Download - 16.Organon Laboratories Ltd. Scotland
Kumar Alok CIMP
Session 11Session 11
Organon Laboratories CaseOrganon Laboratories Case
Kumar Alok CIMP
International HRMInternational HRM
““Human resource management issues, Human resource management issues, functions, policies and practices that result functions, policies and practices that result from the strategic activities of multinational from the strategic activities of multinational enterprises and that impact on the enterprises and that impact on the international concerns and goals of those international concerns and goals of those enterprises.”enterprises.”
----- (Schuler et al., 1993, p. ----- (Schuler et al., 1993, p. 270) 270)
Kumar Alok CIMP
Domestic HRM vs. International HRMDomestic HRM vs. International HRM
ParameterParameter Domestic HRMDomestic HRM International HRMInternational HRM
Functional Functional areasareas
Traditional HR Traditional HR areas areas
Traditional HR areasTraditional HR areas Taxation, currencies and exchange rate and Taxation, currencies and exchange rate and compensation plancompensation plan Direct involvement with employees’ families Direct involvement with employees’ families
Involvement in Involvement in personal lives personal lives of employeesof employees
Limited and Limited and occasional occasional
Assisting in housing in host countryAssisting in housing in host country Assisting in selling/leasing domestic Assisting in selling/leasing domestic accommodationaccommodation Locating recreational and cultural activities Locating recreational and cultural activities Arranging and paying for schoolArranging and paying for school Locating and securing domestic help Locating and securing domestic help
GeographyGeography No need for geo-No need for geo-adaptive HR systemsadaptive HR systems
Geo-adaptive HR systems are required Geo-adaptive HR systems are required
External External constituencies constituencies
Less complex Less complex More complex like foreign governments, More complex like foreign governments, political, religious and activist groups etc.political, religious and activist groups etc.
Exposure to Exposure to riskrisk
Relatively lessRelatively less High risk caused by terrorism, AIDS etc. High risk caused by terrorism, AIDS etc.
Kumar Alok CIMP
Holland, UK & China: CultureHolland, UK & China: Culture
Culture characteristics as per GLOBE studiesCulture characteristics as per GLOBE studies
CountryCountry CultureCulture Characteristics Characteristics
HollandHolland Germanic Germanic EuropeEurope
Competitive, aggressive, result-oriented, Competitive, aggressive, result-oriented, value planning and rules value planning and rules
UKUK AngloAnglo Competitive, result-oriented, less attached Competitive, result-oriented, less attached to families or other groups to families or other groups
ChinaChina Confucian Confucian Asia Asia
Result-driven, encourage group working, Result-driven, encourage group working, loyal to families loyal to families
Can you figure out their business environment?
Kumar Alok CIMP
Organon Laboratories Ltd.Organon Laboratories Ltd.
83 year old company with more than 60 subsidiaries 83 year old company with more than 60 subsidiaries around the worldaround the world
Now a part of Schering-PloughNow a part of Schering-Plough A major pharmaceutical player A major pharmaceutical player Over 55000 employees worldwideOver 55000 employees worldwide Business in more than 140 countries Business in more than 140 countries Net sales: $12.7 billion; R & D investment (2007): $2.9 billion Net sales: $12.7 billion; R & D investment (2007): $2.9 billion Merk and Schering-Plough merged to create the world’s Merk and Schering-Plough merged to create the world’s
second largest pharma company by market sharesecond largest pharma company by market share Innovation driven: Core therapeutic areasInnovation driven: Core therapeutic areas
Gynecology, fertility, neuroscience and anesthesia Gynecology, fertility, neuroscience and anesthesia
Kumar Alok CIMP
International business strategies International business strategies
Global Transnational
Multinational
International
Local Responsiveness
Eff
icie
ncy
Innovation
Adapted from “Information Technology for Management”, Henry C. Lucas, Jr., TMH, 7th Edition, P. 129
Kumar Alok CIMP
Approaches of IHRMApproaches of IHRM
Aspect of Aspect of EnterpriseEnterprise
OrientationOrientation
EthnocentricEthnocentric PolycentricPolycentric RegiocentricRegiocentric GeocentricGeocentric
Standard Standard setting, setting, evaluation and evaluation and controlcontrol
By home By home country HQcountry HQ
By local By local subsidiary subsidiary managementmanagement
Coordination Coordination across across countries in the countries in the regionregion
Global as well Global as well as local as local standards of standards of controlcontrol
Communication Communication and and coordinationcoordination
From HQ to From HQ to local subsidiarylocal subsidiary
Little among Little among subsidiaries, subsidiaries, little between little between subsidiary and subsidiary and HQHQ
Little between Little between subsidiary and subsidiary and HQ, medium to HQ, medium to high among high among subsidiaries in subsidiaries in regionregion
Totally Totally connected connected network of network of subsidiaries subsidiaries and and subsidiaries subsidiaries with HQwith HQ
StaffingStaffing Home country Home country managesmanages
Host country Host country managersmanagers
Managers may Managers may come from come from nations within nations within the regionthe region
Best people Best people where they can where they can be best used be best used
Adapted from “Strategic Human Resource Management”, J. A. Mello, TSW – 3rd Edition, 2005, P. 410
Kumar Alok CIMP
““Organon aims at world-wide registration of its Organon aims at world-wide registration of its products. This requires that all Organon employees, products. This requires that all Organon employees, especially the 2,600 research and development staff especially the 2,600 research and development staff at seven centers world-wide, have a global vision. at seven centers world-wide, have a global vision. Together they form a single world-wide organisation, Together they form a single world-wide organisation, in which team spirit and a collaborative approach is in which team spirit and a collaborative approach is more important than location.”more important than location.”
What does that say about their strategy?
Kumar Alok CIMP
““There are no team-based pay policies on There are no team-based pay policies on either Scottish or Dutch sites. The company either Scottish or Dutch sites. The company have individual-based reward and bonus.”have individual-based reward and bonus.”
Can you see a performance-reward congruence?
Kumar Alok CIMP
SHRM Issues in international assignmentsSHRM Issues in international assignments
International Business Strategy
Local culture National culture Corporate culture
Strategic HR Issues
Purpose of Expatriation
Selection
• Employee
• Family
Orientation
• Employee & family
• Headquarter staff
Managing Expats
• Performance
• Compensation
• Labor relations
• Training
Repatriation
Level of Standardization
• Ethnocentric
• Polycentric
• Regiocentric
• Geocentric
Adapted from “Strategic Human Resource Management”, J. A. Mello, TSW – 3rd Edition, 2005, P. 407
Kumar Alok CIMP
““In general Organon do not like expatriation, it In general Organon do not like expatriation, it is too expensive. They send employees on is too expensive. They send employees on foreign assignments only when they need foreign assignments only when they need someone they can trust in a host site. They someone they can trust in a host site. They prefer to recruit local people when and where prefer to recruit local people when and where appropriate.”appropriate.”
What are the expenses involved in expatriation?
Kumar Alok CIMP
Purpose of expatriationPurpose of expatriation
Purpose of the OrganisationPurpose of the Organisation Purpose of the Individual Purpose of the Individual
Business/Market developmentBusiness/Market development Skill developmentSkill development
Set-up/transfer/integration of ITSet-up/transfer/integration of IT Preparation for top Preparation for top managementmanagement
Manage autonomous subsidiaryManage autonomous subsidiary Follow dual-career Follow dual-career partner/spouse partner/spouse
Coordinate/integrate foreign Coordinate/integrate foreign operation with domestic operationsoperation with domestic operations
Fill vacant positions temporarily Fill vacant positions temporarily
Develop local management talentDevelop local management talent
Adapted from “Strategic Human Resource Management”, J. A. Mello, TSW – 3rd Edition, 2005, P. 408
Kumar Alok CIMP
Compensating expats Compensating expats
Balance sheet approachBalance sheet approach Based on domestic payBased on domestic pay Additional expenses added Additional expenses added Suitable for short-term assignmentsSuitable for short-term assignments
Higher-of-home-or-host approachHigher-of-home-or-host approach Accounts for the higher cost of living in the host country Accounts for the higher cost of living in the host country Suitable assignments of indefinite durationSuitable assignments of indefinite duration
Localization approach Localization approach Salary converted to its host country equivalentSalary converted to its host country equivalent Suitable for permanent assignments Suitable for permanent assignments
Kumar Alok CIMP
Issues with repatriationIssues with repatriation
Career IssuesCareer Issues Personal Issues Personal Issues
Career anxiety – current Career anxiety – current place, futureplace, future
LogisticsLogistics
Organization's reactionOrganization's reaction Personal readjustmentPersonal readjustment
Loss of autonomyLoss of autonomy
Family readjustment Family readjustment Adaptation to change Adaptation to change
Adapted from “Strategic Human Resource Management”, J. A. Mello, TSW – 3rd Edition, 2005, P. 411
Kumar Alok CIMP
““Schering-Plough and OBS have different key Schering-Plough and OBS have different key franchises, with Organon offering new franchises, with Organon offering new direction in the areas of women's health and direction in the areas of women's health and central nervous system medicines, but one of central nervous system medicines, but one of their shared complementary strengths is their their shared complementary strengths is their people.” people.”
Comment on the future of this acquisition.Comment on the future of this acquisition.
Kumar Alok CIMP
Key takeaways from OrganonKey takeaways from Organon
Global business operation is as much about diverse Global business operation is as much about diverse markets as it is about diverse work-forcemarkets as it is about diverse work-force
Culture is not just a customer issue; it is a business issue Culture is not just a customer issue; it is a business issue
Culturally adaptive HR practices can lead to lasting Culturally adaptive HR practices can lead to lasting successsuccess
Staffing, T & D, performance and compensation systems must Staffing, T & D, performance and compensation systems must address the business needaddress the business need
Foreign assignments as business need and not just a fad Foreign assignments as business need and not just a fad
HR must be in sync with business strategyHR must be in sync with business strategy
Kumar Alok CIMP
Thank you!