Impacts of Globalisation on National Human Resource System - Essay Example

?Impacts of Globalisation on National Human Resource System Introduction Globalization is the growth of a business entity into the international market in both its operations, economy of scales and the market share it controls. The extension of the markets for a local business into a foreign environment and the establishment of new units of operation make up the concept of globalisation (Ashton, 2006). Entry into the international market for local companies requires a number of transformations, which involves an increase in the scale of production, number of employees and the complexity of the production process. The growth in international businesses and globalization affects significantly its human resource practices and the people. HRM is a discipline that deals with the recruitment, management, training and promotion functions of people in an organisation. The expansion of operations for a business into the global sphere presents a number of issues that have to be adequately addressed by a business for it to succeed. Multinational organizations continue to handle challenging situations on their human resource management approaches as it varies significantly from the domestic market (Friedman, 2007). Globalisation and Human Resource Management Today, most organizations that are operating in the international and global markets have more employees on their foreign subsidiaries than at home (Poor, 2004). This calls for a change in approach used in the management of the people for the organization to grow and develop its people. This paper gives a detailed analysis of the implications that globalization and the advancement in the international has had on human resource management. The new trends and emerging management practices that have been adopted because of globalisations will also be critically analysed and their potency evaluated. A number of factors have been attributed to the growing globalisation and the need for a larger scale of operation. With raging unemployment and financial crisis, the developed world has been faced with an acute shortage of qualified personnel. This has been attributed to the large number of retirees with fewer graduates into the job market. The emerging economies also provide a better source of low cost labour. This makes it cheaper for international organisations to recruit employees from developing economies (Ibrahim, 2004). The international market is currently characterised by an expanding pool of talented individuals who are more mobile and willing to take up jobs in various parts of the globe. The diverse trainings and educational curriculums of the diverse countries make the nature of training and exposure diverse. As a result, management graduates from the United States and those from the United Kingdom may have different approaches to the same management problem. Such scenarios present a number of challenges to international human resource managers who operate in different parts of the globe (Poor, 2004). Organisations, which decide to adopt polycentric approach in international human resource management practise, also have a number of changes that they must make to their policies. Polycentric approach involves the use of the locals from where the subsidiary is located in the management and operation of the unit as highlighted in the works of Howard Perrlmutter, a scholar in internationalization of multinationals corporations (Schuler et al, 2002). Such individuals are thus well trained and made to understand and integrate the organisational culture of the business into their business practises. Polycentric approach in international human resource management has been applauded as the best practise as it is far much cheaper to maintain and operate as compared to the use of expatriates (Kayode, 2012). However, polycentric approach also significantly affects the practises of the human resource managers. This is because the organisation has to come up with terms of engagement and remuneration according to an organisation’s human resource practises. This remuneration packages must also factor in the country’s labour practises and requirements on minimum and maximum wages. This makes it very difficult for the company to use its current payment package as it may be way above or below what others in similar position in the country are paid (Porumb, 2011). Foreign companies in most situations have a more developed human resource system as compared with the local organisations (Ibrahim, 2004). Such companies have better methods of performance appraisal, communication and career management. Larger companies with international scales of operation also have better schemes and induction of new employee programs as compared to the local human resource management units. This level of growth must however be synchronized with the local level of human resource management for fairness in the labour market. The local human resource management is overburdened with the issues of labour unrest and bargaining for payment packages at the expense of labour growth and development (Kapoor, 2006). In seeking to synchronize the human resource management practises of organisations that operate in different economies, a number of hurdles are faced by international organisations. First, any organisation with global scale of operation has a parent country from where most of the management decisions are practised. According to Hofstede, there are a number of ways through which cross-cultural business operation affect the human resource practises of an organisation (Ibrahim, 2004). Profiles of a countries cultural practise based on the Hofstede theories should be maintained by multinational companies to enable them make sound and correct decisions depending on the location of the subsidiary (Friedman, 2007). The need to employ a given percentage of the foreign citizens for companies in the global markets also makes it necessary for the development of a training program. It enables the locals understand and familiarise themselves with the operations of the organisation, this is helpful in case there will be need for future transition into the hands of a local management team. If Apple Inc intends to open its device assembly plant in Sheffield and the country requires that the locals must be part of the company, Apple will have to provide technical training to the locals. This may vary from technical trainings that revolve around the unique nature of the products that the company produces and the internal business practises and organisational cultures. The human resource management department will thus have to increase its financial allocation to finance the expansion into new work environments also subject human resource management with different legal systems that govern the labour laws, this makes it necessary for international human resource managers to learn international laws and labour requirements (Falcone, 2004). The local global dilemma arises from lack of integration of the human resource systems of an MNC from a developed country moving its operations from a less developed country. The labour laws and market structure of the foreign countries may differ significantly from the domestic markets further complicating the operation abilities of the MNC. Schuler et al (2002), highlights some of the significant challenges that arise from weak labour laws and market structures in the international and foreign countries as some of the major weaknesses of globalisation that has slowed progress in this area. The face of human resource management has undergone tremendous changes especially with the advances in globalization and international human resource management. From a department that was initially tasked with the role of overseeing the general management and promotion of employee welfares, human resource managers have evolved to be key players in strategic business managers and agents of change (Gomez and Sanchez, 2005). There is need for the alignment of an organisations business strategy with the human resource management for it makes it easier for HRM managers to integrate any changes easily in the business approach to their management styles. The success of any international or global business decision can be at risk of the human resource department is not involved and changes made to make it possible to implement the strategies. Countries are characterised by different cross-cultural dimensions that affects the approach taken to manage the human resource, such individuals’ desire stability and certainty. They thus favour a management system that provides a sense of security for its employees. The United Kingdom has adopted a wide range of human resource management practises in order to meet the demands of globalisation (Kayode, 2012). The development of outplacement programmes in the country has made it possible for retrenches to acquire jobs in other sections of the firm or improve on their job search skills. Other multinationals that operate in the country must be able to integrate this practise into their own at an expense. Globalisation therefore makes the maintenance of human resource management practises more expensive and engaging as compared to the local market (Gomez and Sanchez, 2005). Employee motivation and appreciation are traditional roles of human resource management in any organisation or business entity. Globalisation expands the pool of people that requires these roles at different levels of management and operations. Cross cultural difference and human resource practises in a country makes it more complex for human resource managers to achieve this role. The desires, nature, technical qualification and traditions at the different countries of operation thus require human resource managers to be able to integrate the parent and foreign countries policies. The creation of the organisations mindset on the foreign employees is also a critical role of the human resource department of any organisation (Ashton, 2006). Globalisation also increases the pool of professionals that a company can choose from. As a result, multinationals and companies that operate in the global market are best placed to pick the best employees from the international labour market. The international labour market is characterised by a wide pool of highly talented and qualified individuals who are best placed to improve an organisations performance. Innovation and creativity is an important quality that most organisations strive to achieve. The international labour market enables human resource managers to choose from a wide pool of highly talented and qualified professionals in the field of interest. Highly skilled and talented labour force is an organisation’s first step towards increasing its productivity and market share. Human resource managers must be able to identify, nurture and grow such talents for its own benefit and increased productivity (Tregaskis, 2006). International operational and globalisation also exposes multinationals not only to market competition but also to competition for best people. As a free market, the best organisation with better employee management strategy can be able to attract the best pool of employees. The free movement of human labour that has been facilitated by the creation of trading blocs like the European Union has increased the rate of competition for human labour (Jeoung, 2012). Globalisation has also resulted into the creation of global human resource information system. Such a system has been used in the provision of important data that are important in informing decision-making and policy formulation in an organisation. The human resource information systems have a number of components, which are considered as interdependent. These include the data warehousing, data design and information delivery information systems (Dowling, 2004). One of the major negative effects on international trade and the establishment of MNEs is social dumping, a situation that is characterized by big international companies exploiting the weak labour laws in the foreign countries to produce and export goods by using cheap labour under poor working conditions. Some multinationals that are known to perfect this vice also serve their domestic markets and demands using goods produced from a plant located in a foreign country where there is cheap labour and weak labour regulatory policies (Jinji, 2005). Union and right activist groups have continued to raise issue with increased abuse of weak labour laws in developing countries by organizations based in developed countries. They thus argue that fairness to be achieved; there is need for imposing conditions of raising labour standards for companies from developed countries before they operate in the foreign countries. The human resource convergence hypothesis was developed by Kerr and Dunlop in the 1960 when they postulated that international markets will shift their human resource systems to the United States systems. Convergence has this far been fostered by increased globalization and international trade. HR convergence as a result of international trade and increase MNC activity has two different facets, i.e. structural convergence and decisional convergence. In structural convergence, multinationals employ similar human resource strategies with total disregard to organizational context. Decisional convergence employs similar human resource rules but in relation to organizational context to human resource strategies (Chen et al, 2005). Globalization and MNCs has resulted to an increase in the level of international mobility and cross-country movement of the work force. This has resulted into decline and death of trade unions. Organisations created a number of ways of intimidating and subverting the demands of employees through labour strikes. Advantageous labour policies of international entities encourage and attract more employees into joining the organisations thus ignoring any need for belonging to a labour organisation (Ashton, 2006). In the United Kingdom, the human resource practises has significantly shifted to accommodate the cross cultural nature of the economy and of the organisations in the countries (Jeoung, 2012). The UK has also responded to growth in globalisation by the creation of the placement programme. This enables cross-cultural employees develop necessary skills for from the parent organizations, which are necessary for foreign employees in the country. The United Kingdom economy is faced with shortage of employees due to the hire number of retirees and aged workers. Such a labour demography makes present a major challenge to multinationals, which seeks to engage the locals in the management of the local subsidiary (Metcalfe, 2005). UK employees also work longer hours as compared to other member country of the European Union; moreover, International human resource practises of an organisation may not also allow it to change into the UK system as it goes against the labour cultures and laws (Cesyniene, 2008). France uses individualisation in its compensation system which recognises the competencies and qualifications of an individual and not the position held in the organisation. This approach has been criticised by various international business experts as weak and one, which pushes an organisations desires and goals aside. Operation in France, just like in other European member countries thus present a number of management challenges to human resource managers due to their heterogeneous nature and practises (Jeoung, 2012). Conclusion Today, organisations measure their growth and market control by the number of countries and continents that they operate in. Growth and development of companies has gone beyond the borders of their original countries as these organisations continue to open subsidiaries in other countries and parts of the world. This is because of the effects that cross border businesses have on the local human resource practises and culture. Educational heterogeneity and curricula across the world has also made it difficult for human resource managers to develop one standard qualification base upon which to use for recruitment in the international market. Globalisation has thus had significant impacts on the local human resource practise and labour laws. The strength and market share controlled by a multinational company depends on its sound strategies and their ability to master the market variables. Foreign markets are characterised by a number of socio-economic and political environment that differs from the international market. An organisation must be able to understand the dynamics that characterise such a market before beginning operations. It is also accurate to conclude that the contributions of the locals to the growth and stability of the organisation cannot be underestimated at whatever cost. They hold the key to the success of the organisation as they are both the people and the target market to the MNC. References Ashton, D., 2006, Globalisation: the impact on national systems of education and training, UK ESRC project. Cesyniene, R., 2008, Globalization and human resource management, Vilnius University. Chen, S., Lawler, J. and Bae, J., 2005, Convergence in human resource management systems: a comparison of locally owned and MNC subsidiaries, Taiwan: Wiley periodical Inc. Dowling, P., 2004, Human resource issues in international business, London: Thompsons. Falcone, P., 2004, Learning from overseas counterparts, HR Magazine, Vol. 49, No. 2. Friedman, B., 2007, Globalisation implications for human resource management roles, New York; Springer Science. Gomez, C. and Sanchez, J.L. 2005, Human resources strategic role within MNCs, International Journal Of Human Resource Management, Volume 16, Issue 12, pp. 2189 - 2200 . Ibrahim, J., 2004, The effects of globalisation on the development of underdeveloped economies, Harvard business review. Jeoung, H., 2012, The effects of globalisation on human resource management, unions and flexibility in South Korea, Seoul: Korea university press. Jinji, N., 2005, Social dumping and international trade, Okayama university, Okayama. Kapoor, K., 2006, Impacts of globalization on human resource management, Fullerton: cal state university. Kayode, O., 2012, Impact of globalisation on human resource management, Lagos state university: science journal publication. Metcalfe, D., 2005, Theorizing advances in international human resource development, Hull University, Routledge Taylor and Francis group. Poor, J., 2004, Internationalization and globalization in human resource management, university of Pecs. Porumb, E., 2011, The implication of globalisation in human resource management: new realities at Philips, Germany: Osnabruck university. Schuler, R., Budhwar, P and Florkowski, W., 2002, International human resource management: review and critique, international journal of management reviews. Tregaskis, O., 2006, Multinational companies: multi-level control and the role of the corporate HR function, EGOS Colloquium. Read More