The Concepts of Du Plessis and Beaver - Essay Example

FACULTY OF BUSINESS ENVIRONMENT AND SOCIETY ID Number: Module Number: . Table of Contents Table of Contents 2 Introduction 3 Divergence and Convergence HRM: 3 Factors influencing performance, employee engagement and disengagement, psychological contract fulfilment: 5 Base salary, allowances, benefit inducement/hardship premiums 7 Home based and accompanied with its Advantage and Disadvantage 7 HOST- based approaches accompanied with its Advantage and Disadvantage 8 Influence of culture on rewards and compensation practices in international and domestic perspectives 9 Recommendations: 11 Conclusion 13 Reference List 14 Du Plessis and Beaver (2008) argue that pay and conditions of work should not be standardised in multi-national companies Introduction According to Albrecht (2010), widening the scope of operations with the help of globalisation has led to the increase of complexities in the internal managerial processes. The changes instigated as a result of the multinational operations of the business houses, diversified the human resource management system of the organisations. With the introduction of a culturally diverse workforce and customer base in the business process, the designing of the work culture and organisational policies changed. The concepts of Du Plessis and Beaver (2008) mainly are based on the principle that managing employees in a multinational environment increases complexities for the managers unless there is a uniform set of policies to govern the diversified workforce. In this regard, Du Plessis and Beaver (2008) mentioned that companies operating in multiple markets across the world should not engage in changing the pay and work conditions of the employees as it may create discrepancies among the employees of various sector. This statement will be analysed in the following sections of the essay in reference to the changes and the challenges in managing the human resource departments of the multinational organisations. Divergence and Convergence HRM: Buckley and Monks (2004) noted that previously reward and compensations structures of a company were formed depending on the financial stability and the profit earning ability of companies with short-term focus. However, now as firms are trying to formulate strategies for developing long-term benefits and employee needs and expectations perform an important role in this system. According to the studies of Greer (2010), the role of the human resource management processes is to ensure that an organisation has the necessary resources for achieving their organisational objectives. The primary considerations behind the HRM strategies should be to focus on the requirements of the organisation and align the interests of the employees with the organisational needs. Kozami (2008) stated that in the contemporary scenario, the business processes of the firms include the aspect of sustainable business practices along with improved productivity and performance from the workforce of the firms. Hence, in order to motivate and encourage the employee, compensation and rewards structures are used as a primary method. Considering the approach of work structure of the multinational firms, cultural diversity is an integral part of their work force which also enhances the need for the managers for designing the HRM framework based on the cultural diversity of the employees. In this regard, Du Plessis and Beaver (2008) mentioned that developing similar strategies for the workforce of the multinational firms operating in different geographical scenarios will reduce the complications of the management. Another benefit of this principle of Du Plessis and Beaver (2008) is that employees will feel motivated as discrimination will be based on performance and not cultural or other reservation systems. However, Banfield and Kay (2012) argued that as work conditions and regulations differ in various nations, organisations are obliged to fulfil all the regulations imposed by the government and other regulatory authorities. Diverting from these criteria can led to a fall in performance and productivity of the employees. With the increasing in market competition, firms are trying to enhance the scope of market operations and in the process have expanded their market to the transnational segments. This has brought in many changes in the organisational policies and also created discrimination mainly in context of the style of management. The aspect of centralised and decentralised management also became the focus for designing HR strategies. On the other hand, comparison between the working conditions among the employees of the various countries has resulted in chaos in the internal business process of the firms (Han et al. 2006). Thus based on the above discussion, the argument of Du Plessis and Beaver (2008) can be considered valid. However, focusing on the elements of differences in the work conditions in various geographical locations the process of employee management is bound to change (Rynes, Colbert and Brown, 2002). Factors influencing performance, employee engagement and disengagement, psychological contract fulfilment: Employee engagement and disengagement are also among the primary factors associated with the responsibilities of the HR managers in the 21st century. Managers should focus on identifying the problems faced by their employee base in committing towards their responsibilities. In this regard, Bjorkman and Stahl (2010) identified that barriers can be categorised in two parts namely, internal and external. Internal barriers towards commitment generates from the expectations of the employees. Employees are demoralised and can perform poorly when the organisations are not able to fulfil the expectations of the employees. Chapman and Webster (2007) also added that inability to perform creates job dissatisfaction which ultimately reduces the confidence and commitment of the employees. External factors, on the other hand are based on the scope of work provided by the work structure of the company (Chapman and Webster, 2007). The nature of responsibility, employee engagement in decision making, supportive and collaborative network in the workforce, etc are some of the most influencing factors effecting employee engagement processes (De Cieri and Hutchings, 2009). In order to manage these factors, rewards and motivational strategies are developed. However, Du Plessis and beaver (2008) assessed that HR managers should consider in cumulating the employee requirements rather than individualising them. Changing the rules for every employee can create a biased work structure which will also form the problem of employee retention. Bae and Lawler (2008) explained that psychological factors influence the employees in terms of the decisions regarding their need in the organisation, their level of commitment and most importantly their expectations from the organisation. The changes in the management processes of the firms are often directed by the behaviour of the employees which has been considered as unethical for business management by Garavan et al. (2008). The development of the performance management system and monitoring processes are the most influenced responsibilities inflicted by the psychological criteria of the employees. Doty (2008) noted that optimal biasness can be observed among employees of a firm and it is even more reflected when an individual is transferred to another work place or department. The changes in the attitude of the employees also influence the structure of rewards and compensation strategies. According to Rynes, Colbert and Brown (2002), base level employees are mostly influenced by the monetary rewards in order to improve their life styles and also meet their requirements whereas middle level employees strive more self recognition and better opportunities in the industry. Finally the higher level employees are solely focused on enhancing their social status and making a position for themselves in the professional and social sphere. Gratton and Ghoshal (2008) also added that employees who are self-sufficient may not relate to the performance requirements of the company as they can fulfil their personal requirements. Thus, the application of rewards and their affect on the employees depends upon the designation of the workers as well their social status. Base salary, allowances, benefit inducement/hardship premiums The pay structure of an employee is formed of many factors such as basic pay, provident fund, gratuity, fringe benefits, insurances, etc. The managers have to calculate these factors by considering each individual employee. On the other hand, this directly contradicts the argument of Du Plessis and Beaver (2008), as the changes in the environmental factors also instigates changes in the requirements and costs of the employees and the organisations. Gratton and Ghoshal (2008) related this with organisational culture of the multinational organisations and observed that as most of the multinational firms are managed in a decentralised manner, the structure of the compensation and rewards are designed in accordance to the scenario of the concerned department. This is a practical evaluation and also relates with the existing pay structure and compensation framing processes of the firms. Bae and Lawler (2008) noted that in the contemporary scenario, many firms are adding extra benefits for their employees such as food coupons, loyalty points, family gifts , etc which are also included in the operational expenses of the firms. Hence, the differentiation among the pay structure is bound to happen as the needs of the employees are diverse in nature. Home based and accompanied with its Advantage and Disadvantage Considering the situation where the pay structure and reward strategies are framed according to the criteria of the home nation of an organisation, Rynes, Colbert and Brown (2002) stated that advantages and disadvantages mainly relies on the economical status of the country. For instance, when the home nation of the organisation is the United Kingdom and the host nation is a developing nation such as Brazil or India, the pay structure of the employees will increase for the home based nation (based on exchange rate of the currency). This is again a discriminatory factor that does not associate with the theory of Du Plessis and Beaver (2008). Another factor is the consideration of the wage rates and insurance requirements framed by the national authorities such as government of the nation. In the UK, all the organisations are required to pay for the medical benefits of the employees, whereas in India the clause is only implied for registered public and private companies (Albrecht, 2010). In this relation, the expenses of medical factors also influence the medical, plans of the organisations for their employees. One of the negative aspects of home based pay structure and reward strategies is that the nature of expectations of the employees also changes with their cultural and geographical scenarios. For instance, in the UK organisations such as Tesco and Sainsbury’s provide loyalty coupons as rewards, which allow the employees to purchase products and services from their preferred brand (Han et al. 2006). However, in India the employees prefer monetary rewards which can be lower in terms of organisational expenses. Even while considering the work policies, motivational processes and performance monitoring methods, the organisations have to consider the factors of the individual work places. HOST- based approaches accompanied with its Advantage and Disadvantage Contradicting the previous case of home based approaches, the host based approaches have been considered as more appropriate by researchers such as Budhwar (2009) and Han et al. (2006). (Brewster and Harris, 2009) opined that business houses have to consider the changes in the individual needs and requirements of the employees rather than sticking to a constant strategy for employee management. Kozami (2008) noted that employees are hesitant in conforming to a foreign policy to which they are not accustomed. On the part of the organisation, implementation of foreign policies also adds expenses of the firms because of the extra training and induction process associated with it. On the other hand, this increases the discrimination in the management processes and also creates different variables for measuring the performance and productivities of the employees. The changes in the managerial roles and responsibilities also impact the performance of the employees and their commitment towards an organisation. Chapman and Webster (2007) explained that organisations operating in the West are more focused on employee needs, however in the Eastern nations the organisational considerations are directed towards the consumer needs This changes the basic nature of work and policy formations of the human resource management department of the firms and hence induces multiple standards. Bae and Lawler (2008) considered that changing the rules of work or the environmental habits of the employees may reduce the attractiveness of the work culture for the existing and potential employee base of the organisation. Becker and Gerhart (2009) questioned the statement of Du Plessis and Beaver (2008) stating that reducing complexities of management is beneficial for the firm only if the strategies do not subsequently influence the performance and productivity of the employees. Influence of culture on rewards and compensation practices in international and domestic perspectives Influence of culture on the rewards and compensation practices of international and domestic firms is based on the nature of nation in which the concerned firm is operating (Kozami, 2008). The changes in the structure of rewards or compensation or the designing of the compensation structure also relates with the economic condition of the host nations. For instance, businesses such as American Food and Beverage company, McDonalds who have a worldwide market and operate in Triads as well as the emerging nations of the world (Albrecht, 2010). By implementing the Hofstede’s model for cultural dimension, it can be observed that power difference is more in case of emerging nations such as the Brazil, Russia, India and China whereas in case of Triads such as the USA or UK, the power distance is limited (Becker and Gerhart, 2009). Thus, the employees working in emerging nations will be provided a platform for voicing out their needs while the employees operating in Triads will have the opportunity for professional growth along with social recognition. On the other hand, considering the economic states of the nations and the fluctuating global economy, the basic needs of the employees also differ (Brewster and Harris, 2009). The concept of Hofstede’s cultural dimension will be used to determine the performance and productivity of the employees. The first factor of Hofstede model is Power/Distance which shows the respect or disrespect of the employees towards the managerial decisions (Becker and Gerhart, 2009). The primary nature of a high power distance organisation is that of discipline among the employees towards the organisational decisions. On the other hand, with lower power distance, employees are treated as equals of the management and included in the decision making process of the firm. Albrecht (2010) argued that in the contemporary scenario, the aspect of discipline is developed by generating loyalty from the employees. In context of international reward and compensation structure, the aspect of power distance increases the diversity among the pay structures of the firm based on the designation of the employees. The second variable of the cultural dimension model is that of individualism which is also commonly observed in the work structures of the firms in the current scenario. Business firms are trying to create a stress free work structure for the employees and allow the employees space for their privacy. Gratton and Ghoshal (2008) however stated that high level of individualism is focused on the performance of the employees in an individual manner which also reduces the aspect of teamwork. In case of low individualism, the work structure is primarily based on the performance, knowledge and skills of the employees. In context of reward structures and compensation process, firms with low individualism includes materialistic rewards which may or may not relate to the personal needs of the employees as the process of gathering personal information is limited (Brewster and Harris, 2009). Masculinity on the other hand, refers to the discrimination of the employees based on gender. According to Perkins (2008), masculinity has the highest level of influence on the reward structure of the firms and also initiates changes in the nature of work process for the female and male employees. For instance, in case of paternal or maternal leave the female employees are allowed a minimum leave period of 1 month where as for male employees it is hardly of 10 to 15 days. Other differences include medical benefits and bonuses for physical work processes. Greer (2010) noted that based on the policies of organisations for uncertainty and avoidance, the reward and compensation structures are changed. The organisations with high uncertainty and avoidance are mostly expected to follow strict rules for the rewards and have a steady policy for their different organisational departments functioning in different geographical regions. This directly relates to the statement of Du Plessis and Beaver (2008) and also creates a uniform standard for the multinational organisations. Finally in terms of the long-term orientation, changes in the reward and compensation structures in accordance with the changes in the environmental and work scenario are valued in firms with high long-term orientation (De Cieri and Hutchings, 2009). The processes of the firms are also expected to be focused on the changing needs of the employees as well as adjust their pay structure and benefits provided to the employees subsequently. Recommendations: From the above analysis, it has been gathered that designing and implementation of a common pay structure within the operational culture of a multinational organisation may not be feasible. As the workforce, work structure and work culture of different geographical regions vary, the expectations of the workforce and managerial styles also differ. However, if the argument of Du Plessis and Beaver (2008) are to be believed, the primary objective was to reduce the complicacies in making managerial decisions in context of human resource management functions. The recommendations will thus focus on simplifying the managerial roles and responsibilities of the MNEs. The first recommendation will be to ensure that basic framework for building organisational policies are equal across all the major departments and operational regions of their establishments. This will include the development of the code of conduct, pay structure particulars, fringe benefit clauses etc. This will also lead to the alignment of the workforce objectives and direction across all the business units and help in accelerating the growth and development process of the firms. This recommendation in a way is based on the argument of Du Plessis and Beaver (2008) as it will help in setting uniform standards among the business units and help in reducing the complexities in the decision making process of the managers. Another business function that can be developed in uniform structure is the performance management system. The aspect of performance management can be implemented in a single framework for the overall workforce of a MNE. However, the elementary clause for this recommendation is that the business units must be engaged in similar nature of work. Unifying the performance management structures of the MNEs will not only help in making decisions related to the operational structure of the firms but will also help in selection of potential successors for future sustainability of the business. An additional utilisation of uniform performance management structures is that the organisational process of the MNEs will help the managers in adjusting with the work structures of different business units situated in various geographical regions. Thus, MNEs can shuffle their employees across their business units based on the scenario and the need of the firm. Uniform practices across various organisational functions of MNEs will help in developing a transparent managerial system but ignoring the differences in the employee nature will not be a viable option. Conclusion The article of Du Plessis and Beaver (2008) was developed with the objective of evaluating processes for reducing the complicacies of the MNCs. The argument of developing a uniform work process was thus developed in the study. On the other hand, considering the practical scenario of business processes of MNCs, the implementation or development of a standardised operational framework may not be suitable. Relating to the pay structure and the reward strategies of a business, it was observed that employee need varies on the basis of their social and cultural background. Also the cultural influence was further analysed with the help of Hofstede’s cultural dimensions which brought in the aspect of political and economic significance of the market place. In respect to designing the reward structures and pay structures, it was noticed that business houses are trying to promote employee performance by providing them physiological and psychological elements related to their basic needs. Finally, the changes in the influence of governing policies and bodies for the MNCs also prevents the companies to design a uniform work structure and payment structure for the employees operating in different zones. Thus, it can be concluded that although the argument considered will help the MNCs to reduce the managerial complexities but implementing the concept in real world scenario may not be the appropriate option. Reference List Albrecht, M., 2010. International HRM: managing diversity in the workplace. 5th ed. London: Academic Press. Bae, J. and Lawler, J.J., 2008. Organizational Performance and HRM strategies in Korea: Impact on Firm Performance in an Emerging Economy, Academy of Management Journal, 43(3), pp. 502– 517. Banfield, P. and Kay, R., 2012. Introduction to Human Resource Management, 2nd ed. Oxford: Oxford University Press Becker, B. and Gerhart, B., 2009. 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Han, J., Chou, P., Chao, M. and Wright, P.M., 2006. The HR competencies-HR effectiveness link: A study in Taiwanese high-tech companies, Human Resource Management, 45(3), pp. 391-406 Kozami, A., 2008. Business policy and strategic management. 5th ed. London: Prentice Hall. Perkins, S., 2008. Strategic International Human Resource Management. 6th ed. New York: New York University Press Rynes, S., Colbert, A. E. and Brown, K. G., 2002. HR professionals’ beliefs about effective human resource practices: Correspondence between research and practice. Human Resource Management, 41(2), pp.149-174 Read More