Strategic Human Resource Management - Literature review Example

Section/# Factors Affecting the Means by which the Human Resource Manager Integrates with Key Salary Issues for the Multinational Entity One of the most difficult aspects of human resources management is determining how pricing for labor will take place if the firm or organization intends on operating in a multinational setting. Although this may seem as something of a simple function where the supply and demand curves for labor merely need to meet at an equilibrium that the company is willing to accommodate, the determinations that go into pricing this labor are much more complex than one can otherwise realize. As a function of understanding the list of complexities that must be entertained, this brief analysis will count the following as the main determinants that must be engaged with in order to effectively set wages for multinational employees: level and types of skills required, the overall supply and demand dynamics of the labor force, geographic considerations, employment setting, compensation philosophy, employment stability, tenure, and governmental regulations. It is the hope of this author that be analyzing these key determinants, the reader will be able to draw a further level of inference upon the key dynamics that define the means by which any large multinational firm must engage upon the issues of wage setting and salary concerns with international partners. The first issue that any firm or organization must integrate with is the kinds and level of experience that they require. One can understand this as a simple function of asking whether or not the jobs that are being offered will require a high level of education or prior experience or whether they can easily be filled by any number of individuals (Winkler et al, 2013). As such, with regards to the British expatriate managers and engineers, the salary determinations can and will be effectively straight forward as they will reflect a slight and/or nominal increase over the rate of pay they received in England due to the fact that they will now be required to move to location and be remunerated based upon the additional strain and hardship that such a lifestyle and location change necessarily portends (Simpson, 2007). Conversely, the externalities of skill necessarily dictate how the local employees will be salaried and to what extent these salaries will be commensurate with or far below the same levels of expertise offered elsewhere in the world. The single most important determinant of labor and the rate at which it is paid is of course the supply and demand ratios that exist within the given system. This can be understood through a situation in which a given economy may have 1000 workers who specialize in the labour fields of A, B, C but only have 5 employees that specialize in labour field D. As a function of this low level of representation within the labour market, these individuals necessarily command a premium; both in the country in question as well as likely within the world at large (Songstad et al, 2011). The supply and demand for labor within a given market is one of the reasons that many firms have sought to export and/or relocate talent acquisition portions of their business to different regions around the globe. In hopes of saving money and finding the cheap and extant talent that can further drive their firm or organization, many entities have sought to merely move operations to where the labor specializations are highly concentrated; albeit not always necessarily cheaper. This is done as a means of providing a base of production and specialization that can be drawn upon for many years into the future. With regards to the salary concerns for those individuals that will be brought into the given system as expatriates, again concern should be given for these individuals that they are paid commensurately with the specialists in their field at home as well as commensurately, and likely higher than, those individuals who specialize in their own field within the nation in question (Ployhart & Moliterno, 2011). Another salient concern must be given to the actual physical and geographic location that is chosen as a means of focus for the firm or organization in question. For instance, if a firm is seeking to relocate and/or focus operations within a certain district of India, key considerations must be made with regards to the fact that all India does not share the same wage dynamics. Just as within Great Britain, certain regions will command higher salaries due to higher standards of living and higher levels of affluence. As a function of this, a level of deep economic and market research must be performed prior to setting wages that are not based merely on the fact that workers within the Indian or Russian economies should receive a given amount of salary due to the fact that the nation’s economy as a whole indicates that such would be the average (Racicot et al, 1996). As a simple function of understanding what a national average entails, i.e. the median between the high and the low, the HRM should seek to dispel such figures in lieu of determining more specific and actionable intelligence with regards to the level of remuneration that is realized within a given geographic region. Another specifically important factor that must be engaged with is the presence and/or prevalence of unions within the given economic system that is sought to be integrated with. This forms a valuable concern for the employer due to the fact that a certain level of employee cost cushioning must be built into the wage structure if a union or the possibility of unionization exists. Such a constraint exists not only for the British expatriate workforce that will be engaged within the multinational endeavor but also within the domestic workforce. Although it is not the express intent of this paper to discuss whether or not unionization is a net good or a net bad for the employee, the system, and ethical behavior in the labour market, it should be noted that the existence of unions necessarily decreases the amount of money that the employer is initially willing to engage for the salaries. Although this figure may grow with time and come to represent a figure much larger than is represented in other systems without unions, the initial salary offerings are an order of magnitude lower due to the fact that the firm or entity believes that the union will ultimately drive salaries up much higher so they are trying to enter the labour market on the very low end of the spectrum with the understanding that inevitably they will be forced to raise salaries as the unions exert more and more influence over the way in which the firm operates and pays its employees. Another key determinant that affects the rate in which employees can expect the level of salary offerings to be determined is the level of employment stability that is provided. Whereas one can and should logically presume that due to the fact that the firm in question is interested in resettling several upper level positions from the United Kingdom, these positions will be assumed to have a high degree of employment stability as a function of the fact that such a high level of individual investment in the employees denotes the fact that the firm intends on holding on to these individuals for a longer period of time. However, with regards to the manufacturing, engineering, and management staff of the foreign country, it would be reasonable to assume that these employees are prone to a rather high degree of uncertainty. Tying in closely with the level of employment stability that is engendered within a given system is the level of governmental oversight and controls on the labour force. Although the three countries that have been listed with regards to this case study have relatively lax labour laws to protect the employee, it is nonetheless a concern that the multinational firm must integrate with. By choosing to integrate with and operate within a given economy, the multinational should understand that this means they can and should be required to fully be aware of as well as understand any and all laws that relate to what levels of responsibility exist between the firm and the employee. One of the most important factors in seeking to quantify wage level within a given firm or organization is the internal factor of compensation policy. Whereas many firms will only seek to maximize profit be developing overseas assets as a function of defraying labor costs, there are those firms and organizations in business that seek to integrate a compensation strategy that revolves around equal pay for equal work. Moreover, the ultimate size of the firm is an integral concern with relation to the level of ability it has to provide higher wages. Though the given example has asked the student to integrate an understanding of a multinational firm, even such a level of understanding necessitates that the respondent considers whether the multinational is massive in scope or merely starting to expand globally. This is due to the fact that such a level of understanding will deeply impact upon the level to which the firm is able to compensate its shareholders. Though the previous determinants have sought to understand how a firm will factor salaries for its employees based upon the dynamics of the hiring process, the fact of the matter that the overall profitability of the multinational will also have a profound effect on the level of salaries that can be passed along to the shareholders at the very lowest levels of the firm (Marler, 2012). It should be noted that the expatriates that have been elaborated upon previously within this analysis will likely be the ones that remain the most insulated from market fluctuations as well as changes in the overall level of profitability that the firm exhibits. Whereas some may say this represents an unfair and/or nativist approach which places these individuals as more important than the local employees/shareholders, the fact of the matter is that these expatriates represent a disproportionally higher amount of investment on the part of the firm (Berts, 2003). As such, it only makes logical sense that the organization and/or firm will seek to insulate these shareholders from market swings and layoffs that would otherwise affect others. A final determinant that must be engaged upon by the HRM is the level and extent to which an employee tenure or performance ladder is exhibited within the given firm. Within such a context there are ultimately two basic approaches that can be engaged with. The first of these would be for the firm to hire the individual with the express and sole purpose of fulfilling an extant and determinant need for the entity or firm in question. The secondary option would be for a firm to hire an individual to fill a specific duty and then offer then a set of tenure and/or performance options which allow them to grow as an employee (Baird & Meshoulam, 1988). The level and extent to which such an approach can engage shareholders and increase overall efficiency has been aptly illustrated by a number of studies. As a function of this, it is usually advantageous for a firm/entity to seek to engage such an approach with its workforce; however, if the ultimate and immediate concern is maximizing the bottom line and rapidly replacing any employee that seeks to move on to another position, this secondary approach is not beneficial. As has been illustrated by this brief analysis, the level and extent to which these factors affect the means by which a HRM will integrate an understanding and application of differential wage and salaries is great. Moreover, although it may be convenient to imagine that the HRM manager is ultimately in control of all of these determinants, the fact of the matter is that these individuals oftentimes have little purview over many of these and rely on the upper levels of management to dictate the way and means by which they should integrate with them. References Baird, L, & Meshoulam, I 1988, 'Managing Two Fits of Strategic Human Resource Management', Academy Of Management Review, 13, 1, pp. 116-128, Business Source Premier, EBSCOhost, viewed 19 March 2013. Berts, A. 'Cost-cutting shifts the terrain' 2003, Workforce Management, 82, 13, pp. 85-91, Business Source Premier, EBSCOhost, viewed 19 March 2013. Marler, JH 2012, 'Strategic Human Resource Management in Context: A Historical and Global Perspective', Academy Of Management Perspectives, 26, 2, pp. 6-11, Business Source Premier, EBSCOhost, viewed 19 March 2013. Ployhart, R, & Moliterno, T 2011, 'EMERGENCE OF THE HUMAN CAPITAL RESOURCE: A MULTILEVEL MODEL', Academy Of Management Review, 36, 1, pp. 127-150, Business Source Premier, EBSCOhost, viewed 19 March 2013. 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