Environmental Audit - Essay Example

?Environmental Audit - Russia Organizations is maximum sectors including in Information Technology sector (IT) will always want to expand their horizons and cross into new territories. After achieving success in their home operations or importantly to tap the good opportunities in the foreign market, the organizations will initiate the entry. Before initiating the entry, organizations will carry an in-depth analysis or an environmental audit of the foreign market or country; it is going to enter, to find out the aiding as well as hindering factors. Only if the organizations find out these factors, it can positively tap the aiding factors, even while coming up with strategies to overcome the hindering factors. There may many country specific factors, which could impact the functioning of the organization in the Host country, including its Human Resource (HR) functions. When an organization starts off its foreign operations, the role of HR department and optimum HR practices is crucial because it can only facilitate and encourage coordination and cooperation between employees from both the host country as well as home country (company’s home country). In this report, Russia is the host country, and so this report will discuss how a multinational company in IT sector, while entering Russia particularly in the form of Joint Venture (JV) need to analyse its HR functions to optimally manage its operations there. Economic Indicators Russia's geographic position as neighbour and a key influencer of the expanding European Union and the dynamic countries of Asia including China and India has given it new options to optimize its globalization drive. So, it is encouraging many multinational companies (MNC) to enter and start their operations. Actually, Russia’s incorporation of globally dominant norms, rules, etc as part of economic globalization, took some time to actualize. That is, when Russia endorsed and embraced globalization, it was not a smooth transition, as certain tough decisions were taken. When globalization made its entry into Russia, there was sceptical feeling that globalization and the entry of foreign firms particularly from Western countries is actually a form of US-led hegemony increasing Russia’s marginality in world affairs. “Their fear of globalization is heightened by the perception that the process is not driven by the impersonal forces of the information revolution and the market, but controlled by the United States as part of a hegemonic project” (Federov 2000). Russia voluntarily took certain steps to welcome globalization and thereby open its market to foreign firms. That is, by introducing convertibility of the national currency and liberalizing both current and capital accounts of her balance of payments, Russia fully exposed herself to globalization. (Vorobyov and Zhukov 2001). From that time, Russia is encouraging entry of foreign firms and also Foreign Direct Investments (FDI) in the Russian IT sector. Although, Russia’s IT industry and market is considered small, when compared with other regions and countries, MNCs like SAP, TietoEnator, T-System, etc are expanding their operations, along with the domestic players. Importantly, the potential of Russia’s IT market is going to optimize, with its quick recovery from the economic recession. “Russia has experienced a surprisingly quick rebound after being heavily affected by the economic crisis in 2009…The Russian ICT market is being driven by information technology spending, which is expected to increase by 12 percent to 15 billion euros in 2011.” (eito.com 2011) Comparative analysis of HR systems in both Europe and the US Each nation is different from one another based on their culture, people, language, climate, etc, etc…and based on these differences; there will be different styles of HRM. Thus, different management styles and importantly HRM policies seen in the functioning of MNCs are dependent on the culture and other regional factors of a country. That is, when one focuses on the HRM policies in USA, it appears more of an open management. Organizational targets and goals could be reached with lot of aggression and also occasionally manipulation. Edwards et al. (2005) highlight the ‘barriers’ that institutions in the US present to this occurring in American MNCs. Edwards et al. (2005) also points out how there will not be much of strict hierarchy inside the MNC, as all the employees from the Managing Director to a security guard will enjoy openness and it will visible in every part of their interactions. When these HR initiatives are viewed from the perspective of HR policies in Europe, it is clear it is a mix of both the open minded as well as conservative HR policies. It is a sort of dichotomous Eurocentric thinking that characterised both features. (Hall & Soskice 2001). While, certain European organizations or MNCs welcome open-minded HR policies between the employees, while others companies, which have been functioning for many years and having traditional practices, would not allow this kind of openness in the HR policies. Thus regional factors could decide the HRM polices in any country, with MNC venturing into these countries have to analyse these distinct aspects, while coming up with best HR policies. Organisational issues that influence the development and implementation of HRM strategy There are certain organizational issues in Russia, which could influence the development of HRM strategy in the JV initiative. One of the key parts of an organization’s HRM strategy is setting apt as well as optimum salary scales for the employees. Only if the HRD along with the management sets salary scale equal or even more than the industry standards, it can bring in qualified and talented employees. For many years, MNCs in Russia got away with just paying average salaries, however, in current times, it needs to pay aptly to recruit talented staffs. “…companies must realise that they have to pay competitive salaries now, that these salaries will become ever more competitive as the market continues to tighten and that this is a global trend.” (neumann-inter.com). On the same lines, incentives are normally given to all the employees or even particular department, as incentives are viewed as the traditional part of the Russian compensation system, without focusing on top performers. Thus, this organizational issue relating to salary and incentives has to be taken care when framing the HRM strategies. The other organizational issue is relating to the expatriate employees, who are brought in to work in the local subsidiaries. “Given the increasing lack of qualified Russian staff - 20% of western companies have or are considering bringing back expatriates to Russia for some posts.” (neumann-inter.com), Although, these expatriate employees from Western countries have lower salary expectations, when compared to the Russian staffs, they need to be given apt salary packages, which includes the spouse’s package as well. (neumann-inter.com) Parent country issues that influence the development and implementation of HRM strategy The key Parent country issue (Europe in this case) that needs to be considered is giving importance to regional factors or regionalization. That is, generally European MNCs while expanding into new territories, will provide a lot of responsibilities and importantly put the onus on the local managers to handle the units, as part of local culture and local HR policies. For many years now, the HR based policies in European countries does not revolve around the social order that might be visible in the country’s society. That is, organizations will be viewed as an extension of the employees’ family and so working for it, is identical to working for his/her family. This form of management is visible in most of the Japanese organization, where there will not be retirement age for the workers even if they become elderly. This way, the employees will become more integrated into the organization giving maximum output. However, this is not the case in USA, Europe. That is, in USA as well as in Europe according to HR policies, the professional and the personal life of the employees are kept separate without one intruding into the other. (Camen 2001). If this human resource management practice or strategy is implemented in Russia, it can also strike rich dividends because it will surely allow the management in JV to take practical and logical decisions for the wellbeing of the company. On the same lines, it will also allow the local employees as well as the expatriate employees to take correct decisions regarding their careers thereby avoid emotional decisions maximally. Cultural issues that influence the development and implementation of HRM strategy Russia has been a ‘hotbed’ of activity because of the various political, economic, social and importantly cultural changes that are happening for the last few decades. These changes has have made and is making impacts in the organizational functioning and the related issues. The main cultural issue relates to the lack of English proficiency among the Russian employees. With Russian being the main language of communication, Western MNCs need to bring in HR personnel, who are equipped in the Russian Language. At the same time, training classes to teach and improve English can also be started as part of their work training. The other key culture related aspect, which needs to be considered as part of HRM strategy formulation, is recruiting prospective employees who are not above 35 years of age. “The best Russian employees are regarded as those who were about 20-25 years old in 1991. These people as a generation were very well-educated under the Soviet educational system, but were not “contaminated” by Soviet ideology and experience.” (neumann-inter.com). Thus, these employees are more open to the current ideas and trainings, which are prevalent among the organizational culture of the Western MNCs. References Camen, M et al. (2001) ‘Between home and host country: multinationals and employment relations in Europe’, Industrial Relations Journal vol. 32, no. 5, 4355-448 Edwards et al. 2005, ‘Reverse diffusion in US multinationals: barriers from the American business system’, Journal of Management Studies, vol. 42, no. 6, pp. 1261-86 eito.com 2011, Press Release: Emerging markets boost ICT spending, viewed on May 16, 2011 http://www.eito.com/pressinformation_20110106.htm Fedorov, Y 2000, Democratization and Globalization: The Case of Russia. Carnegie Paper No.13. Hall, P. and Soskice, D. (eds.) 2001, Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, Oxford University Press, Oxford. neumann-inter.com, Human resources in Russia, viewed on May 16, 2011 http://www.neumann-inter.com/reports-media/reports/human-resources-in-russia/ Vorobyov, A and Zhukov, S 2001, External Liberalization, Economic Performance and Social Policy, pp. 251-283 Read More