Page 57 - DMGT548_GLOBAL_HRM

Global HRM

Notes 3.2 Control Mechanism

International operations place additional stresses on control mechanisms. There is also additional
stress on the firm’s ability to coordinate resources and activities. The less-hierarchical and
networked structures that are evolving require coordination and human resource processes of
high-level involvement, taking into account cultural variables of each unit and national culture.
Human resource management plays a key role in control and coordination process in less
hierarchical structures:

1. The key means for vital knowledge generation and diffusion is through personal contact.
This means that networked organisations need processes to facilitate contacts. Training
and development programmes held in regional centres or at headquarters, become an
important forum for the development of personnel networks that foster informal
communication channels, as well as for building corporate culture.
2. Network relationships are built and maintained through personal contact. Therefore,
staffing decisions are crucial to the effective management of the linkages that the various
subsidiaries have established.
3. The management processes in a networked multinational rely heavily on the ability of
key staff to integrate operations to provide the internal company environment that fosters
the required level of cooperation, commitment and communication flows between
functions and subsidiary units.
4. Staff transfers are also an important part of the required management processes, particularly
that of control. Multinationals continue to rely on the movement of key staff to assist in
coordination and control.
5. Expatriates are used to instil a sense of corporate identity in subsidiary operations, and to
assist in the transfer of corporate norms and values as part of corporate cultural (or
normative) control.

6. The visit of the CEO to different countries also helps in integrating relationships and
developing, strategic focus.
Thus, proponents of less-hierarchical configurations argue there is greater reliance on informal
control mechanisms than on the formal, bureaucratic control mechanisms that accompanied the
traditional hierarchy.

Figure 3.8: Control Mechanisms in Network MNC

Control Mechanisms

Formal Informal
 Structure
 Reporting Systems
 Budgets
Personal Corporate
 Performance Targets
Relationships Culture
Source: International Business Review 1996 (5.2) p. 137

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