International Human Resource Issues Dilemmas And Complexity Management Essay
Sinclair & Co was founded in London, an IT Consultancy in 1973 by Adam Ferguson. The company floated in 1995 retaining 5% share by Ferguson. During 1980s, the firm gained a customer base in UK as Enterprise Resource Planning (ERP) systems began to be seen as vital competitive factors. Sinclair & Co consultants were of two types: ‘veterans’ (aged 50 plus) and young consultants (aged 27-40 and even consist of women employees). The consultants grouped into two are; “Consultant Adviser’ and ‘Senior Consultant’, highly incentivized. In 2001, the firm opened offices in Frankfurt (Germany) and Paris (France) and later in 2004, at Noida (near New Delhi, India). Moreover, in future the goal is to open offices at Singapore, Hong Kong and Shanghai.
INTERNATIONAL HUMAN RESOURCE ISSUES, DILEMMAS & COMPLEXITY
Administration of human resource in worldwide trade is known as International Human Resource Management (IHRM). Every country may be different in terms of the ethnicity, multilingual, monetary, political and legal state. Failure in global ventures is due to the lack of understanding in managing the varied necessities and opportunity of workforce across different ethnicity. It is essential to understand that what has proved to be successful in the domestic market need not necessarily be successful in the international market. Employees from different backgrounds have different requirements and expectations. The general beliefs in developing countries are multinational companies have better HRM systems when compared to local companies (Taylor, Beechler, & Napier 1996, Duarte 2001). Multinationals considered being ‘pattern-setting employers’ in China and India; these are gradually leading to the emergence of global value paradigms among their employees (Chatterjee & Pearson 2000, Zhu & Warner 2000, Warner 2004). Local organizations are still very far from applying the concept of HRM as is understood internationally (Warner 2004). Global companies are regarded as training grounds for local employees and that local companies copy HRM systems from their global counterparts (Khilji 2004).
HR ISSUES OF SINCLAIR & CO
HUMAN RESOURCE PLANNING: According to Sinclair and Co the administrators can be made to take care of the HR activities in each country i.e. an HR administrator for UK, France, Germany & India and they will be reporting to the HR manager directly. A proper planning helps in providing equal opportunity to all employees. The challenge for organization would be to boost the equality and more openings in the workplace. The entire subsidiary is directed by the procedures of the parent company. All HR issues should be solved and managed in the respective country and through the administrators. In this case, the chances of prudence between the countries managers can be reduced to a great extend.
RECRUITMENT & SELECTION: There is almost no swapping of people among the companies as far as Sinclair & Co is concerned. Expatriates can be sent to foreign countries to provide technical and administrative services based on the requirement on rotational basis and leave once they have finished their assignment. In case of new business, a deployment of parent country national as expatriates is the best option. Gradually locals have to be developed to take over the charge. Recruitment and Training can be localized.
TRAINING & DEVELOPMENT: Training is a lifelong endeavor and expatriate must be flexible to adapt to the cultural changes and must be competent enough to gain the respect of subordinates in the foreign country. Technical competence is an important factor in deciding the candidates for overseas assignment. In fact, expatriate failure is rarely a result of a need of technical skills (Shen, 2005). Therefore, organization has to prepare and train the expatriate employees to work in an international assignment. Other than the technical skills, the expatriate employees have to be adaptable and should possess all other skills such as languages and a proper understanding of social customs, cultural values of conduct, and motivation and reward systems in the host country. Thus making it essential for managers to be educated and trained in International management skills.
Hence MNC’s must provide sufficient training to expatriate by implementing variety of training techniques such as developing the local language skills which would help in day to day dealings in the host country and also understand values, customs and behavior which is essential for expatriate managers and employees to succeed in today’s competitive business environment. Expatriate employees who receive orientation not only will be more important to their MNC’s, but also will receive 30 percent more than those who don’t receive such direction (Galagan & Wulf, 1996). Employees have to be trained to study and value the essentials of diverse culture. Global managers have to be trained to manage teams with people from different cultures and backgrounds. Training is essential to carry transformation in business. The organization should persuade employees to become keenly involved in company activities by submitting continuous feedback. The employees can be retained within the organization by increasing the motivation and satisfaction levels and widening the chances for increasing the opportunities for employees to develop professionally by conducting corporate training programmes and other educational opportunities.
COMPENSATION MANAGEMENT: The exchange rates are different for different countries. The major task is to make sure equality and justices of payment among the employees of the organization. The use of structured assessments encourages healthy competition among the employees and helps to a get better superior subordinate relationships. This improves the employees to work, as workers are able to work together as a team. Improved productivity may translate to higher bonus as well. The Company has to communicate clearly the evaluation techniques used for assessment. By understanding the evaluation techniques helps the employees to be motivated towards achieving goals and objectives of the organization.
CAREER MANAGEMENT & DEVELOPMENT: Employees expect improved career advancement opportunities and better prospect in an MNC. It is the responsibility of the HR Department has to ensure whether the career needs and expectations of the employees are met, this would help to retain the employees within the organization. Career development initiatives and succession planning in the company can ensure that both employ and the company enjoys long-term benefits of working together. To improve the dedication and reliability, it is important that employees must identify with the company and feel proud to being a part of the organization. It is essential, for a company to keep up an image to prove that it is worthy of a long-term association.
MANAGING CROSS – CULTURAL ISSUES: In the book “Blunders in International Business” by David A. Ricks he explains, “Cultural differences are the most significant and troublesome variables Ã¢â‚¬Â¦ the failure of managers to fully comprehend these disparities has led to most international blunders.” In an international organization, the employees must have the expertise to function and direct in a cross cultural team. It is also the task of the HR manager to cultivate an organizational culture that encourages diversity at work place.
According to ‘Douglass’, “Performance appraisalÂ is a method of acquiring and processing the information needed to improve an individual employee’s performance and accomplishments”.
To put it simple words performance appraisal is evaluating the performance of employees and communicating the results for developing the employee. Every organization has some kind of performance appraisal system for monitoring the individual employee performance.
Even though performance appraisal is a widely used term in most companies, Sinclair and co find it difficult to manage its international appraisal mostly due to the lack of coordination between the host country and the subsidiary. In order to have an effective appraisal system; employee attitude, acceptance, good relationship, and regular communication between appraisers and appraisee is required along with timely and accurate feedback. As far as international business is concerned, it may be challenging for a regular feedback, as the employees do not get an opportunity to discuss their review. Subsidiaries are an extension of the parent and hence most of the HRM policies are exported to the subsidiaries. It is important for Sinclair & Co to conduct exemplary performance appraisal such as regular feedback contact with supervisor and follow up which can help in the long-term retention of the employees in the organization.
Regular contact and follow up by e-mail and telephone with the employee is necessary for an effective appraisal system in order to facilitate accurate and reliable assessments. Traditionally appraisal was done by the supervisor, in recent time’s 360 degree feedback, peers; subordinates play an important role in assessing the performance of the employees giving a holistic way of performance review. Its also important for the organization to take steps to employee is equipped with the necessary skill sets to perform his role and is provides with regular feedback as to where he is heading rather than throwing ‘year end surprises’ in the form of annual performance appraisal.
In this global sineario, the value of expatriate employees is more significant than the domestic operations. Multi National Companies be in small, medium, or large have overseas subsidiaries, are facing crises in recruitment, orientation, selection and compensation as well as the reintegrating expatriate causative managers. Inspite of these issues, the expatriate managers are being considerably to the achievement of the MNC’s goals and as a result, their importance should not be overlooked (Treven, 2003).
Sinclair & co should have a global strategy for its subsidiaries in different countries. The absence of a global strategy can lead the management to evolve their own style, which can be very different from one another that can lead to the whole system dysfunctional, it is important that HR policies and systems in different parts of the world be in harmony for the smooth functioning of the firm.
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Multinational organization is conducting business in global markets and that is the reason the workforce is distributed worldwide because of which certain problems occur in managing the human resource across boundaries. Culture plays a major role in the behavior of the employees within the organization. The employees are expected to have a conscious cultural knowledge when it comes to cultural adaptation. The culture of the host country should never be estimated because it is as important as selection, recruitment, training, motivation and compensation practices.
DEFINITION OF CULTURE
Hofstede, G. (1984). ‘National Cultures and Corporate Cultures’. In L.A. Samovar & R.E. Porter (Eds.),Â Communication Between Cultures. Belmont, CA: Wadsworth. “Culture is the collective programming of the mind which distinguishes the members of one category of people from another.” (p. 51).
International business brings people of various countries together. As a matter of fact, most of the MNC’s face intercultural communication and management issues. The success of business operations in foreign countries is normally attached to the accomplishments of the expatriates sent by headquarters in continuing essential communications between headquarters and international operations (Harzing, 2001). It is very important to be aware of the customs, values and tradition as it decides the success and failure of the business. As far as Sinclair and co is concerned it is essential for the company to know the culture of each country it has extended its business thus making it possible to understand whether the host countries contribute to success. Typically, studies that examine the cultural influences on expatriate success discuss the need to understand the host culture of the target country and ways to adapt to that culture (Randolph and Sashkin, 2002; Selmer, 2001; Osman Gani, 2000; Black et al, 1999; Fenwick et al, 1999; Katz and Seifer, 1996; Black, 1992). Based on these studies it is understood how far other cultures affects success and failure.
In order to function successfully in a different culture one has to be aware of ones own cultural orientation. Most people consider their culture accepted as we have absorbed it from birth our childhood with no conscious attempt. Ones own culture has the power to influence in the successful adjustment to the host culture. Hence it’s important for Sinclair & co to understand the national culture of the countries that the company has its operations. An expatriate’s own cultural surroundings influences to a great extend how successful he/she will be in overseas assignment.
The main goal of every business is the success in expatriation because that determines the accomplishment of the organization in the universal environment. Firstly the company has to screen for personality characteristics in employees such as flexibility, openness and sense of advantage so that to identify whether the employees can cope with cultural changes. Employees lacking these qualities can be trained to attain them or screen them out of the selection process from the foreign assignment.
Proper training must be given to the expatriate to familiarize with the foreign culture as it becomes easy for communication and effective function with employees from different background.
International business is made of different countries with different rules and regulations. Each country follows its own rules and regulations and each country has its own different way of life and habits as they have developed differently. It is vital for the host country to be aware of the government regulation of all the subsidiary companies country as the tax laws, work permits etc are beached in a countries culture.
As Sinclair & co is concerned a comparative study in national culture and cross-culture has to be done.
CROSS CULTURAL MANAGEMENT
In international business as it involves communication and association between people across nationalized borders, and also considering the cultural environment is very important. Consequently, an understanding of cultural divergence is necessary for the HR manager at corporate headquarters as well as in the host location (Tung 1993). Most of the HR activities such as recruitment, training, motivation and compensation have to be determined by the host country. For example in Sinclair & co the Indian MD has hired most of family members instead of competent staff and most of the British managers were upset here the Indian was fulfilling his duty to his family by employing family members since he was in a position to hire he was compelled to do so. Adjusting to new cultural environment and coping with the cultural difference is a challenge of the expatriate employees.
The development of a company’s HR policies are subject to cultural influences and that MNCs must take these culturally based differences into account when operating overseas (cf. Hofstede, 1980; Laurent, 1986; Schneider and Barsoux, 1997; Adler, 2003). IHRM deals with issues of cultural differences in management style (Hofstede, 1980), employee motivation (Smith et al., 1996), leadership style (House et al., 1999; Keating and Martin, 2004), negotiation style (Martin, 2004), as well as cross-cultural training and acculturation issues for expatriates (Black et al., 1999).
The purpose of study in the cross-cultural management (CCM) approach is to clarify the variances in employee behaviors and employee approach as well as organization practices using “culture” as an descriptive variable. Culture tends to be operationalised according to psychological dimensions.
Issues in cross-cultural management
While considering Sinclair & Co CCM is concerned with examining whether organizations and HRM practices are diverging and converging. Sinclair & co are more similar in terms of structure and technology (macro-level variables) whereas people’s behavior within that organization (micro-level variables) continues to manifest culturally based dissimilarities.
All the managers in subsidiaries should have a strong international orientation in terms of company objective and the aims. Hence the managers can concentrate more on home issues and reduce the difference between international and domestic environment.
Sinclair has to give more importance to the extent of reliance in UK – the domestic market even though it is a major player in the UK, and is seen as a competitor by some global US concerns that work in the UK. The company has to provide better services to the customers and establish itself in the domestic market.
BEST PRACTICE APPROACH LINKED TO SINCLAIR & CO
“Best practice is a method where organizations identify their key business processes, and actively seek out and compare them with similar processes in organizations recognized for their exceptional customer service or outstanding business processes. The purpose of the comparison is to gather information and insight about better, more efficient and effective methods and approaches, with the view to identifying and implementing the ‘best’ practice/s.” (Derek Stockley, 1990)
Sinclair & co’s HRM could contribute to the ‘Best Practice’ approach on the influence of foreign MNC’s on national HRMS and the transfer of MNC HRM into indigenous country. The HR managers should be trained in such a way, as they have ability to shift HR practices across nationalized borders or on the prospect to build international best practice HR principles.
From Best Practice approach the Sinclair & co could be suggested that there are profit which have being acquired from engaging in mutual, comparative, inter-disciplinary, cross-cultural channel of communication and research. Before embarked on the expedition of team building, the HR managers from the five different strands must be trained about the culture and policies of the global company by recognizing and accepting the strengths and weaknesses of each approach. ‘Innovation and Continuous improvement is necessary’.
Sinclair & co has suite to the proven services and technical control for the plan and execution over solutions for the design and implementation of a practical compliance framework tailored to information risk management needs.
The best practice strategy helped Sinclair & co to:
become more viable in UK
increase sales and expand new markets globally
improving the proficiency of workforce
efficient use technology more effectively
respond more quickly to innovations in particular sector
E.g. Sinclair & co established in France, was having the best database management system and was able to won contracts of foreign expansion French firms. Basically Best Practice Theory efforts to elucidate the way HR strategies in general and incentive policies in particular can be directed to larger organizational effectiveness.
Limitation of Best Practice Approach related to Sinclair & Co:
The HR managers from different countries are oriented towards their country culture values compared to host country culture and cross culture. E.g. Sinclair & co at India, the manager was able to build turnover and support expansion as he had experience of being worked in UK team. There is lack of universality with regard to reward system.
Many cultural difficulties exist in cross cultural management that has a major impact on the effectiveness of international business. Creating the right corporate culture with in the organization to accommodate people from different cultures is also the responsibility of international HR managers.