International And Comparative Human Resource Management Management Essay
This assignment includes journals which are in core with international human resource management (IHRM). In a modern competitive environment most of the organization move globally. IHRM is basically management of human resource internationally for the business occurs globally. Hence IHRM plays a vital role in globalized business. Compare to HRM, the IHRM have additional responsibility with regard to planning, staffing, performance management, training & development, compensation and repatriation in international context.
The main objective of writing this journal is to identify how HRM practice and managing the people in multinational context and as well as to identifying and analyzing the theories of this particular topic. It gives me wide knowledge about international human resource management.
This reflects journal is about nine critical areas of IHRM which was discussed in our class and my observation, my personal viewpoints and theatrical understanding of each session of IHRM class. In order to present my view point better I refer magazine, books, online web and relate my class theatrical understanding with real world examples. I believe this journal will help me to recollect all what I learn from my class to understand and expand my knowledge.
Introduction to IHRM
In modern competitive environment company efficiency is greatly influenced by the best human recourses. The globalisation made possible for an organisation expands their business in multinational level. Human recourses management in domestic involves all management decision and practices that affect directly the people who are working in the organisation.
The first class about international human resources management (IHRM) was conducted by our lecturer Mr. Chandana Kumara and he gave us brief description about our unit plan course outline, learning and assessment method of this subject. In this class we learnt introduction of IHRM in multinational prospective. Also we learnt difference between domestic and international HRM. Human resource manager in multinational company together with HR activities they engage such as helping suitable working environment for the expatriates to avoid regional disparities, reduce cultural risk and to settle down in their working place.
We learnt procuring, allocating and effectively utilising human resources and HR activities in foreign locations and also we understood the importance of selecting employees in all three nations such as host country, parent country and third country. IHR manager in an international organisation need to understand the values of host country employees against the home country employees values. The HRM activity such as human resource planning, staffing, performance management, training and development, compensation and industrial relations is more complicated in multinational context. The human recourses manager for an organisation which has branches in overseas need to have a good understanding of cultural diversities and ability to manage diversifies human capital effectively.
Managing human resource management internationally is not easy due to the fact that we need to consider the government regulation, policies, cultural background and strategies to be followed to run the enterprise in the host country. Major factor in international human resource management is first we need to understand and satisfy the government regulations of three country nation such as parent country nation (PCN), host country nation (HCN), and third country nation (TCN). The international HR manager has to effectively handle these kind challenges to be successful in the business.
IHRM needs additional HR activities such as international taxation, International relocation and orientation, administration service for expatriates, host government relations and language translation services when an organisation moves globally (Dowling & Welch, 2004, p.g.7). As a result HR manger should be able to identify and evaluate HR in broader perspective to treat all the employees equally and pay attention fairly when they consider for any compensation and promotion. HR manager need to satisfy all three nations when he evaluates the employee performance in multinational organisation. Moving the organization internationally it involves different types of employees with different personal life style. The risk exposure is also very high when comparing with the domestic HRM. External factors such as the growth of the host country government and state of economy also play a major role when the organization does a business globally. These factors HR manager need to be aware for the organization success and to achieve its target goals.
I got good overview of IHRM and the importance to managing the people with different cultural values in international context. Globalization and rapid increase in technology gives more prominence for IHRM in an organisation.
Second class is all about cultural framework. This part is basically describes on cultural behaviour of the society impacts on an organisational performance. Hence HR manager for an international organisation need to have clear understanding about culture for the host nation and knowledge about different culture practice in different nation to run the organization efficiently and to avoid any misunderstandings among the employees. Here we study different culture of each country related to human resource management and expatriate cultural shock experiences when they work in different state.
HR manager must know well about host country culture to reduce conflicts, cultural shock among co-workers and to achieve the business objective of the organisation. Expatriate to overcome from frustration the organisation needs to give introduction and train them.
Measuring and assessment of cultural situation can be divided into two. They are emic and etic prospective. Emic refers how own nation look at their own culture and Etic is refers how outsiders views about their culture. IHR manager should have clear knowledge about both with regard to accepted customs and values of the nation as well as his understanding and his view about their values and customs.
After the etic and emic perspective we learn about cultural dimension. There are lot of framework to identify cultural difference such as Hofstede’s five dimension and trompernaar’s dimensions. For an example discussed about Hofstede’s five dimensions which are individualistic vs. collectivism, power distance, uncertainty avoidance, masculinity vs. femininity, long term vs. short term and Confucianism. In order to explain the above dimension examples taken Sri Lanka and Maldives, Saudi Arabia and Japan for us to get an understanding about of these countries in terms of cultural dimension. The HR managers should have a clear understanding of the importance of host country culture.
We learnt china, Japan, Sri Lanka, India which has high power distance because they give respect to the position as well when they address someone they call sir or madam. USA and UK have low power distance because they have friendly relationship between employer and employee. They all called by first name of the person. Uncertainty avoidance is high where a country can take high risk as well as planned before problem arises. Example we can say UK and USA prefer to take risk so they have high uncertainty avoidance countries. Sri Lanka is a low uncertainty avoidance country. Femininity refers to a country which gives priority to relationship. Example like Sri Lanka, India they give first priority to relationship. Masculinity is where a country gives priority for values, money, status and success.UK and USA are masculinity countries. Individualistic countries achieve their success individually. UK and USA are individualistic countries they identify their success individually. Collectivism is where countries achieve their success by set of group. Sri Lanka is a collectivism country.
Managers in the multinational organisation, they need to work globally valuing the customs and practice of the locals of the country they work. IHR managers in the international organization need to understand and work in accordance to the cultural diversity of working people for the efficiency and to safe guard the interest of the stakeholders. The knowledge I gained in the class will help me in the future when I am working with different cultural people.
The Organizational context
This chapter explains how the organizations managed and controlled in international level and effectively handling its human recourses with different cultural values and languages. Also lecture explained span of control of smaller and lager organizations and the benefits of having centralized/ decentralized operation. Organization operated with centralized operation where the decision making with top level management.
The manager need to mange internal factors to compete internationally. There are six factors which direct the organization effectively and efficiently. They are size, structure, host country demand, national culture and language, flow and volume of information, operation modes, control mechanism and geographical dispersion. We have to consider these six factors when moving and doing business internationally because this will impact on HR functions.
IHRM plays a vital role in selecting and training people and the factors affecting HR with some of them are political and legal nature, technology, and the nature of the product. HRM has the responsibility to select the right people for the tight positions. Also it was discussed about the manager’s leadership style in the organization and their cultural values and their attitude. Mangers need to adopt different style according to the situation to improve the organization performance. There are some different types of leadership styles to regulate different kind of situation. They are participative, consultative, paternalistic and autocratic styles. Participate is basically always like to work, consultative consults it’s subordinates to go through specific objective, paternalistic is more concern about employees who works in its organization and autocratic is have a control on what’s its operates.
A control mechanism plays a major role in an organization. Control can be formal and informal. A formal control mechanism mainly includes for the firm of an organizational structure, reporting system, budget, performance target and formal communication. Informal coordinates its resources and activities not only in the domestic but also for the international level. It’s basically includes personal relationship and informal communication and corporate culture.
From this class lecture I have understood that the HR manager plays a vital role in an organization. Because they have to know about the different structure and changes which occurred during the external and internal environment.
HRM in the host county context
This topic explains about issues and problems relate to IHRM in the host country context. This chapter identifies and discusses drivers that interact between global standardization and localization of HRM practice when an organization operates with number of subsidiary operates worldwide. The organization has to decide whether to operate with standard HR policy need to be implement in all worldwide subsidiary or to be localized in accordance with country wise. The implementation of standard HR policies vary from parent country to host country according to culture, maturity, institutional environment, the mode of operation and subsidiary roll.
When multinational enterprises (MNE) decide to standardize or localized its operation globally, it needs to have global mindset with local responsiveness. When implementing HR policies globally, the parent company needs to respect host country culture and traditions. There are four factors which have a major impact on standardization. They are host country environments or work place, mode of operation, size and maturity and subsidiary mandate. Need to adopt local institution requirements such as host country government policies and regulations and Host country employee’s education system and their expectations.
Host country culture and workplace environment is different from the parent company culture. Hence localization would be suitable because the host country employees will be find it difficult in adapting to a different culture. Culture determines the standardization in the placement, processes and practices in the work place. For example if the host country belongs to high uncertainty avoidance the employees tend to be rather risk averse and prefer fixed compensation packages or seniority pay. Selection of mode of operation is essential in determining the standardization of work practices. When it is a fully owned subsidiary there is more possibility to standardize than in alliance. Standardization of the organization depends on size and maturity of the firm. Standardization is essential in order to build individuality in all the outlets of the organization. When the subsidiary plays a major part, the work practices and policies of the subsidiary would be standardized to add value. This subsidiary becomes relatively important.
According to my opinion adapting to the host country background and culture is a critical factor rather than organizing a socializing program. HSBC, being a multinational company has the slogan of World’s Local Bank’, and also in Sri Lanka McDonalds quit beef burgers in India due to the culture problem raised in India and Pizza hut have been initiated to provide variety of rice and pizzas according to citizens’ taste and eating habits.
The advantage for global standardize HR polices are ease of administration and better efficiency and effectiveness. HR policies will be much consistency and transparency. Standardization can be achieved thorough HR practice such as staffing procedure; staff appraisal system, staff training and development programs and corporate code of conduct. (E.g. Unilever, HSBC)
Both Standardization and localization for MNE has advantages and disadvantages. Parent company need to adapt suitable HR policies in host country globally for the efficient and effective function.
Sustaining International Business Operations
This is the topic which identifies the introduction about staffing and the approaches of staffing. Staffing is very important for an organization and in human resource management staffing is a process for recruiting and selecting the best candidate from the pool of the candidate. The objective of this chapter explains about the approaches of staffing. An organization which is having subsidiary internally has different approaches. They are as follows: ethnocentric, polycentric, and geocentric and regiocentric. Each method includes pros and corns depending on the situation.
Ethnocentric gives more importance to the parent company and it is having an authority against subsidiary operations. In this approach autonomy is limited and strategic decision is made by headquarters (Dowling & Welch, 2004, P.58).this approach is managed by PCNs. This approach will retain a good communication, good coordination and strong control with parent company. Key position is hold by parent company and independent decision making is limited to the HCN and TCN.
Polycentric explains MNE treats each subsidiary as separate national entity and gives autonomy to formulate decision to the subsidiary (Dowling & Welch, 2004, P.59). This subsidiary is operates by local nationals. This staffing approach method is so effective and it gives more advantage to the host country nationals (HCNs). It eliminates the language barriers and adjusts the expatriate problems. Basically subsidiaries are managed by host country nation. For an e.g. HSBC is more rely on polycentric approach.
Geocentric explains the MNE takes a global approach to its operations. It is accompanied by a worldwide integrated business and nationality is ignored in favor of ability (Dowling & Welch, 2004, p.g.60) it gets the best people for the right job. Here subsidiaries are managed by PCN, HCN and TCN because to get the best work force in order to shine in operational and strategic level.
Regiocentric explains that utilizes a wider pool of managers but in a limited way (Dowling & Welch, 2004, p.g.62). Each individual HR person or organization has to take each approach regarding to its situation. We can’t apply all the approach for a particular situation we must analysis and compare the situation and think what approach is more suitable for this kind of situation after that apply the staffing approach. Roles of expatriates to act as agent of direct control, to act as an agent of socialization, to coordinate the building of sustainable networks within the host country, to act as boundary spanners and to transfer competence and knowledge (Dowling & Welch, 2004, p.69).
International assignment includes different reasons such as to fill up the position, build up management and organization and the period of assignments can be short, medium and long term and non standard forms of assignments are commuter, rotational, contractual and virtual assignments. The functions of the expatriate: as an agent for direct control, as an agent, as network builder, as boundary spanners, and to coordinate the building of sustainable networks within the host country and transfer information and capability. Expatriate also undergo so many challenges. They are cultural issues, communicating difficulties, family absence and health problems. Here after I would say expatriate are more aware of their tasks it will lead to the success of the organization.
Recruitment & Selection for International Assignments – Staffing
Recruitment and selection are the important factor in human resource management. International recruitment and selection are important and difficult task when doing business globally. Recruiting is basically selecting a good candidate for a right job after recruit the selection process will continue in the process. That is basically gathering all information and selecting a best candidate. In this chapter mainly explains about expatriate recruitment and selection process as well as the success and failure of expatriate and the direct indirect cost of expatriates.
The expatriates are used to transfer knowledge, control the organization as well as to fulfill the needs of the organization. The performance of the achievement will rank the organization. In this class mainly discuss about the recruitment and selection process done internationally for assignments. Here also discuss about major difference between the domestic and international staffing, firstly it says the firm have predisposition towards to hold the key position in headquarters and subsidiaries and by host government and the firm’s ability to attract the right candidate. To achieve the international assignment the expatriate should give their best shot to identify their personal trait. To prove that they should have a good leadership style, adoptability, flexibility, accept and adopts changes and work as calm and relaxed when under pressure times. Convince the managers to send the best employees for the international assignments are the main role for corporate HR.
The four myths of global manager are there is a universal approach to management, people can acquire multicultural adaptability and behaviors, there are common characteristics shared by successful managers and there are no implements to mobility. Our lecturer spend some time in discussing the global manager and there function. The global manager job is tough to handle because most of the time they live abroad and they use to the different culture as well as they adapt to it. When the HR manager is recruiting employees for international assignment they have to motivate the staff to accept the foreign assignment so HR manger have to say that they are proving attractive salaries, financial incentives and other salary based benefit. When the organization is expanding their business globally they have to make sure staffing methods and policies are in line with host country laws.
Selection also play major role in HR function. Expatriate failure is mainly premature return of expatriate. It will occur due to family concerns, early completion of assignments, cultural shock, security concern, lifestyle, poor performance, due to wrong selection and repatriate issues.
For an example expatriate work in china they will come across cultural shock due to the poor performance. This will lead to the failure of expatriates. Analyzing the performance would be inability to adjust to foreign country, length of assignment, willingness to move, work related factors and psychological contract.
Expatriate failure will cause direct cost and indirect cost. Direct cost includes airfares, associated relocation expenses and salary and training. Indirect cost will includes damaged relationship with host country and demotivating the local staff. To overcome this factors MNE should send knowledge person for the right assignment before sending the staff make sure to attend the pre – departure program. International assignment will help the expatriate to gain knowledge in related topics and it will lead to achieve their career succession well.
Training & Development
This chapter explains about one of the HRM function. Training and development plays a vital role for employees to achieve their target. In HRM recruiting selecting the first aspect and second is training development. Providing training in work place is to improve the current work, flexible in work as well as to adopt changes and challenges and work successfully in a given situation. Expatriate can perform well when they adopt and practice the training. To be last in the global market we need training as well more firms are focusing on the task of human resources as a significant part of their core competence and competitive advantage.
Functions of Expatriate training contain many factors. They are Pre departure training, effective cultural training, host country business practices, host country labour laws, management styles, economic legal factors and relocation training and language training.
The expatriates who work in abroad are not be aware of the host country function and cultures. To overcome this issue they have to undergo pre – departure system which help the employees to know about the organisations, functions of the organisation and culture of the host country. Pre-departure training would include cultural awareness programs, preliminary visits, language training, practical assistance, training for the training role, TCN and HCN expatriate training. The success of the expatriate is depending on pre – departure programs. It will give confidence to expatriate to do their work in host country.
Effective cultural training also plays a major role because employees who selected to work abroad also find difficult to adopt host country culture. They undergo cultural shock so to overcome these better to have culture training. Trained expatriate will be more confident when they work in host country. Cultural training will provide confident to the expatriate to work effectively in host country. Cultural training and preliminary visit are important factor in pre – departure program.
Language training also plays an important role because an expatriate enter into a country and they use different language then expatriate will face difficulty. It will lead to a poor performance as well as communicate with other employees also lacking. Comfortable communication will lead to success and poor communication will lead to failure so to overcome this issue if they undergo language training it will help to be confident in host country. For an example if an employee going to China or France without attending language training they will face lot of problem. An effective employee will always go under language training before going to the host country.
To compete successfully in the global market MNEs firms are focusing on the task of human resources as a significant part of their core competence and competitive advantage. To improve in competitive advantage training and development are important.
Performance management is a process which highlights in running the multinational organization and improves the entity, subsidiary unit and corporate performance as a whole to estimate whether they have achieved their target and pre determined goals. Introducing new methods to the labor force which will helps the multinational organization to carry out the employee performance to present level to the desired level. Through identifying the employees performances MNEs can evaluate the employee’s strengths, weaknesses and gaps between the desired one and actual one. During this process they can identify the employees in different levels. The organization proved training and development program for the employees to work easily at their home country.
The major advantage of performance appraisal is selecting the right person for the right job. Because to reach the success. Mainly recruit the right employee as an expatriate to achieve the success in the global market. To motivate them the organization need to provide benefits and compensation to promote them and achieve the target goal of the organization.
The organization should be very cautious when evaluating the subsidiaries sometimes it will get into demote situation. Because subsidiaries are different due to many other factors that affect performance appraisal such as who conducts the appraisal, use of standardized or customized appraisal forms, frequency of appraisal and performance feedback host country environment. There are three types of goal. They are hard goals, soft goals and contextual goals. Performance appraisals and these types of goals will help the firm to manage and control the work force and cultural to be flexible when dealing with people.
Therefore performance appraisal system for subsidiary needs to be modified according to the environmental changes. The performance of the expatriate determined with support from headquarters host country culture, family consideration and external environment of the subsidiary it operates. Hence we could standardize and implement similar performance appraisal system in our entire subsidiary when evaluating performance appraisal for expatriate.
Re – entry and Career Issues
This topic explains the challenges faced by expatriate when they enter into their home country. Re – entry to their home country will lead to new challenges. Repatriate who are going to host country after finishing their task they have to return to their home country. When they come to their home country they will experience re – entry shock. Expatriate will experience the cultural shock when they return back and experienced the difference of unusual things in home country. This will happens when the expatriate stayed for long time in the host country and use to the cultural differences. So when they come to home country they will experience the differences. In addition, after returning the expatriate may discover the organization’s culture and subordinates also have change and expatriates feel working in a new environment.
The re – entry process includes four phases. They are preparation, physical relocation, transaction and readjustment.
Preparation is basically when an expatriate return to theory home country they have to be well prepared. HR department must do the needful thing to the repatriate. The organization will provide the checklist when the expatriate return to their home country.
Physical relocation means dismiss and finale the personal effects and breaking ties with same age group and friends and moving to the next positioning.
Transaction refers to adjustment and settlement in the home country. When expatriate move to their home they need accommodation such as basic needs to fulfill the expectation. For an example such as basic needs – housing, schooling, banking facility, transport facility, insurance, medical insurance and facility.
Readjustment is includes in coping home country changes, reverse cultural shock and career demands.
To overcome the re – entry issues in home better to design a repatriate program. It will help the expatriate to avoid fear and adjustable to their home country culture. The expatriate can have
Pre – re – entry program before they enters to their home country. This program is useful before entering into their home country. This will also help to adjust their selves in their home country. I firmly believes that HR manger have to play an important role in an expatriate re – entry process.
International human resource management plays a major role in every organisation to provide a successful staff base and also achieve the firm target internationally. International human resource management mostly rely on HR issues and challenges.
Throughout all the lectures I understand about the HR roles and challenges faced when expatriate enter into the host country as well as issues occur when expatriate re – enter to their home country. After understanding about the international human resource management I realize HR manger plays a vital role in recruiting, selecting, training an employee for the right job globally. The success of the multinational organisation depends on HR manager’s selection. HR manager have a responsibility to make sure to improve skills and knowledge of the employees in order to shine in domestic environment as well as global environment.
These reflective journals help me out to understand about human resource management globally. Our lecturer Mr. Chandana kumara discusses lot of questions and argues with students in related topic. It helps me gather more information in related topics in international human resource management.