IBUS2002 Chap.5 Transferring HR Practice Across Subsidiaries
Transferring HR Practice Across Subsidiaries
Who decides, and how alike?
Week 5 asks how multinationals coordinate HRM across countries. The first step is to separate two ideas the slides insist are related but different. Centralisation concerns where decisions are made, usually how much headquarters decides; standardisation concerns whether units end up with the same approaches.
They normally move together, but a decentralised firm can still converge through benchmarking, and a centralised firm can choose to differentiate.
Incentives to standardise include shared HR information systems, training, expatriate integration and a common corporate identity; incentives to localise include national legal and political contexts and product markets.
How practices move
Forward diffusion pushes practices down from headquarters; reverse diffusion carries them up from subsidiaries.
Decentralised firms often rely on coercive comparison: best practices are shared, while performance comparisons reward strong sites with investment and starve weak ones.
The Week 5 case shows a US multinational's Irish subsidiaries reorganising HR into centres of excellence, an idea headquarters then built into a global shared services model, while line managers took on HR work and local employment relations expertise stayed essential.
Turning the ideas into an answer
Questions on transfer reward precise vocabulary.
Say whether a practice moved forward or backward, whether the firm is centralised, standardised or both, and what incentive drove the choice. Then add the employee consequence: benchmarking places local terms and conditions under the shadow of sister plants, so transfer is never only a technical matter of copying good ideas.
What this chapter covers
- 01
Centralisation and decentralisation
- 02
Standardisation and localisation
- 03
Coercive comparison and benchmarking
- 04
Forward and reverse diffusion
- 05
HR centres of excellence and shared services
Worked example · free
Show forward and reverse diffusion in one firm
- 2Identify the bottom-up movement and its origin.
- 2Identify the top-down movement that followed.
- 2Explain the cost and competition pressures behind both.
Key terms
- Centralisation
- Centralisation is the extent to which one unit, usually headquarters, makes HRM decisions for the whole multinational.
- Standardisation
- Standardisation is the extent to which units of a multinational use the same HR approaches, whoever makes the decision.
- Forward diffusion
- Forward diffusion is the top-down transfer of a practice from headquarters to subsidiaries, associated with centralisation.
- Centre of excellence
- A centre of excellence is a unit that specialises in one area of HRM and shares that expertise across several subsidiaries.
Transferring HR Practice Across Subsidiaries FAQ
Can a decentralised multinational still have common HR policies?
Yes. Common policies can emerge when managers coordinate many local choices, backed by benchmarking across countries and the transfer of best practice. Performance comparisons then pressure local managers to adopt what the firm presents as the best solution.
What makes a comparison coercive?
The comparison is tied to rewards and penalties. Sites that perform well win new investment and new products, while weak sites lose investment and face being wound down unless they recover, and actual or threatened relocation becomes part of the process.
What happened to the HR function in the Irish subsidiaries?
About 30 per cent of HR jobs across the subsidiaries went, and each site kept only an HR manager and an employment relations specialist. Specialised centres took over recruitment, training, administration and reward, and line managers took on more HR work themselves.
Why did headquarters need local HR managers to explain Ireland?
The US headquarters had little experience of unions at home and found Irish employment relations uncertain compared with codified co-determination. Local HR managers translated the host environment, which helped avoid disputes during redundancies.
What did Belizon and colleagues find about decentralisation?
The more different the host's type of capitalism, the more likely HR decisions are decentralised, and the more flexible the variety of capitalism, the more control headquarters exercises. Host systems shape the structure of control, not only individual practices.
Exam move
Draw the two-by-two of centralisation against standardisation and place at least four practices from different cases in it, explaining each placement in a sentence. List the tangible and intangible incentives to standardise and the incentives to localise, and practise using them to predict which policies transfer most and least easily.
Write a 130-word explanation of coercive comparison that includes both the carrot of best practice and the stick of investment decisions. Use the Irish subsidiary case to rehearse three separate answers: one on reverse diffusion, one on devolution of HR to line managers, and one on why headquarters must understand host institutions.
Close by connecting the Belizon finding back to Chapter 3, so that you can explain how host systems affect the structure of control as well as individual practices.
Working through Transferring HR Practice Across Subsidiaries in IBUS2002? Sia is AskSia’s AI Management tutor — ask any IBUS2002 Transferring HR Practice Across Subsidiaries question and get a clear, step-by-step explanation grounded in how IBUS2002 is taught and assessed. Read this chapter free, then take your hardest questions to Sia.