International HRM In Globalized Business Management Essay
This assignment includes the journals which are in core with international human resource management. In a modern competitive environment most of the organization move globally. So IHRM plays a vital role in globalized business. In IHRM the main factors are planning, staffing, performance, training & development, compensation and international context. IHRM is basically business occurs globally that is human resource is managed internationally.
The main objective of writing this journal is to identify my strengths and weakness regarding this topic as well as identifying the theories and practical by analyzing particular topic. It gives wide knowledge about international human resource management.
This reflects journal is about my observation, theatrical understanding and my personal viewpoints of each session of IHRM class. In order to present my view point better I refer magazine, books, online 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 and expand my knowledge to do better in my final examination.
Introduction to IHRM
In modern competitive environment company efficiency is greatly influenced by 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 to settle down in that 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 International human recourses manager for an organisation which has branches in overseas to manage diversifies human capital effectively needs to have a good understanding of cultural diversities and ability to handle this diversity efficiently.
Managing human resource management internationally is difficult because we have to consider the government regulation, policies, cultural background and strategies to be effective in the enterprise. Major factor is first in international human resource management first we have to satisfy the regulations of PCN, HCN, and TCN as well as government regulations also. The international HR manager has these kind challenges to be successful in the business.
As a result HR manger should identify and evaluate HR in broader perspective. 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).when the organisation evaluate the employees performance they have to be careful with three nation and have to satisfy to use or translate by middle person to know about the procedure. When moving to broader perspective they have to treat all the employees equally and pay attention to give compensation and promotion. When an organization moves in to international business it involves different types of employees and their personal life. For an example we have to offer the promotion fairly to all employees and we have to consider all three nations when we are doing this. The risk exposure is also very high when comparing with the domestic HRM. External factors also play a major role when the organization does a business globally. The external factors control the IHRM which are doing business with host country government, the growth of the host country government and state of economy. These are the factors that HR manager should be aware to achieve the organization 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 and people thinking gives more prominent for IHRM in an organisation.
Second class is all about cultural framework. This part is basically describes on cultural behaviour of the society impact 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 employees. Here they study different culture of each country related to human resource management and expatriate will experience cultural shock. HR manager must know well about host country culture to reduce conflicts, to reduce cultural shock and to increase business success to the organisation. Expatriate to overcome from frustration the organisation has to train them as well it will give success to the organisation.
According to measuring the assessment of situation culture can be dividing into two. They are emic and etic prospective. Emic refers how own nation look at their own culture and Etic is refers how others views about their culture. IHR manager will have knowledge of both regarding accepted customs and values of the nation as well as his view to understand 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 clear path of these countries 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 as they call sir or madam when they are addressing someone. 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 lecture class 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. (Eg 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 a 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.
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.
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.
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).
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 life 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 that 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.