Human Resource Management of Headmin - Essay Example

Name : xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Tutor :xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Title : Organizational expansion Institution : xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date :xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx @ 2012 Executive summary Headmin is a Manufacturing Company in Australia that seeks to expand into the Philippines. It produces juice and mineral water. This paper explores the Human Resource issues that the company has to deal with as it ventures into the international market. Various factors have been discussed in this paper concerning this expansion. The rationale is to increase sales and profits and to take advantage of natural resources and economies of scale. There are differences in national culture between Australia and the Philippines which will be considered by the company. The laws and business ethics in the Philippines will also be taken into account. The Human Resource Management will have to consider these laws, national culture and ethics of the Philippines in their selection, recruitment and compensation of their workers. This paper makes several recommendations on Human Resource management, international business and national culture that the company must adhere to if it has to succeed in the new market. Table of contents Executive summary…………………………………………………………………. 1 Table of contents…………………………………………………………………… 2 Introduction………………………………………………………………………… 3 Rationale for expansion…………………………………………………………….. 3 Differences in national culture…………………………………………………….. 5 Implications for Human Resource Management………………………………….. 7 Recruitment and selection…………………………………………………………. 9 Compensation……………………………………………………………………… 10 Recommendations…………………………………………………………………. 11 Action plan………………………………………………………………………… 12 Conclusion………………………………………………………………………… 13 Bibliography………………………………………………………………………. 14 Introduction This is a report that explores and critically analyses the human resource issues relevant to an organization intending to expand into the global market. The organization chosen for this discussion is Headmin Company Limited, which falls in the manufacturing industry. It does not exist in real life and therefore a composite picture of the organization will be created. The organization deals in the manufacture of foods and beverages. Its major products are soft drinks including juice of various flavors and bottled water. Headmin Company has been growing through the years since it was started and currently it is headed into becoming a big company with a name that is known in the whole of Australia. It has over 10,000 employees working in its various departments and branches within the country. The company is going international by entering the Philippines market. It has both the skilled and unskilled personnel involved in various activities from the production to sales and marketing. Rationale for expansion The rationale for Headmin Company going international is to build sales and profits through market expansion, gain competitive knowledge and ideas, to achieve economies of scale and to take advantage of world niche markets (Baker 1993, 76). Since the local market for Headmin Company has not shown the expected growth in sales in the last few years it is looking to the international market to help maintain its stability and make it more successful. Diversification into the international market is expected to raise the revenues of the company so that it can make up for the losses encountered in the local market. It is also expected that more growth will be experienced since a new market has a lot to offer in terms of customer base. Increased sales should also come with lower costs. Headmin Company hopes to bring down its costs as it enters the international market (Yadong 1999, 23). Headmin Company also expects to gain ideas and competitive knowledge from the overseas market. With the global village phenomena taking shape there is accelerated exchange of ideas around the world. Having positioned itself in the global market the company will definitely benefit from available knowledge in the industry and the entire market. When there is high and increased demand in the international market the company has the ability to spread its fixed costs over a bigger production base. This helps it to lower its unit costs hence contributing to higher profits. Through this it is able to achieve economies of scale. Finally Headmin Company hopes to take advantage of world niche markets. The world market is looking for value added niche products. Consumers in the international markets want products that are of high quality, having an appealing image and display high performance. Owing to the size of Headmin Company, it can fill this niche because it is flexible and has an innovative advantage which helps it to produce products speedily. Headmin Company has been motivated by the desire to get more solutions to their economic problems in manufacturing and production (Baker 1993, 67). The company hopes to take an advantage of the low labor costs in the Philippines and to benefit from the country’s tax structures as well as the natural resources in the name of the abundant fruits for juice making. There is a huge production of dragon fruit, mango and papayas in the country which can be used in fruit making. Since production is high, they can be acquired at cheap prices by the Company. Water is also a natural resource that a fruit juice manufacturing company wants to have in plenty. This is also abundant in the Philippines at a cheap price. By going into the Philippines Headmin Company will not have to rely on the economy of Australia alone. They can protect their market and investments through international trade. In case of recession in one country the company will not collapse if the second country is not affected. The company also hopes to benefit from international trade by gaining some defense from competitors and also to gain an advantage on both the existing and potential competitors (Baker 1993, 71). Differences between the national culture of Australia and Philippines There is a big difference in terms of national culture between Australia and the Philippines just as there is between two individuals from these two countries. Filipinos are very nationalistic having suffered for a long time under colonial rule and attained their independence through a difficult struggle (Rodell 2002, 111). There are no traditions in Australia that stretch back for centuries and the country has never been under foreign power domination. Its rise to nationhood has been comparatively easy and therefore Australians did not make comparable sacrifices to get independence and nationhood (Graeme 1994, 90). Behavioral norms among the Australians are instilled since birth. The children are expected to carry them into adulthood where they affect business and work relationships. On the other hand behavioral norms among the Filipinos are centered on the extended family, acceptance and conforming. In Australia, students take education as a right and therefore do not work hard. Public schools charge no fees but church and private schools do. In the Philippines students take education to be a privilege and they work harder. Australians can have the old boy network although they do not insist on maintaining such relationships and this shows personal independence. These networks do not take a central role in business relationships as opposed to the Philippines where they take a major role (Graeme 1994, 99). Australians are used to expressing ideas and opinions openly about issues being discussed or on other people’s opinions. Contrastingly Filipinos prefer euphemism to express their opinions and disagreeing openly is uncommon. Australians resent authority and they can use strong language and disagree openly with their superiors while Filipinos defer to authority and always strive to have non stressful relationships with people in authority. After completing school an Australia can opt to depart from the nuclear family and live on their own even if parents prefer otherwise. Contrary to this Filipinos don’t depart from home before marriage because they fear injuring family feelings (Manuel 1994, 105).  Social activities in Australia are confined to small groups or the nuclear family. In Philippines people participate actively in community activities like weddings and wakes. Involving themselves in community affairs especially civic organizations make Filipinos to get power that makes them able to help extended family members. Filipinos feel obliged to return a favor extended to them for a longer time than the Australians who only repay it once (Rodell 2002, 116). Again Australians feel like depending on one another when there is adversity as opposed to the Filipinos who share both losses and gains all the time. As Filipinos believe in fate to give them failure or success Australians make their own decisions and carry the consequences of the failure or success thereof. Typical Australians make their own independent decisions. Filipinos on the contrary make decisions after consulting with all the people that matter. Filipinos when making decisions tend to consider the self esteem and the feelings of the people who stand to be affected. On the other hand Australians make their decisions using facts and very little on the people involved (Rodell 2002, 81). The primary language in Australia is English although there are several aboriginal dialects. There are other languages spoken by European, Middle Eastern and Asian immigrants. In Philippines Filipino that is based on Tagalog is the official and national language although it is spoken by only 55% of people. There are also about 111indigenous dialects and languages. English is used for commercial, educational and governmental purposes and in schools for instruction. Australians do not have a lot of formality and therefore their greetings are relaxed and casual. Filipinos have formality since their initial greetings are formal and they have protocol in greeting with the most important or eldest coming first (Graeme 1994, 110). Implications for Human Resource Management From the above discussion of the differences in national culture between the Philippines and Australia, it is obvious that there are implications to the Human Resource Management of Headmin Company if they have to establish their business in the Philippines. There are sharp differences in the culture of these two countries. HRM will be affected first by the sense of nationalism among the Filipinos. Non nationals will therefore have to be sensitive and treat them with respect without insulting their nationalism. Since Australians may not have a strong sense of nationalism they will have to try hard to accommodate the behavior of the Filipino staff in the company (Bratton & Gold 2001, 61). Australians make independent decisions while Filipinos consult widely. This must be understood since delays in accomplishing responsibilities given to workers may be mistaken for laziness when in really sense it is consultation. Filipinos as opposed to Australians are used to participating in communal activities. This may imply that at the work place they may prefer team work instead of working in isolation (Collings & Wood 2009, 21). Filipinos believe in fate to give them failure or success. Australians make their own decisions and carry the consequences of the failure or success thereof. This could imply that the Filipino workers may not be good at decision making when hired by the Headmin Company. Australian staff in the company will then have to make the important decisions or allow the Filipinos to consult with them before deciding on anything since they are not used to making independent decisions (Mathis, Jackson 2011, 210). Deference of authority by Filipinos and the resentment of authority by Australians must be understood as well. The HRM will have to understand that Filipinos won’t show open disagreement especially with authorities and that they use euphemism a lot. This implies that they may fail to raise their concerns with the authorities even if there is need for fear of being contradicted. The old boy networks among Australians do not take a central role in business relationships as opposed to the Philippines where they take a major role. This is bound to have implications since the way these two groups of people relate at work will be determined by the way they value their relationships. The use of other languages such as Filipino apart from English may mean that at work Australians will have to adapt since there may a rise issue of language barrier for the Human Resource Management. The HR will have to deal with the problem of language and communication so that things can flow smoothly at work (Torrington, Hall, Taylor 2008, 262). Behavioral norms among the Filipinos are centered on the extended family and this means they value such large family units. Australians do not. This has major implications on their work ethics and behavior which must be taken into consideration by the Australians working with them. Recruitment and selection The national culture of the Filipinos requires that recruitments be made in fairness and equitability. The HR department will have to observe things such as ethnic affiliation of their potential employees, their educational qualifications and fitness for the job. The society values extended family units and the opinion of relatives is held in high esteem. Potential employees will have to be given a chance to consult with relatives and parents before taking up any assignments or job opportunities (Torrington et al 2008, 251). Ethical requirements in the Philippines demand that all job seekers should be given equal treatment. There should be no discrimination on the basis of origin, race, political and religious views, sexual orientation, gender, or age. It is not advisable for job seekers to be asked to add their photos to their resume. Hiring decisions should be made based on relevant job related information (Rodell 2002, 41). The law in the Philippines lays down several requirements for employers who are trying to recruit people to work for them. According to the legal requirements as far as recruitment of employees for Head min Company is concerned the Human Resource Management will be expected to abstain from acts of canvassing, contracting, enlisting, utilizing, transporting, procuring or hiring workers without a proper license or authority found under Art 13 (F) of Presidential Decree No. 442, otherwise called the “Labor Code of the Philippines.’ (Business accent 2009). The HRM will have to ensure compliance with rates of minimum wage based on the prescription of the respective Tripartite Wages and productivity boards that have the authority of state to fix minimum wages. There are criminal and civil violations if the company fails to comply with the wage orders. They will also have to comply with minimum age of employment which is 15 years in the Philippines. There are exceptions where children below 15 years can be hired upon compliance with certain conditions (Collings, Wood 2009, 19). Based on the Philippine labor laws probationary employment should not go beyond 6 months since the first day of work for the employee. An exception is when the period is covered under an apprenticeship agreement allowing for a longer period. In article 281 it is clear that an employee on probation should be dismissed if there is a just cause or if he does not qualify as a regular employee based on reasonable standards outlined to him when he was hired. If this criterion is not given to him then he will be assumed to be a regular employee. An employee on probation can become a regular employee if he works beyond the period of probation (Business accent 2009). Compensation The company will have to adhere to the law in compensation matters as well. The labor code stipulated that the employer should pay workers compensation and benefits they are entitled to such as night shift pay, overtime pay, holiday pay and others. Others are the ones specified in special laws like the 13th month pay (Business accent 2009). The law also says in RULE III SECTION 1 that for the injury and the disability that results from it or death that can be compensated, that injury should be resulting from an injury that has been sustained in the course of employment (ECC Resolution No. 2799 July 25 1984). For a sickness and the death or disability that results to be compensable that sickness should have resulted from an occupational disease found in Annex ‘A’ of the rules with a satisfaction of the conditions therein. If not, there should be evidence that the risk that made one to contract the disease is accelerated by the conditions at work (Business accent 2009). In article 280 of the Philippines labor code, different employment types are described such as seasonal, project, casual and regular. These distinctions should be observed because some benefits are extended only to regular employees. Studying the national culture of the Philippines reveals that the Filipinos return a favor done to them several times unlike the Australians who do it only once. The implication for this would be that Filipinos would expect to benefit continuously from the company in terms of compensation. They would not be comfortable with compensation being done only once. The HRM would therefore have to explain to them that for any particular reason compensation must be done just once based on the law of the land (Manuel 1994, 65). Recommendations For Headmin Company to successfully expand into the Philippines which is a foreign country, they need to inspire passion around the brand vision. Whatever makes their brand special should be communicated effectively to the international expansion team especially new members within the team. They should share best practices and global learning because sharing knowledge in the right time and manner with the appropriate people makes it possible for the brand to succeed in the new market (Bratton et al 2001, 76). They also need to measure against their most important metrics. Key consumer metrics will have to be measured for example the Net promoter score. The company needs to find out the languages being used in the Philippines so that communication with clients, customers and suppliers can be made easier. The business customs and culture of the Philippines such as days of business and structure of business should also be checked before hand. It is also advisable to know about international relations. This pertains to political stability, natural catastrophes, trade embargos and other factors that can affect business in the new country. The management of Headmin should check the communication methods in the new country for example the technologies in use and tone of communication and adapt to that. They also must know the style of dressing in the Phillipines. On HR Management they need to avoid any favoritism towards staff that is Australian The Company must identify the activities that bring success in business globally and specify those positions that will have to perform them (Yadong 1999, 23). The HR will have to create a global database that will enable them to understand where their talent is. Finally the management should endeavor to challenge and retain talent within the company. Action plan The management of the company will have to: Identify and start collaborating with trusted, savvy local advisers Establish a good understanding of international laws and practices that the company must conform to. Adopt a non habitual but purposeful behavior pattern Immerse in the Philippines culture for them to understand how they are perceived Understand how this culture expresses values and makes decisions Look at change and ambiguity as opportunities and not hindrances Be open to learning opportunities so that they can increase their cultural intelligence (Yadong 1999, 40). Conclusion In conclusion the paper has explored the plan for business expansion into the global market. Headmin Company located in Australia is expanding into the Philippines. It is a juice manufacturing Company that hopes to get a number of benefits from global trade. This expansion is prompted by the desire of the company to increase its sales and profits. It hopes to take advantage of the abundant fruit supply in the Philippines. The Philippines and Australia have certain differences in their laws and national cultures and the HR management will have to observe this for them to have smooth operation in the new country. They will need to consider the laws, ethics and national culture of the Filipinos in recruitment and selection as well as in compensation of employees. Finally the Human Resource management and the entire company management must consider the recommendations made in this paper as they launch this expansion. Bibliography Baker J.C (1993) International Business expansion into less developed countries, Routledge Bratton J., Gold J. (2001) Human Resource Management: Theory and Practice, Routledge Business accent (2009) Philippine Labor Laws that employers must know. (online) Available at: http://businessaccent.com/2009/10/18/philippine-labor-laws-that-employers-must-know/, Viewed 10 May 2012. Collings G.D, Wood G. (2009) Human Resource Management: A critical approach, Taylor & Francis Graeme T. (1994) Making it national: nationalism and Australian popular culture, Allen & Unwin Manuel B. (1994) Values in Philippine culture and education, CRVP Mathis R.L, Jackson H. J. (2011) Human Resource Management: Essential Perspectives, Cengage Learning Rodell P.A (2002) Culture and customs of the Philippines, Routledge Torrington D., Hall L., Taylor S. (2008) Human Resource Management, Financial Times Prentice Hall Yadong L. (1999). Entry and cooperative strategies in the international business expansion. Green Wood Publishing. Read More