The International HR Managers for MNCs and Their Strategies - Research Paper Example

1) Introduction The emergence of the Multi National Corporations (MNC) as the dominant force for the production and distribution of goods and services worldwide brings to attention an organizational form that has business interests and employees that are spread amongst different countries rather than confined locally. It can be seen that there are competing forces characterising the operation of MNCs versus internationalization of various HR issues. In order to clearly understand this intricate scenario, it is imperative to begin by defining globalisation which is the major term underlying the whole discussion. In attempting to highlight some of the considerations the managers of MNCs have to take into consideration in the event of operating in other countries in view of globalisation, it is imperative to define the whole concept of globalisation first. Globalisation is loosely defined as the economic activity taking place across the national boundaries (Buckman 2004). Globalisation is a result of internationalisation of financial markets which aims to promote free trade as well as direct investment among member states across the world. It liberalised trade where the barriers to trade which used to exist among nations were removed and different countries can engage in free trade. In the business strategy area of MNC’s, it can be seen that they try to position themselves to respond to the competing pressures to standardize production, to gain from economies on the one hand while remaining viable to respond to the local market pressures internationally in the host countries. Thus, HR management of MNCs strives to grapple with international operations that demand inter-functional teams and international project teams that require multi cultural management competencies. However, as noble as it may be, that best practice is impractical in terms of MNC and the use of best fit and RBV are all not taken seriously by MNCs in most cases. (2) Analysis of Global and Local tensions with necessary strategy application and case study examples in the following categories a) Transfer of HR practices posits to the effect that there is movement of skills inherent in people from one organisation to the other from a global perspective. Diffusion of skills mean the movement of skills from the parent company to subsidiary companies while reverse diffusion concurs that skills are transferred from host countries to the parent companies headquarted in different parts of the globe. It can be seen that there is diffusion as well reverse diffusion of HR practices in China where there is movement of knowledge from both ends with regards to the operations of the MNCs. The best strategy is IR-grid by Bartlett and Ghoshal, Taylor. Birnik and Moat (N.D.) assert that, “multinational firms need to develop an operating model at the activity level. By doing so, managers can identify inconsistencies and develop coherent operations across local subsidiaries, the corporate centre and outsourcing partners.” Goshal’s integration responsiveness (IR) grid helps the managers on MNCs determine whether they should operate as transnational, global, multinational or international firms. These four options often provide the framework to manage international operations by virtue of providing an outline which determines the level and magnitude upon which the organisation would be operating. b) According to Jackson & Schuler (2000), in a merger, the two firms supposedly are on equal footing after the deal is closed, while in an acquisition, it is clear that one firm will take control of the other’s resources. There are various reasons why firms embark on mergers and acquisitions such as the need to increase their market share, increase their geographic reach as well as responding to new deregulation. In most cases, one major objective of a merger or acquisition is to gain skills and talents of people employed by another company. Therefore, it would be imperative for both parties involved having a sound understanding of the concept of mergers and acquisitions and no one company should yield more power over another since this would imply easy takeover of another company’s assets and resources. The best strategy is Whittingham model which basically deals with the transition that is often witnessed by MNCs as they transform their operations during acquisitions. c) Multinational in developing countries are often confronted by various factors that shape their mindset in doing business. In most cases, the orientation of the MNC is often reflected through its product offering, organisational culture way of managing foreign people as well as its recruitment process. These factors are often intricate and challenging to the MNCs. The best strategy to overcome this is the adoption of the Perlmutters mindsets. Howard Perlmutter found three distinctive orientations which he called ethnocentric, polycentric and geocentric (http://www.businessmate.org/Article.php?ArtikelId=12 N.D). He noted that senior managers of multinational corporations posses one of these if not all. The ethnocentric orientation is oriented towards home where the manager seeks to maintain is ways of doing business back home. The ideas are transferred from the headquarters to the host countries which need to comply with these standards. Information obtained online posits that the main advantage is that positions will be occupied by qualified nationals, and that it creates a unified organizational culture where as it helps to transfer co-competencies to the other companies in developing countries. On the other hand, the polycentric orientation is concerned with the host country where the idea is that one size fits all. Any person given the autonomy can as well successfully manage the organisation and this leads to broader organisational culture and is the most popular strategy employed by MNCs. American MNCs operating in China are slowly moving away from using their culture. The geocentric orientation is oriented towards the whole world. Most MNCs adopt one or all of the Perlmutter’s orientations in their global operations. d) Knowledge management and induction posit to the effect that organisations should run on the basis of knowledge management than employees doing the work using their hands. Knowledge management is a virtue in the running of an organisation. Operating in an international market, MNCs are faced with the challenges of imparting knowledge to their employees across the globe. The employees must be equipped with knowledge or given the opportunity to acquire the much needed skills to perform various tasks expected of them. The best strategy is IR-grid by Bartlett and Ghoshal, Taylor which tries to distinguish the nature of the organisation so as to come up with ideal package of knowledge to be disseminated to the employees. e) Management is primarily concerned with the aspect of getting things done though people. There is need for management to constantly develop the employees and the best strategy that can be used is resource based view. This is primarily concerned with the availability of resources and their capability to be fully utilized in order for the organisation to gain competitive advantage. f) Recruitment and selection involves searching for and obtaining qualified job candidates and it gives the organisation the opportunity to select the most appropriate persons to fill its job needs (Carrell, R. et al 1995). Effective recruitment often attracts individuals to the organisation and also increases the chances of retaining the individuals once they have been hired. Recruitment efforts seek to satisfy the needs of job applicants as well as the needs of managers. During the contemporary period, various multi-national organisations operate in different countries across the globe but of concern is the need to recruit the individuals with suitable competencies as well as successfully retaining them in a complex international labour market that is also characterised by competition. The best strategy of recruiting at international is best fit which involves outsourcing for highly skilled workers who have great influence in making strategic decisions in the operations of the organisation especially in the context of big multinational corporations operating in various countries. Basically, outsourcing refers to the process whereby the organisation hires someone outside the organisation to perform the task of recruiting that can be done by the organisation itself (Kleynhans et al 2006). The recruiting agencies take a leading role in selecting employees particularly using head hunting tactics to identify and attract the best candidates with high skills and experience. These agencies can work hand in hand with the responsible authorities controlling the organisation. For instance, a good example can be drawn from Anglo American which is a mining conglomerate operating in various countries across the globe but it can be difficult for the organisation to successfully recruit the best skilled workers for its companies in various countries across the globe. In this case, recruiting agencies come in handy with the best alternative since they specialise in headhunting for talented workers on behalf of different clients. Indeed, there would also be need to recruit local talent to fill the less demanding positions and this can be done either directly by the organisation or even outsource where necessary. g) Pay and reward are considered as the primary factors which motivate workers to do their best in their jobs. Basically, motivation is loosely defined as the incentive or motivator given to employees to improve their performance as a way of encouraging productivity and ultimately growth of the company. However, some motivators often reflect the content of the job where no superior person in the management can dispense them upon individuals (Carrell et al 1995). This is often the challenge that affects MNCs since there would be expatriate workers who may not be motivated by pay and rewards alone. The best strategy is resource based view. It follows from the argument that the availability of resources can only determine the amount of money and reward earned by an individual. It defies logic to award expatriate workers hefty salaries when the company is operating below capacity. h) The concept of CSR has many different interpretations and can be seen in many different practices by MNC’s. Historically CSR was used to describe the requirement that corporations assume greater responsibility for their decisions and actions, particularly the ill effects, on the wider society. Labour issues are frequently at the heart of ethical disputes in MNC’s. Executives believe CSR is PR (CIPD, 2002). The strategy that can be used in the practice of CSR is best practice. It is always good for the organisation to establish and maintain goodwill among its stakeholders. (3) Appreciation of the requirements of all Stakeholders It is also of paramount importance for the MNCs to take into consideration the host country’s legislation structure in terms of shareholding of ownership. Ownership structure of an organisation is very important since it determines the nature of HR approach to be pursued in the organisation since there would be need to balance the interests of different stakeholders involved. Some governments have laws in place that forbid any other multinational organisation to have more that 50% stake of the share holding of that particular organisation. For instance, there is controversy surrounding the indigenization law in Zimbabwe which is located in the Sub Saharan Africa. This is a good case study since the operations of many organisations have been affected. Whilst this is meant to safeguard the interests of the host country as well as that of local nationals, it would also be important to take into consideration that the multinational organisations ought to put in place flexible HR policies that are accommodative to different people particularly in the host country. Failure to do that will result in clashes with the interests of the host government which can negatively impact on the operations of the whole organisation as a whole. The operations of any organisation are guided by the legal framework of the host nation in most cases. The national government is the final authority in determining how the organisations ought be run. Failure to adhere to the requirements of the laws of the host country may even lead to the cancellation of the operating licence which would not be a good thing to happen especially to large multinational corporations. It is imperative for any multinational organisation to abide by the rules and regulations of the country to ensure cordial relationship with the government so as to minimize the chances of conflict. Employment and labour laws must always be safeguarded under whatever condition as a way of ensuring the local people who are employed by these multinational organisations are not oppressed and being given very little money that is not commensurate with the profits that would be raised by the big organisations. In some cases, multinational organisations would seek to invest in poor and less developed countries where they would seek to get cheap labour from the local nationals. However, it is always the duty of the local government of the host country to ensure that there are fair labour practices that are practiced by the investors. There are in most cases labour laws through an act of parliament which make it compulsory for all organisations to observe the employment regulations of various countries as a way of promoting the interests of the local people. Indeed, the aim of these regulations is meant to ensure that local communities are benefiting from major investments undertaken by multinational companies in a fair manner. In this case, the minimum wage policies are put in place by the host government so as to ensure that the interests of its own people are given priority rather than just focus on reaping profits. This mainly shapes the strategic human resources policies of the MNCs to ensure compliance with laws of the host countries. Violations of these laws may negatively impact on the operations of the organisation. It can be noted that the poor nations are not yet developed to the extent of focusing on “global values of exchange,” Isaak (2005). The developing countries in essence are not yet industrialized or developed to such an extent where they can match the developed nations. In order for them to undertake fair practices, the poor nations have responded by putting measures in place that would try to balance the situation whereby there will also be in a position to benefit technically from the operations of the multinational organisations. Provisions that are meant to train the local people to be competent especially in manufacturing industries as a way of stimulating growth of their own economies through the acquisition of relevant knowledge are clearly spelled in the labour laws of the host countries. It should also be noted that each society has got its own cultural values and they ought to be protected. Every person has got a culture and all the people across the globe do have values that are shaped by their culture. It is very important to ensure that the culture of the national people is not violated by the foreigners who come to invest in the country and this shapes their HR policies. The values of the people shape their way of behavior hence they ought to be safeguarded. Structures should be put in place that would be meant to protect the interests of the local people and the government should take a leading role in spearheading such an initiative. If a multinational organisation fails to observe the values of the local people, it may be difficult to be profitable as there would be other problems related with managing the human resources since there would be some elements within the new value system that would not be compatible with their own culture. (4) Competencies and talents required of International HR Managers International HR managers should have quality leadership styles that would enable them to positively influence their employees to improve on their performance so as to be able to achieve the organisational goals set. These leadership styles would enable them to be flexible and be able to adapt to different environments found across the globe. For instance, international HR managers should have the charisma to motivate their employees to put optimum performance in their duties. The employees are likely to be highly motivated if they are being led by an exemplary person as he would try to establish a free environment in which the workers would not feel betrayed or let down by alien policies which may not be compatible with their own values. These managers should create flexible working conditions which can motivate the workers to put optimum performance in their day-to-day operations. International HR managers should also be better positioned to develop their employees as well as put measures in place that would ensure staff retention. This can be achieved through staff development initiatives such as training which can also include mentoring and coaching of the employees (Kleynhans et al 2007). These managers should put measures in place that treat the employees as valuable assets to the organisation as a way of motivating them. The most important competency required of the international HR managers is their ability to be accommodative to different cultural values of different people from different cultural backgrounds. HR Managers in different regions ought to respect different cultural values so as to create a peaceful working environment that is characterised by mutual understanding where the employees can freely share their ideas towards the attainment of the organisation’s goals. There is need for constant development of the management in this area as this ensures the smooth operations of the organisation in the face of changing times as well as the business environment. HR Managers have the task of ensuring that the interests of the organisation as well as of the employees are met in a manner which does not exploit the other party. Since all the organisations operate in a dynamic environment which constantly changes, there is need for the international HR managers to be also constantly developed so as to be able to cope with the changing times. More and more people are migrating to different regions in search of employment and the international HR managers should be developed so as to be impartial when dealing with aspects such as recruiting or hiring employees. The managers should not be influenced by such factors as race, gender, religion or culture when selecting employees to join the organisation or when dealing with people already employed by the organisation but hailing from different cultural backgrounds. The secret behind international HR management is that it involves people from diverse cultural backgrounds. (5) Conclusion Over and above, it can be noted that there is no magic formula to implement the relevant strategy to reduce the global and local tensions, not neglecting the relevant stakeholder, all in an effort to create the ideal international HR Manager. However, as noted above, the international HR managers for MNCs are confronted by many challenges as discussed above and some of them can be overcome through implementing various strategies outlined above. Bibliography Armstrong M. (1999), Human Resources Management Practice. 7th Edition. NY. Kogan Page Limited. Bates B. et al (2005). Business Management, fresh perspectives. CT. Pearson Education. Bond P. (2002) Fanon’s Warning: A civil reader on the new partnership for Africa’s Development, Africa World Press. Boxall, P. (1995). The challenge of human resource management. Longman Publishing group, London Brewster, C. et al (2003). Contemporary Issues in Human Resources Management: gaining a competitive advantage. 2nd Edition. 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Available at: http://nus.academia.edu/AndreasBirnik/Papers/90423/Mapping-multinational-operations Accessed on 20 April 2010. Read More