December 24, 1967), he stated:
IBM practices what it preaches about internation-
alism in its business. Take my case for example.
I can honestly say that I never notice a man’s
nationality but only whether he has, can or will
do a job.
IBM handles the problem of biculturalism, or adapting its operations to different countries, using a pragmatic approach. When the move overseas was decided upon by its founder Thomas J. Watson, certain distinctions were made between aspects of IBM which would remain constant throughout the world and those which would be adapted to suit the needs of whatever country it would locate in:
the traditional IBM emphasizes on training,
education, and employee relations was to be
preserved along with high standards of quality
and service. At the same time, managers of
these companies were to be allowed considerable
flexibility in the matter of harmonizing company
objectives with national characteristics and
customs, especially in advertising, selling,
marketing, customer relations, and the like.
An example of this is the fact that, although countries such as France, Germany and Japan preferred to deal with older men as executives, the Watson clan has always favored a younger executive and they held to this position even in more traditional countries. On the other hand, the position of “customer service engineer” has to be downgraded from its American equivalent to an”outside service technician” for the European market, because: (a) the use of the term “engineer” in Europe is strictly confined to the academic degree, rather than the loose interpretation used in the United States, and (b) the job itself (fixing malfunctions in the machinery) had connotations of “manual labor” which made the position subject to the social restrictions prevalent in the European countries.
To facilitate the process of biculturalism, IBM has required that its overseas managers speak at least one other language than that of their host country and in the New York office a common phenomena is the arrival, one hour early, several times per week of top-level executives, who use the time to take language lessons at company expense.
The wage and salary structure at IBM was modified for overseas purposes; when American managers were being placed abroad (before the policy of promoting nationals went into effect) their base salaries reflected U.S. living standards and included extra money to cover dual taxation. In addition, a 10 to 20% bonus was common as well as the usual relocating expenses and costs of trips home at regular intervals. The much higher wages and benefits cost of placing Americans abroad was a strong incentive for promoting nationals within the foreign operation. In administering the pension plan (one of the most liberal anywhere, with 100% company contribution), IBM adapted its operation to suit the customary practice in overseas countries; in France, for example, the workers actually prefer to pay into their own pension plans and IBM accommodated their desire. Elsewhere it is common for the large corporations to form a pension pool in order to minimize the risk to the workers’ pensions should a large company fail. In countries where this is the practice, IBM is a member of the pension group.
IBM has found that the best way to deal with the differing political situations is by the employment of foreign nationals on all levels of employment. These nationals are often either U.S. educated or have a good understanding of U.S. business practices, so that their biculturalism and status as influential citizens within their host countries has surely served IBM well in its dealings with foreign governments and political realities. For example, IBM France in the Sixties was managed by Baron Christian de Waldner, who chose to play down the American identification in deference to France’s nationalist attitudes. He identifies the problem of dealing in a foreign political situation as being able to: “digest the good things of America, yet leave to the Latins what cannot be done by Yankee ingenuity.” In Germany, which is much more pro-U.S. Hans Borsdorf, IBM’s man in Germany in the Sixties, is happy to emphasize the company’s American aspect: “the high reputation that built up the late Watson n America, I profit from that today.”
In dealing with the very strong and politically active unions, IBM’s paternalistic company policies managed in the Sixties to keep the European operations ununionized. In Japan, where the entire corporate structure is intensely paternalistic, with “cradle to grave” employment, IBM blends harmoniously into the prevailing cultural and business practices.
The public agencies operating in the international sphere face very different needs and problems than do the multinational corporations. In discussing the public agencies, I shall refer to the United Nations for example.
The initial difference in the public sector is the factors affecting recruitment of personnel. Article 101, Paragraph 3 of the United Nations Charter stresses “the highest standards of efficiency, competence, and integrity” with emphasis also paid to “the recruiting the staff on as wide a geographic basis as possible.” This has led in the past to problems of under-qualified “experts” chosen on the basis of geographical and/or political considerations. Positions requiring fluency in speaking the mother tongue of the host country are almost exclusively filled by nationals, as are the lower echelon clerical and assistant positions. The role of the recently established International Civil Service Commission can be expected to exert a positive influence in recruitment on a merit basis, since it is expected to make recommendations on recruitment standards and competitive examinations.
The wage and benefits structure is a problem for the U.N. agencies, just as it has posed difficulties for the multinational corporations. The U.N. follows the principal of paying: “salaries based on amounts received by the highest paid home civil service of any member state, with adjustment for expatriation.” This is known as the Noblemaire principal, first stated in 1921. For the nationals of low-paying national services, the U.N. posts represent a substantial financial gain and U.N. positions are coveted accordingly.
Problems of adjustment predominate over those of biculturalism in U.N. personnel policies. There is a continuing problem of social isolation for many U.N. employees vis-a-vis the nationals of the host country. “No matter how well received by the local population, the international civil servant always remains a guest.” Since, for political considerations the international civil servant must remain aloof from local politics and community endeavors, he finds it hard to put down roots anywhere and the emotional toll of decades of mobility is a heavy one. The problem of operating within another culture on an organizational level is better for U.N. employees than for multinational employees, since the international character of their employer often eliminates or at least mitigates local hostilities which may exist with regard to the national affiliation of the U.N. employee. Biculturalism poses a problem in that language training is still not mandatory for U.N. employees and their families, although such training is encouraged and is a factor in placement.
The main problem, it would seem, for employees of the U.N. agencies, is one of policies and nationalism. Political considerations permeate every aspect of personnel policies in U.N. agencies, a fact which the International Civil Service Commission hopes to ameliorate. Placement is greatly influenced by political considerations, with preference given to nationals of the Third World countries. Political problems also exist with regard to the political activities of the U.N. employee; these problems are caused in large part by a vaguely worded set of guidelines restricting their activity within various political parties. In Third World countries, with often frequent changes of government, this is an area of special concern, since the party affiliations of U.N. employees within the host country are likely to be outlawed with each change in government.
In comparing and contrasting international operations in public and private agencies, it seems safe to say that the fundamental differences in personnel policies and practices stem from the raison d’etre of the employer. The profit motive is paramount with the multinational corporations and this enables them to hire on a basis of equality all over the world. National considerations, race, etc. are not as strong as the profit motive in recruiting managers for the corporations. Even cultural and national differences become, I believe, subordinate to the dominant economic influence that the multinationals are able to exert. If we are headed in the direction of “one worldism” which some believe, it is my opinion based on research, that we will achieve (if we have not already done so) “one world” in the economic sphere before we do so politically. The public agencies have the disadvantage in being dominated by political interests, which tend to foster poor hiring practices and limit international control and personnel within international public sector agencies. American-based international public agencies are particularly hampered in this regard, since their employees may be isolated by both income and housing and language, as well as subjected to harsh treatment on account of anti-U.S. sentiments throughout much of the world.
If the U.N. is able to free its personnel functions by placing them under the International Civil Service, some improvement in personnel administration should be seen. If U.S. agencies are able to recruit more bicultural specialists, then some of the political problems encountered by their employees should decrease, although they will always remain vulnerable to outbreaks of anti-U.S. feelings. It appears that only in the international business community can be found some degree of harmony and concord today.