Human Resource Management and Organizational Reliability: Coordination Mechanisms, Training Models, and Diagnostic Systems for Contingency Management

Human Resource Management and Organizational Reliability: Coordination Mechanisms, Training Models, and Diagnostic Systems for Contingency Management

Filippo Ferrari (Bologna University, Italy)
DOI: 10.4018/978-1-5225-2250-8.ch003
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In the International Strategic Management (ISM) field of research, a frequently studied problem is the impact of distance (both geographical and cultural) on organizational effectiveness and reliability. Furthermore, in multinational corporates, Human Resource Management practices play a fundamental role in order to provide peculiar skills to operators. In fact, in high reliability organizations (HROs), the operator is one who addresses operational issues, often far (hierarchically and physically) from the managerial level, alone or as part of a team. This article discusses issues related to 1) the coordination mechanisms used by a multinational organization to ensure reliability, 2) the characteristics possessed by the operator, and 3) the training strategies that should be used to develop their skills; provides a discussion of 4) the relationship between the group agent (team) and organizational reliability; lastly this chapter proposes 5) a diagnostic model in order to check the organizational reliability.
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International strategic management1 (ISM) research saw rapid growth through the 1980s (Ricks et al., 1990) and the 1990s (Werner, 2002). In her review, Lu (2003) highlights that an important category of research in this field of study is leadership and organization, in particular internal coordination and decision-making. Studies in this group tend to view challenges involved in managing foreign subsidiaries such as issues of the control (Nobel & Birkinshaw, 1998) and coordination (e.g., Martinez & Jarillo, 1991) of international subsidiaries. Research has also examined knowledge flows in the organization (e.g., Ghoshal et al., 1994; Gupta & Govindarajan, 1991) and a firm’s need for internal coordination (Roth, 1995). Research on decision-making has focused on the effectiveness of planning (Jones et al., 1992), sometimes as contingent on the profiles and effectiveness of boards of directors (Kriger, 1991).

From a strategic point of view, in a multinational company it is necessary to translate the subsidiary’s mission into individual objectives at the operator’s level, in accord with a bottom-down process. Hence, this chapter focuses on optimal coordination mechanisms to ensure reliability, and highlights the skills that an operator should have in order to function successfully, and suggests appropriate actions for achieving these skills. In this sense, this work has followed important suggestions from studies on High Reliability Organizations (HROs; Weick, Sutcliffe, 2007) and sensemaking capabilities (Weick, 1993; Lanzara, 1993), here supplemented by indications from the organizational theory of coordination and control (March, 1993; Olson et al., 2005). Given this theoretical scenario, the first aim of this chapter is to discuss issues related to the coordination mechanisms used by a multinational organization to ensure effectiveness and reliability.

The whole effectiveness of a multinational organization depends also on the reliability of each subsidiary. Under what conditions can subsidiaries (and their operators) successfully cope with unexpected events? Organizations, and in particular subsidiaries of a multinational company, frequently perform in a situation characterized by bounded rationality (Simon, 1957), uncertainty (outputs/outcomes depending not only on the actions of operators: Jensen & Meckling, 1976), and distribution of information with information asymmetry in favor of the operators, since they are often closer to the “front line” of operations, and far from their headquarters. That characteristics are typical of an Agency Relationship or Theory (AT), largely studied in literature (for a review, Eisenhardt, 1989). Frequently, these units are ephemeral, as their life-cycle is determined by a specific task and/or temporary event. Despite their widespread diffusion, literature suggests that ephemeral organizations are less reliable than permanent ones (Lanzara, 1993; Weick, 1993). I chose semi-isolated, small units because existing literature (Watts, 1999; March, 2004; Fang et al. 2010) underlines several adaptive advantages due to isolation, especially in order to 'maintain diversity and to explore more diverse solutions in the space of possibilities' (Fang et al., 2010, p. 625). Despite this evidence, this chapter attempts to underline some weaknesses in small units’ reliability.

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