Companies that operate across national boundaries often need to work with unions in more than one country. Organizations establish policies and goals for labor relations, for overseeing labor agreements, and for monitoring labor performance. The day-to-day decisions about labor relations are usually handled by each foreign subsidiary. The reason is that labor relations on an international scale involve differences in laws, attitudes, and economic systems, as well as differences in negotiation styles. At least in comparison with European organizations, U. S. organizations exert more centralized control over labor relations in the various countries where they operate. U. S. management therefore must recognize differences in how various countries understand and regulate labor relations. For example, in the United States, collective bargaining usually involves negotiations between a union local and an organization’s management, but in Sweden and Germany, collective bargaining generally involves negotiations between an employers’ organization and a union representing an entire industry’s employees.
Legal differences range from who may form a union to how much latitude an organization is allowed in laying off workers. In China, for example, the government recently passed a law requiring employers to give new employees shorter probationary periods, consider workers’ dependents in making layoff decisions, pay severance to fired workers, and give the Communist Party–run union more power in negotiating contracts and work rules.
In Germany, because labor representatives participate on companies’ boards of directors, the way management handles labor relations can affect a broad range of decisions. Management therefore has an incentive to build cooperative relationships. International labor relations must also take into account that negotiations between labor and management take place in a different social context, not just different economic and legal contexts. Cultural differences that affect other interactions come into play in labor negotiations as well.
Negotiators will approach the process differently depending on whether the culture views the process as primarily cooperative or competitive and whether it is local practice to negotiate a deal by starting with the specifics or agreeing on overall principles. Working with host-country nationals can help organizations navigate such differences in negotiation style. Many organizations with foreign operations fill most positions with host-country nationals. These employees can more easily understand the values and customs of the local workforce, and hiring locally tends to be less expensive than moving employees to new locations.
Organizations also fill foreign positions with parent-country and third country nationals who have human relations skills associated with success in foreign assignments. When sending employees on foreign assignments, organizations prepare the employees (and often their families) through cross-cultural training. Before the assignment, the training provides instruction in the foreign country’s language and culture. During the assignment, there is communication with the home country and mentoring.