Contemparary Issues In International Hrm Management Essay
In wide range of market economies, human resource management plays an important role. Analysis and evaluation of HRM have become major themes in, policy, academic and practitioner literatures (ref: human resource management by Julie Beardwell and Tim Claydon, 5th edition). In any organization, the main objective of the Human Resource Management function is to check that the most effective use is made of its human resources(ref :global excellence )
International HRM has been characterized by three broad approaches.
It is one of the approaches in IHRM using which HR Management in MNC’s (multinational companies) understands the reasons for similarities and cross- national differences in HR practice in the countries in which they operates. Before exploring this in detail, it is necessary to understand the institutional distinctiveness of National Business Systems (NBS) as it is the main reason for cross-national differences in employment policy and practice.
Distinctiveness of NBS’s:
Global economy can be defined as amalgamation of different individual and independent nations. While majority of these nations are capitalist, they have followed unique and different path ways for their industrial capitalism .Each market economy is shaped by its distinctive economic, political and social characteristics which are embedded in its social system. Hall and Soski (2001) have done an academic work on NBS’s by considering US, UK, Germany and Japan. Writer of this assignment explored. Hall and Soski’s academic work and identified following things:
Capitalist economies are of two types Liberal Market Economies (LMEs) and Co-ordinated Market Economies (CMEs).These creates different national patterns of corporate strategy. These also determine different labour laws and regulations around funding etc.
US and UK economies are liberal with less government involvement in labour market and funding regulations. Provision of funds operates with in open market. Here capital providers like pension fund managers provides funds, on short term basis and expects rapid returns. It is more focused on the value created for shareholders with in short time scale. US is highly liberal market with highly developed stock and capital markets to reinforce market relations.UK even though liberal and capable of innovation .But low level of institutional regulator in labour and capital markets, skills education hinders its capability
Germany and Japan economies are treated as CMEs where there is less free market for equity capital and most of the shares are owned by founders of firms, and have institutional fund providers supported by state provides funds as a credit and they look at long term prospective also their labour market is highly regulated. Germany is coordinated market economy which can exhibit incremental innovation and change and has sustained competitive advantage in manufacturing due labour and capital regulation.
Due to these Distinctiveness of NBS’s discussed above Comparative HRM approach is needed for MNCs to understand Cross-national differences in HR policy and practice. Researchers found differences in training, pay practices, industrial relations and employee’s representations between different nations.
These differences which are impacting HR policy can be well understood, if we consider part time employment in Europe as more and more employers are using part time employees as a method of matching labour demand and supply on temporary basis and also European commission is promoting part time employment to combat unemployment.
If we examine OECD stats, highest part time employment in UK can be explained due to lack affordable childcare facilities, state tax and welfare policies and availability on more students for part time etc.
At the same time if you consider Spain which has less part-timers can be explained due to existence of fixed term contracts (full time) available in labour market. Also in UK part time means 17 HRs a week and in France part-time means 21.5hrs a week. Due to these differences, it is challenging for any global company to have HR strategy in different countries.
USA has the weakest system of employment protection .Less or lack of regulation reduces barriers or constraints faced by employers, weather this result in improved performance is another issue for argument.
If we take Germany it is a quiet contrast labour market is regulated and Germany human resource and employment relation policy and sectoral collective bargaining are deeply integrated in its society as a method of determining the wage. Almost 80%of German employees are covered by this creating good working conditions and standardisation of pay . Also training and human resource planning policies and institutions are governed by government, trade unions and employers. Sometimes these types of policies are treated as constraints for IHRM, weather it is true or not is another issue.
This comparative approach doesn’t take into account about the effects of multinationals and multi cultures have on HR strategy and policy.
Cross -cultural approach
Culture is a of shared attitudes, values, goals and practices that characterizes an company or institution (Asgary and Walleor, 2002) or a complicated socially constructed system which includes art, law, knowledge, beliefs, customs, morals and any other habits and capabilities acquired by human as a member of society (Banerjee, 2008).
There exists ,many criticisms towards the cultural approach by HRM academics, out of which Hofstede, Trompenaars and Laurent are confined in centre of attraction, as well being ambiguous when using ethnographic approach. The individualism has also a very different apprehension, from one civilization to another, and may not be always completely different from collectivism. Although, Hofstede and Trompenaars believe an apparent association between attitudes and behaviour, on account of that, there is assumption that specific cultural attitudes would lead instantly to particular type of behaviour. They have as well been accused of disregarding cultural framework, having motionless determination which does not locate principles in historical growth and relationship between community and institution. Again, there is a problem of accreditation of one culture to entire national structure, which masculinity and femininity are inappropriate names and that structure of four-dimension approach could be easily questioned (Beardwell et al. 2001, pp.642-643).
Hofstede’s (1980a) approach was one of the first attempt to develop a universal framework for understanding cultural differences in managers and employees values based on a worldwide survey, although not the only one. The argument here is that this work was starting point, both for serious academic research, and for managers working across culture to make a first estimate of the differences in organizational values which may exist among different countries(ref: international hrm: a cross cultural approach by Terence Jackson).
Hofstede’s work focuses on ‘value systems’ of national cultures which are represented by five dimensions (1991).
This is the extent to which inequalities among people are seen as normal. This dimension stretches from equal relations being seen as normal to wide in equalities being viewed as normal.
This refers to a preference for structured situations verse unstructured situations. This dimension runs from being comfortable with flexibility and ambiguity to need for extreme rigidity and situations with a high degree of certainty.
This looks at whether individuals are used to acting as individuals or as part of cohesive groups, which may be based on the family (Chinese societies) or the corporation (Japan: Hui, 1990). The dimension ranges from collectivism to individualism.
Hofstede (1980a) distinguishes ‘hard values’ such as assertiveness and competition, and the ‘soft’ or ‘feminine’ values of personal relations, quality of life and caring about others, where in a masculine society gender role differentiation is emphasized.
Long-term Vs short-term Orientation:
This distinguishes peoples’ choice of focus for their actions; values that foster virtues oriented towards future rewards (persistence, perseverance) vs fostering virtues related to the present and past (eg :stability, respect for tradition) (Romani in Harzing & Van Ruysseveldt, 2004; Jackson 2002)
Multinational human resource management is an important function in multinational organizations. Multinational human resource management functions cover many different activities related to a business organization’s employees and contractors. The first and most important is the staffing needs of the company whether staff members are company employees or outside contractors. Functions include
Recruiting and training employees
Performing at expected levels
Handling performance issues
Multinational human resource management is the fastest-growing subset of human resource due to the growing trend for global business operations.
Companies can apply one of the three different approaches to managing and staffing their subsidiaries (Francesco, Gold, 1998). Different models and their advantages and disadvantages are as below
Centre of operations from the home country makes key decisions, employees from the home country hold important jobs, and the subsidiaries follow the home country resource management practice. Companies following the ethnocentric approach assume the home country approach is best and that employees from other parts of the world can and should follow it. Advantages and Disadvantages of using local employees as staff in multinational subsidiaries (Gomez-Mejia, Balkin, Cardy, 1995) are as below
Lower labour cost
Acceptance of the company by the local community
Maximizes the number of options available in the local environment
Leads to recognition of the company as a legitimate participant in the local economy
Effectively represents local considerations and constraints in the decision making process
Makes it difficult to balance local demands and global priorities
Leads to postponement of difficult local decision until they are unavoidable, when they are more difficult, costly and painful than they would have been if implemented earlier
May make it difficult to recruit qualified personnel
May reduce the amount of control exercised by headquarters
Each subsidiary manages on a local basis. A local employee heads a subsidiary because headquarters’ managers are not considered to have adequate local knowledge. Subsidiaries usually develop human resource management practices locally.
Cultural similarity with parent company ensures transfer of business/management practices
Permits closer control and coordination of multinational subsidiaries
Gives employees a multinational orientation through experience at parent company
Establishes a pool of multinational experienced executives
Creates problems of adaptability to foreign environment and culture
Increases of the subsidiary
May involve high transfer and salary costs
May result in personal and family problems
Leads to high failure rate
Has disincentive effect on local management morale and motivation
May be subject to local government restrictions
Geocentric or global.
The company that applies the global integrated business strategy manages its staff and employees on a global basis.
In developing an international managerial team in global context
Overcomes the federation
Co-operation and resource have sharing across units
Most of local citizens employed demands by host government
Extensive documentation is required
Richard C. Hoffman & Frank M. Shipper (2012): The impact of managerial skills on employee outcomes: a cross cultural study, The International Journal of Human Resource Management
Brent MacNab, Richard Brislin & Reginald Worthley (2012): Experiential cultural intelligence development: context and individual attributes, The International Journal of Human Resource Management.
David G. Collings (2012): International Human Resource Management:
Policies and Practices for Multinational Enterprises, The International Journal of Human Resource Management
PAPER – 2
“Culture is the shared knowledge and schemes created by a set of people for perceiving, interpreting, expressing, and responding to the social realities around them” (p. 9).
– Lederach, J.P. (1995).
Nature of Culture
Every nation possesses at minimum some differences such as laws, government and history when compared to others. The more nations in which a multinational organization works the more compound and complicated will be their HRM policies that effect business performance.
It’s common for the MNCs to work together with multiples of other countries. Variations in the national cultures pertaining to different countries and degree of complexity in understanding the cultural differences is one of the main challenges faced by IHRM in its modern and global operations.
Importance of Human Resource Management
Human resource management plays a key role in the organization in recruiting the most effective human resources into the organization. In achieving the organizational goal, the HR professional make of activities include sourcing, development, reward and performance appraisal towards the employees. In this process the Human resource managers have different mind sets towards the organizational goal. There are mainly four mind sets
In this ethnocentric, major strategic decisions are made at the headquarters of the organization. They are managing the subsidiaries by the expatriates from the home country.
In this polycentric, multinational enterprise treats their subsidiary as a distinct national entity.
In this regiocentric, decisions are made within a geographic region. In decision-making, the regional managers enjoy a degree of regional autonomy and they not be promoted to headquarters.
In this geocentric, they follow global approach to its operations, identify the each part and make a unique contribution with its unique competence.
The research of the author Geert Hofstede, primarily reliant on review data attained from two organization approach studies performed has offered seminal insights of the changing cultural tendencies over the global barriers. A group of five dimensions are recognized involving power distance, uncertainty avoidance, individualism, Long-term versus short-term orientation and Masculinity versus femininity
It explains about the degree of inequality in among the people with and without power. In this case, when the power/distance is high that indicates the society is in an unequal distribution of power and people in the system.
In this individualism, it explains that the individual are expected to take care of themselves and their related families only.
In this collectivism, it means that the individual are expecting their relatives or group of members to take care after them in exchange for not loyalty.
Masculinity Vs Femininity (MAS)
In this dimension, the masculinity represents they preference the society for heroism, assertiveness, achievement and reward for success.
Uncertainty Avoidance (UAI)
In this uncertainty avoidance dimension, explains that the degree in which the members of a society feel uncomfortable with uncertainty and ambiguity.
Long-Term Vs Short-Term Orientation (LTO)
In this long-term orientation, they deal with society’s search for virtue. In this dimension, people believe the truth on basis on situation, context and time. They also have ability to allow traditions to changed conditions and determination in achieving results.
In this short-term orientation, they have strong concern with establishing the absolute truth; they think in normative way, respect the traditions and focus on achieving quick results.
“Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organization”. -by Edwin B. Flippo
In every organization or company, recruitment plays a role in human resource in achieving the organization goal. Recruitment is a continuous process in which the company attempts to develop a pool of qualified applicants for the future human resources and needs even though specific vacancies do not exist.
TYPES IN RECRUITMENTS
Recruitment takes place within the organization. In the internal recruitment they recruit the employees from their own organization by three sources
Re-employment of ex-employees
In this way, the organization can save the money, time and efforts. By this approach the organization can have drawback in refrains the new blood into the organization.
Internal recruitment has some advantages and disadvantages
Quickly and cheaper to recruit
Employees are well-known to same business and operations
Opportunities for promotions within the organization
Numbers of potential applicants are in limits
No new ideas can be implemented
External recruitment takes place outside the organization. The sources for the recruitment into the organization are
It involves a lot of time, money and effort in recruiting of new applicants into the organization. There are some advantages and disadvantages in the external recruitment
New ideas come from new people
Identify the right person for the right job
Big process to recruit the new applicants
RECRUITMENT IN INTERNATIONAL HUMAN RESOURCE
In international organizations, it is not easy to recruit the people from different cultural backgrounds and Human resource managers need to identify and ensure that the recruited people are eligible and having right skills and knowledge for the right position in the international role.
Culture plays a key role in recruitment process in the organization. It involves in hiring talent from different cultures and it can influence in key recruitment practices such as interviews, assessments and applicants. Understanding the person’s cultural background determine not only what holidays they celebrate, which language they speak but virtually we must understand and aspect of social and professional life is important.
Diverse cultural backgrounds, different behaviours and attitudes can create confusion, misunderstandings and false perceptions are some factors while hiring new employees into the organization.
Job interviews conducted by the UK Company in INDIA may not get effective result in hiring the best candidates as a result of large cultural differences in between two countries.
There are some keys areas in which the interview may fail as a lack of cultural awareness and cross cultural differences.
In UK culture, the people are openness and directness are highly valued so that, the UK interviews may tend to ask the questions around the professional background of applicants. But in INDIA culture, people are some where they are closed-minded and may be difficult for the Indian people to tell for the direct questions and make them uncomfortable and not respond appropriately.
In UK culture, the interviewer interviews the candidates in face to face .Face to face communication plays important role in recruitment. But in the case of INDIAN culture, there are different steps in recruiting the candidates such as writing test, communication test and then finally interview test.
Another factor difference in culture between UK and INDIA while in interviewing the applicant the most important is eye contact. In interview process, the eye contact is most important that means it shows the applicant is confidence.
Paper – 3
In this globalization, there are plenty of imperative and expatriate managers in doing international improvements for the challenging implications for IHRM. The development of multinational in the emerging countries is important factor in which to analyze and realize the organization structures and policies in complex situations. The imperative and expatriate managers from host and third countries into the home country organization in order to hold potential in developing of future global managers.
In today’s business environment, the globalization was approaching the status of a strategic norm and it is becoming strategic necessity. In increasing of business globalization there is necessarily of adaptation of human resource procedures, people and identifying the people who can facilitate the organization adaptation of global strategies while responding to local markets and competition.
In the globalization, in competitive field the organization must develop their managers and protect them as core competencies which the company allows to compete effectively. In this growing consensus, the organization must have global human resource management architecture, reflecting the quantity and quality of global managers may be important resources of the organization capability to compete in the competitive world.
IHRM IN EMERGING MARKETS
In present economic environment, emerging markets are treated as economic engines for growth of MNC’s in developed and matured economies. These emerging markets are important as they are rapidly expanding in certain areas like population, economic growth rate and having the opportunities or risk to attract the investors. Countries such as MEXICO, ARGENTINA, TURKEY, RUSSIA, POLAND, BRAZIL, CHINA, SOUTH AFRICA, INDIA and SOUTH KOREA are some of the emerging nations. In future, the vast majority of the population is to be in emerging countries due to this global expansion. There is rapid growth in emerging markets, which shows that there is more demand for both industrial and consumer goods and services.
In the near future MNC’s from emerging countries will have common uniqueness appropriate to European and United States based MNC’s. Main difference is in economic development and cultural distance between the developed and emerging countries and it is the main reason for increase in the requirement of HR managers in MNC’s, who are willing, capable ,understand and manage cultural differences between these distinct countries. If a HR manager is from native emerging county, they have ability to understand and forecast the future in different specific socioeconomic and cultural situations and add strategic value to MNC’s.
Most of the MNC’s expanding their business into emerging markets and they need managers with specific social knowledge and ability to conduct revenue generating business in these countries. These MNC’s believe in managers who can effectively operate in economically/culturally distant countries and this is key resource for creating competitive advantage and finally success for MNC’s in the global market.
MNC’s treat HRM as important, knowledge intensive core competency, which have to be developed within the organisation. They treat this as must have to maintain competitive advantage over other organisations or other MNC’s. This strategic international human resource management is focus on building process and procedures for utilizing personnel as a competitive asset. In recent survey they found that 81% of the companies felt, to expand their organization into emerging countries (expatriate manager program, 1997).
In achieving the organization goal, in this competitive world the international human resource management managers identify the framework for emerging countries which is shown below.
A conceptual framework of strategic HRM for emerging MNE’s
IHRM Philosophy, policy, &practice
Staffing, evaluating, rewarding and developing a global workforce
Expatriation Vs Impatriation
Talent attraction & retention Vs diversity management
Fit between corporate & subsidiary
Centralized Vs Decentralized in decision-making
Control & communication
Corporate vision & mission
Corporate structure & strategy
Resource seeking via M&A
Experience in international business
Choice of host country
Industry & size
Domestic & global competitive demands
Changing global market environment
Government policy & resource support
Invited by developing host country’s government to revitalize economy
Networking with local firms to industrialize
Global village concerns
Satisfy multiple stakeholders
Cultural sensitivity & local responsiveness
Economic development in industry sectors
Social harmony, peace and stability
Effectiveness in resource allocation
Global co-ordination & integration
Flexibility, learning and further expansion
Other important emerging context – specific variables (including geo-political factors)
National culture Vs Corporate culture
Global integration Vs Local responsiveness
Sinocentrism Vs Globalism
There are both external and internal drivers of internationalization similar to those proposed in the prior models as the background of Strategic Internationalization Human Resource Management (SIHRM). Two distinctive drivers for internationalization of MNC’s at the global level are domestic and global competition demands and global market environment. In present decades, many emerging countries economics have adopted major economic reforms and they have largely integrated into global economics.
In recent decades, China has become emerging country in global economics. Most of the multinational corporations have identified the China market and they establish their operations and created enormous competitive pressure.
Due to the globalization, the market environment was changing with the increasing free flow of information, flow of capital, and labour that helps in facilitate networking and transactions between internally and abroad. Multinational enterprises have more opportunities and threats in free market conditions. Of course they have more opportunities but they have to face different cultural dimensions and organizational frameworks both in home and in the host countries. They also face the challenges in order to adjust their policy and practices in response to the changing environments.
Therefore the internal and external drivers for the internationalization of MNC’s are most combined and create confluence effects.
STRATEGIC IHRM PHILOSOPHY, POLICY AND PRACTICE
SIHRM is essentially for the balancing MNC’s “inter-unit and within unit and also the needs for differentiation and standardization. SIHRM policy formulated with three concerns similar to those established MNC’s
First, they think about the subsidiaries that it manages independently or to be managed by the headquarters way of the MNC’s.
Second, they need to devote considerable energy, time and financial resources towards managing their global workforce. They have take decision making use of resources in achieving the goal of ultimate effectiveness in resource allocation by using either centralization or decentralization depending on circumstances.
Third, they have to decide whether in sending the staff from headquarters or need to recruit the resources from locally, regionally and globally in order to carry out tasks generated in first and second points. The importance and roles of these international staff is able to control, co-ordinate and facilitate communication between headquarters and subsidiaries.
IHRM practices are most important to the strategy need of any MNC’s of those practices related to evaluating, rewarding, staffing and developing a global workforce. Of course the MNC’s have lack in managerial experience and impatriate the managerial staff to the headquarters and allow the general staffing issue to local subsidiaries.
It is important to acknowledge both the internal and external fit in the organization and internal fit for the set of IHRM philosophy, policy and practices and external fit for the environment.
In organizational level, the IHRM play a key role in achieving the effectiveness in resource allocation, efficiency, global integration, global competitiveness, flexibility and learning. But they also need to take into account are national, industry, global and community levels of concern when multi levels of drivers are considered.
In general HRM often considers employee job satisfaction and organizational commitment. But it is difficult in multinational organization to satisfy the needs of the employees. It is important and need to recognize local conditions when applying the IHRM across different cultural and institutional environments in the globalization.
By positive results, the organizations would provide feedback so that they could analyze the alignment of their corporate strategy, structure and systems and strengthen existing IHRM. It indicates that the outcomes from home and host countries, that the policy makers has focus on further development in further expansion.Order Now