An International and Comparative Human Resource Management - Essay Example

An International and Comparative Human Resource Management Summary Global development always reflected effect of the factors generated by global influencing of the capital. For this reason, multinational enterprises (MNE) continue to play a significant part in the world's economy. P&G have been chosen as an example of MNE which operates in South Korean market. In this case, IHRM plays a vital part in successful company's performance in foreign market. The USA and South Korea differ in their cultural traditions and HRM practices, and it is important to apply appropriate IHRM practices to manage cultural diversity at the workplace. Two HRM policies under analysis are training and motivation. These activities play a crucial role in IHRM and help P&G to manage culturally diverse work force. Introduction Today, globalization of markets is an important aspect of modern world system which involves all areas of public life, including economy, politics, social sphere, culture, ecology, and safety. It is one of the most influential forces determining the international HRM. Development of IHRM becomes important in maintenance of human relationships and ensuring the physical well-being of employees so that they give the maximum contribution to efficient working. It is obviously closely related to the management process as a whole and each functional manager and supervisor must apply the principles effectively. According to Torrington (1994, cited Armstrong 2003: 130): "international HRM is not just about copying practices from the Americans, Japanese, Germans and so on which will not necessarily translate culturally. Neither is it simply a matter of learning the culture of every country and suitably modifying behaviour in each of them, which is an impossible ideal because of the robust and subtle nature of national cultures" Also, International HRM have a great influence on the global consumer market as well. The transition to the knowledge economy, globalisation, and omnipresence of information and communication technologies (ICT) require a permanent updating of the skills and competences of organizational workforce. Business is not all about profit but also for organizational value creation. Organizational values in MNEs involve providing opportunities for employees' development and self-realization, pursuing unmatched product quality, creating a safe working environment, and working for the improvement of the natural environment (Dunning, 1993). However, the key issue is how to manage these valuable knowledge, make it easily accessible and understandable by all employees across global workplace and creating a culture of knowledge sharing and trust. The aim of the paper is to apply the concepts of International HRM and comparative HRM for analyzing practices of P&G in South Korea. Information about the MNE's background (Proctor & Gambler) P&G is a multinational enterprise which operates in 160 countries around the world. Its main activity includes manufacturing of consumer, pharmaceutical and household products for diverse target audience. After the Second World War, P&G had started its international and global expansion in manufacturing and sales. In 1954 P&G has started its international activity in Europe leasing a detergent manufacturer.In 1980 P&G became a global company, and after a period of successful mergers and acquisitions with such brands as Noxell, Max Factor and Ellen Betrix, P&G expands its global presence. In 1993, the 50% of sales came outside the USA (Bob's River View, 2002). With the changing economic environment, globalization of markets, international economic integration and increased competition have enhanced the need of new strategies in international and global business. Today, it is one of the most important infrastructure requirements, which is essential for the expansion of opportunities and plays an important role in making or breaking the competitive positioning of P&G. The main products of the company can be divided into 6 categories: laundry and cleaning products, beauty care, paper goods, food, feminine and health care Many European countries restrict access to those goods which do not meet their requirements. This means that products can be barred access on the grounds that they infringe local rules on health, safety and environmental protection. P&G designed and developed all the products (packaging, labeling) in order to meet international and local requirements. P&G has started to penetrate into Asian market, including South Korea in 2000. In this market, IHRM thinking and strategic management are the most important activities undertaken by P&G. Changes to one area of the value chain has knock-on effects in other parts of the business. P&G maintains "the gold standard of marketing" which means "staying in touch with the consumer and building the business than Procter & Gamble does (Bob's River View, 2002). Operating in South Korea involves P&G addressing the issue of cultural difference and consequently developing a balance between standardisation and adaptation. Usually physical nature of the product, packaging, labeling and content, patent laws, local rules, tariffs and taxes differ greatly from country to country, but P&G uses the same design of its products in order to protect local customers and producers, which have the effect of enforcing a degree of global product adaptation. Socio-cultural forces also regulate the values, mores, and customs of society. "P&G's activities in detergents, paper goods (e.g. Pampers), and health & beauty products had a mixture of structures for integration and responsiveness, with some subsidiaries having global mandates, while others regional and national" (Koning, n.d.). Global strategy for P&G is the determination of the basic long-term goals and objectives, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals. An outline of the HRM systems of both the home and the host country (comparative HRM) Proctor and Gambler is a US-based enterprise which can be described as a "perfect" company. The remarkable feature of HRM system in the USA is corporate culture which has a great influence on employees relations and organizational climate. Without exception, the dominance and coherence of culture proved to be an essential quality of HRM. Moreover, the stronger the culture and the more it was directed to the marketplace, the less need was there for policy manuals, organization charts, or detailed procedures and rules. In the USA companies people way down the line know what they are supposed to do in most situations because the handful of guiding values is crystal clear (Beardwell et al, 2004). Corporate culture helps to account for variations among organisations and managers. It helps to explain why different groups of people perceive things in their own way and perform things differently from other groups. It provides a consistency in outlook and values, and makes possible the processes of decision making, co-ordination and control. Payment-by-results methods and flexible working is another feature of HRM. In the USA, many organizations have instituted quality management processes to receive accreditation under the Standards. They lay down the requirements for a cost-effective quality system and how to establish and maintain it, with the aim of demonstrating to customers that their organization is committed to quality. However, this does not necessarily mean that they have a total quality philosophy in their organization. Effective JIT systems include training each employee to do a variety of different tasks, which eliminates the need for specialists. The theory held is that by training employees to do a variety of tasks it gives them the ability to view problems from many perspectives and problem solving can then be transferred from staff specialists to line employees, giving much greater staff flexibility. Employees' skills, knowledge, and abilities are among the most distinctive and renewable resources on which a company can draw, their strategic management is more important than ever (Rugman et al 1995). Taking into account historical development of South Korea, it should be mentioned that this part of the country, contrast to North Korea, was influenced by American culture and traditions. For this reason, there are some similarities in HRM practices of both countries. According to Kim & Yu (2000 cited part, Park, Yu 2000:14) "The traditional Korean HRM system has been defined as one that cultivates long-term loyalty and organizational attachment from employees by providing job security and various seniority-based HRM practices". Recent economic changes and globalisation processes have an influence on Korean HRM. In Korea HRM is the prerogative of senior management. HRM has elevated human resource issues to a position of key strategic importance. To compete today, HR departments are asked to achieve four seemingly contradictory goals. First, they are being asked to be more strategic. The bottom-line business of human resources is the delivery and development of human capital that enable the enterprise to become more competitive, to operate for maximum effectiveness, and to execute its business strategies successfully. "Another important factor changing HRM picture in Korean firms is digital revolution and the rapid growth of ventures. Venture firms using intensively the information technology and internet are not adhered to the traditional Korean HRM model: they don't guarantee job security and they prefer recruiting the workforce from external labor market in offering attractive compensation including stock option" (Park, Yu 2000: 2). In spite these facts, development, learning activities for personal and professional growth and the long term as opposed to training for immediate job performance, is used to prepare managers for future jobs and to lead to promotion. HR factors are strategy, opportunity structure, messages sent by promotions, and long-range staffing goals. In South Korea, the social networks and political influence factors were to do with bosses' identification of, comfort with, and similarity to candidates, candidate impression management and ingratiation, and negotiation through mutual accommodation and adapting jobs for candidates. Another important feature of South Korean model of HRM is gender differences. In south Korea, the places where women work have not changed substantially and remain different in kind from male occupations. In essence, women are working in occupations which reflect their perceived role in society, and are generally found servicing and caring for others. It is recognised that many organisations are adopting equal opportunity policies and are seriously examining whether they are fulfilling the potential of all their staff. However, statistics reveal that progress is slow and the number of women holding senior managerial positions is still insignificant (Management in Korea, n.d.; Gross, Tran, 2002). The interrupted pattern of women's employment therefore decreases the incentives for both women and employers to engage in their training. Although this may explain the position for some it does not explain the position of women who do invest their time in education and training. Neither does it explain the disparities in earnings which exist between men and women where neither have committed themselves to education and training. In South Korea, labour market is divided into two separate markets: prim market consisting of jobs with career prospects, high wages and stable employment; and the secondary market whose jobs are dead-end, low paid and with poor prospects. Research evidence shows that women, and ethnic groups, are over-represented in the secondary market. According to Gross (1996): "Creating a strong sense of belonging drives and motivates Korean workers. The "inwha" forms the root of the Korean organization -- a concept that incorporates both loyalty on the part of the employees and a type of paternalistic concern and behavior on the part of employers toward their workers". According to Gross (2001), in Korea, on-the-job training increases employee pay and other rewards as work experience increases, because productivity increases, and employers are said to make specific investments such as executive training of their employees. Training and development are also proposed to lead to promotion to top management by developing knowledge, skills, credibility, and credentials and thus expertise and power. The application of the relevant theoretical concepts for analyzing the IHRM policies and practices in the MNE. The different positions and perspectives offered above have presented researchers with a number of hypotheses to test and there has been no shortage of research activity into the changing role of IHRM. To analyse IHRM policies it is necessary to take into account internal environment of organiosation. The goals of the organisation may be pursued in accordance with an underlying ideology, or philosophy, based on beliefs, values and attitudes. This ideology determines the 'culture' of the organisation and provides a set of principles which govern the overall conduct of the organisation's operations, codes of behaviour, the management of people and its dealings with other organisations. These sets of principles may be recognised and implemented informally as 'accepted conventions' of the organisation or they may be stated formally in writing (Rugman, 1995). Externally IHRM concerned with labour shortages, union policies on strikes, influencing educational institutions and the legal framework. Government intervention is growing and many new Acts in South Korea has influenced HRM. Human resource management is intimately involved with the environment in general and certain trends are noticeable. New terms and techniques have appeared, for example, manpower planning and management by objectives. Manpower planning should not, though, be regarded as a new technique as it embraces existing techniques, i.e. work study, job evaluation, and description performance rating, etc. Whatever new ideas appear, the criterion should be more efficient utilization of labour. A logical approach to the consideration of this function is to look first of all at the problem of overall company organization and manpower planning, then the operations necessary to implement the plan, that is, recruitment and selection, training and development, and wage and salary administration. Other aspects of human resource management include industrial relations and the law of employment, welfare and safety, and other employee services (Beardwell, et al 2002). In international companies there are some functions that are almost always performed by expatriates from the headquarters country. Start-ups in a new territory or training to deliver skills in local markets inevitably involves expatriate management. The two HRM policies under analysis are training and motivation. Participation in training and development courses over one's career is positively related to manufacturing managers' promotion and pay. A discussion of the factors (host-contextual and firm-specific) that determine the IHRM policies and practices on which you are working. Recent years, P&G has shifted its global focus to core brands and price reduction measures. This strategy has helped P&G to maintained high-speed growth through continuous optimization of its product mix and constant technological innovation. An understanding of the employer's perspective is also important to company managers and specialist skilled staff who are asked to work abroad in any of these capacities or for whom international experience is a prerequisite for career advancement into senior management positions. The key issues concerning management of the home country and host country operations are self-explanatory; for both of these players the transfer of skilled and experienced employees is inevitably a disruptive event that will affect the smooth running of their local businesses. Similarly, for the assignee and his or her family the key concerns are clearly definable, although the order of importance attached to each issue will vary. The corporate issues are necessarily more complex, involving the need to balance the interests of the home and host operations with overriding group interest, which include building and maintaining a cadre of effective, experienced and well-motivated IMEs. A large part of a manager's task is getting things done through people; he must therefore try to understand people's motivation. This aspect of the management element of direction is concerned with inducing people to work to the best of their ability. All aspects of motivation of employees cannot be provided by management as other influences occur outside the working environment, e.g. community and family pressures. Motivation refers to the way urges, aspirations, drives and needs of human beings direct or control or explain their behaviour. It may simply be described as keenness for a particular pattern of behaviors (Robertson, 2002). There is a great difference between Korean cultural norm and job motivation and American one. In South Korea the main driven force of motivation is focused on people's feelings of how fairly they have been treated in comparison with the treatment received by others. People evaluate their social relationships in the same way as buying or selling an item. People expect certain outcomes in exchange for certain contributions, or inputs. Social relationships involve an exchange process. For example, a person may expect promotion as an outcome of a high level of contribution (input) in helping to achieve an important organisational objective. People also compare their own position with that of others. They determine the perceived equity of their own position. Feelings about the equity of the exchange is affected by the treatment they receive when compared with what happens to other people. Women, unlike men, reported having to push for the job after a trial. Bosses cited diversity when women were chosen on merit, whereas availability was cited for talented men. Women appeared to have to demonstrate personal strength and prove themselves extensively before they were promoted, in order to reduce perceived risk (South Korea HR, 2005). P&G have formalised structure and culture. It is important to note that P&G encouraged individualism. Individuals in the organisation are not guided at all times by the primary goals of the organisation. On the other hand, P&G culture is based on a team work: people in P&G valued teamwork and liked to work in teams. Goals and objectives pursues profitability, but this is not by itself very clear for its effective management. P&G gives attention to motivation in all key areas of its operations. The combination of objectives and resultant strategies influence culture, and may themselves be influenced by changes in culture. The primary function of P&G determines the nature of the technological processes and methods of undertaking work, which in turn also affect structure and culture. Employees doe not know long-term strategies which prevent them from effective performance. People with a high achievement motivation may perceive that successful performance is caused by their own internal forces, and their ability and effort, rather than by the nature of the task or by luck. If members of staff fail to perform well on their tasks they may believe that external factors are the cause, and as a result may reduce the level of future effort. On the other hand, if staff perform well but the manager perceives this as due to an easy task or to luck, the appropriate recognition and reward may not be given. If the staff perceive that good performance was due to ability and/or effort the lack of recognition and reward may well have a demotivating effect (Robertson et al, 1992). Becoming a strategic business partner requires that HR functions be involved in the development, planning, formation and implementation of competency-based strategies. Training is important at a time of skill shortages and when the traditional source of young people entering the workforce will diminish noticeably in the next few years (Taylor, 1998). Training requires the co-operation of line managers, adequate finance and resources, time, skilled staff. P&G training development requires a combination of on-the-job-training, through, for example, delegation, project work, coaching and guided self-analysis, trial periods and simulation; and off-the-job-learning. For factory workers located in less developed countries the following plan will be the most appropriate: training sessions and self-assessment programs. External short courses, and further professional study are also important. It can be effectively used on all the level of training. But, the motivation for further education should be provided by Human Resource department which helps employees to identify their career opportunities and goals. This training and learning should be aimed at providing a blend of technical competence, social and human skills, and conceptual ability. This form of training is time and cost consuming. Conclusion To conclude, IHRM functions should be flexible to meet the needs of a particular country. Achieving strategic fit in IHRM today rarely means stable fit and, increasingly, strategic management means change management. Maximizing each employee's potential as an individual and as a team member is a key to maximizing the profitability of each company unit. A large part of a international human resource manager's task is getting things done through understanding employees' motivation and specific cultural traditions. This aspect of the management element of direction is concerned with inducing people to work to the best of their ability. References Armstrong, M. 2003. Human Resource Management. Kogan Page. Behavior. 2nd edn. Boston: Kent Publishing. Beardwell, I. Holden, L., Claydon, T. 2004, Human Resource Management, London Pitman Publishing, Bob's River View. 2002. Available from: http://www.reveries.com/reverb/packaged_goods_marketing/wehling/ [Accessed 20 Oct 2005] Dunning, J. 1993, Multi-national Enterprises in a Global Economy, Workingham: Addison-Wesley Gross, A, Tran, C. 2002, Korea Returns as an Economic Force Pacific Bridge, Inc. - Korea HR Publications.. Available from: http://www.pacificbridge.com/Publications/Korea2002.htm [Accessed 20 Oct 2005] Gross, A. 2001, South Korea HR Update, Internal Publication Pacific Bridge, Inc. - Korea HR Publications. Available from: http://www.pacificbridge.com/Publications/KoreaSummer01.htm[Accessed 20 Oct 2005] Gross, A. 1996, Human Resource Issues in South Korea. Available from: http://www.pacificbridge.com/Publications/KoreaSummer96.htm[Accessed 20 Oct 2005] Koning A. Reach for Regional Strategies for Global Competitive Advantage. n.d. pp.128-127. Available From: www.blake.montclair.edu/cibconf/conference/DATA/Theme1/reach.pdf [Accessed 20 Oct 2005] Management in Korea: employment, policies and practices. N.d. Available from: http://www.ftmastering.com/mmo/mmo13_2.htm Park, Woo-Sung, Yu, Gyu-Chang. 2000, "Transformation and New Patterns of HRM in Korea". International conference on Transforming KoreanBusiness and Management Culture.. Available from: www.kli.re.kr/20_english/ 02_work/file/HRM%20in%20Korea.pdf [Accessed 20 Oct 2005] Robertson, I .T., Smith, M., Cooper, D, 1992, Motivation, Institute of Personnel Management, London Rugman, Alan M. and Richard M. Hodgetts. 1995, International Business: A Strategic Management Approach, McGraw-Hill, Inc, United States South Korea HR Update. 2005. Available from: http://www.pacificbridge.com/Publications/KoreaSummer01.htm [Accessed 20 Oct 2005] Read More