Role of HRD in Multinational Corporations - Essay Example

? Role of HRD in Multinational Corporations Introduction Given the rapid pace of international competition, it is argued that the main elements essential to every organization in order to remain competitively viable are knowledge and skills. This argument obviously elevates the status of the Human Resource and Development (HRD) function of an organization. Like most international organizations, Multinational Corporations (MRCs) find themselves trapped in this dynamic, increasingly competitive and global environment. Some of the continuous changes in the environment these organizations operate in include international competition, increasing acquisitions and mergers, reformations of individual organizations, and technological advances as identified by Dowling & Welch (2004). The implications of these changes on various aspects of the organization vary depending on the individual organization, however, for international corporations that experience the impact of these changing dynamic environments it is necessary to adopt a greater level of flexibility and search for novel sources of competitive advantage. As mentioned above, skills and core competencies are regarded as the key elements essential for driving effective innovation and desired change, and therefore are the major source of competitive advantage (Gratton, 2000). As highlighted by Boxall and Purcell (2003), these changes do indeed qualify knowledge work and employee skills. In tandem, this offers the suggestion that Human Resource Development (HRD) is the core function around which Multinational Corporations (MRCs) succeed and maintain competitive advantage. Although all organizations are bound in such external environments, particular organizational features put emphasis on some important disparities in the role profiles of the people who have been tasked with carrying out the operations in each specific organization. It is widely held that the prevailing competitive environmental condition and appreciation of the significance of knowledge and learning to gain a competitive edge are increase the status and power of the HRD function and lead to the emergence of varied opportunities for HRD professionals (Boud and Garrick, 2001: Carter, Hirsh and Aston, 2002: Harrison, 2006). The increasing challenges manifest in the organizational structure of MNCs lead to the creation of distinctive roles for HR and HRD professionals that are not available in domestic organizations or the national context (Peterson and Thomas, 2007). This paper therefore discusses the role played by the HRD function in MNCs in an international context concerning the changing environmental circumstances that have been highlighted above. In addition, draws on the conclusion that the role of HRD in maintaining a competitive advantage in a global stage has become greater than ever before, and is mainly influenced by the international factors that come into play. The International Context and the Role of HRD in MNCs The extant surge in globalization has been identified as a central environmental factor that continues to shape the operations of HRD professionals in MNCs across the world. Globalization entails a large quantity of issues such as the growth in international, multinational and transnational organizations’ advances in technology, mergers, acquisitions, ad strategic alliances. Short and Callahan (2005) state that in the quest for organizations to go global or maintain their position at the international stage, they are likely to turn to HRD professional to offer advice and support on the most viable strategies and practices to adopt. However, globalization forces the HRD function of such organizations to transform their way of thinking about the nature radically, role and tools of people development in order to remain competitive. The methods, therefore, adopted by the HRD function in MNCs is mainly influenced by the decision of the organization to lean toward international convergence, divergence or to operate as a transnational corporation (Gubbins and Garavan, 2009). The international-domestic aspect of MNCs is a key factor that has received considerable amount of deliberation in international HRM literature as argued by Edwards and Kuruvilla (2005). With regard to HR, it is argued that MNCs can pace themselves in a position that enables them to benefit from the consistencies that international HR policies offer, putting in mind that any endeavors in that regard must be balanced against sensitivity to the domestic context in which they operate. Organizations that decide to lean toward a strategy of convergence need to adopt a strong center for international strategy (Wit and Meyer, 2004). However, concerning HRD function, such a strategy has its own particular implications that need to be considered for each subsidiary of the MNC (Gubbins and Garavan, 2009). It is imperative that each portrays a reflection of the HRD strategies, policies, practices and approaches that have been adopted in developing people, of the local business system in which the MNC originated. The argument that failure to build international HRD practices has the great potential of placing the MNC at risk of not reaching mission-critical goals of knowledge management in multiple locations that supports different cultures and enhances performance across geographical boundaries is offered by Krempl and Pace (2001). Therefore, HRD professionals find themselves in a situation whereby they are compelled to adopt internationals ways of thinking and influence national organizations’ strategies that are in correspondence with HRD practices in the country of origin. Moreover, the HRD function must ensure that HRD interventions taken promote a common corporate culture, and facilitate the propagation of the best practice in the MNC. Sharing of knowledge and skills on national human resource development practices in international organizations such as MNCs is an essential element in constructing viable, international practice models (Swanson and Holton, 2001). Similarly, it is necessary for MNCs that opt to operate as transnational corporations to perform sort of a balancing act by tapping into individual host country opportunities, and consequently adapting the acquired competences and advances to other countries (Wit and Meyer, 2004). In this regard, the role of the HRD function is to provide a balance between the strategic business partnership and service provision at both the national and international stages. The HRD function with the guidance of HRD professionals therefore need to formulate strategies and put together interventions that make use of specific competences from a country and facilitate their exchange and coordination with different national contexts. Concerning HRD practice, professions in the HRD function of organizations are tasked with recognizing and differentiating between HRD practices that can be employed in an international stage with those that can only be employed at the local or domestic stage. In so doing, one of the major roles of the HRD professionals operating in MNCs in such environments is to be mindful of various factors as identified by Marquardt et al (2004). Most importantly, HRD professionals need to recognize that the demographic features of trainees are more diverse concerning nationality, culture, learning styles and language. The role of HRD in this scenario therefore is to enable MNCs, the managers and overall employees to contend with such diversities. However, when carrying out this role, it is important for HRD professionals to note that it is not only about the development of competences that enable the managers and employees to deal with diversities, or recognizing and accepting diversity. This role also entails facilitation of the development of corporate cultures that are internationally acknowledged. The level of diversity experienced by MNCs also leads to a higher level of administrative issues for the HRD function, such as translating adopted strategies across various languages, synchronizing such strategies to national cultures and learning, and adherence to specific national and government practices. In additional to the cultural diversity, HRD in an international context is likely to encounter different environmental conditions in terms of politics and economics. For example, the HRD professionals may find themselves operating in environments with adequate resources or scarce resources, or in environments that are experiencing booming economic conditions, or one that is under the control of the military with negative growth. The roles of HRD therefore have significant differences across countries and cultures. The diverse cultures and contexts the HRD functions of MNCs operate in requires that HRD professionals in such organizations either resort to becoming experts of all contexts and cultures or seek the services of those that have expertise in specific contexts. However, it is often argued that the best practice is for the HRD to employ the services of local experts to handle HR issues that are unique to a particular context. In this regard, Gubbins and Garavan (2009) propose that HRD professionals in MNCs are more likely than not to utilize a combination of strategies that are internationally and locally receptive and address the overall competitive goal of the MNC. With the increasing intensity and globalization of competition, strategic HRD issues are becoming more significant. A specific HR response to this increasing intensity and globalization of competition is the use of human resources as the basis of gaining and maintaining competitive advantage. In order to achieve competitive advantage, it is essential that HRD prepare for continuous change by improving and increasing the skills of employees and the organizations’ overall knowledge base. The Resource-Based View of strategy puts emphasis on the significance of the core competencies in forming the central foundation for viable competitive advantage. However, as noted by Clardy (2008), it is imperative to take into great consideration the role of HRD function in developing core competences .The roles of HRD in development and management of core competences include participation in strategic planning and protection of the developed competences. The acquisition of knowledge by the workforce of an organization is a scarce, valuable form of capital and a central competence for the success of individual organizations, in this case, especially MNCs (Sadler-Smith, 2006). Those MNCs that have the necessary learning and development competences have the ability to deal with the challenges and threats brought about by external environments. Moreover, such MNCs can benefit from internal advantages by engaging in information and knowledge sharing and collective learning, which greatly enables them to create novel sources of knowledge, translating into better products and services (Sugarman, 2001). Bui and Baruch (2010) suggests a causal model that associates the different constructs of Senge’s principles in the learning organization that is essential for organizations, especially MNCs to attain competitive benefit. In carrying out this role, the HRD professionals need to note that even though learning is a core component of the HRD function, it is multifaceted and therefore the different components have to be integrated in order to underpin the HRD at a practical level (Garavan, Gunnigle and Morley, 2000; McGoldrick, Stewart and Watson, 2001) Increasing international competition and the growth of MNCs has also brought about a surge in the number of mergers and acquisitions and strategic alliances (Dowling and Welch, 2004). Mergers and acquisitions bring to the forefront significant, hitherto not experienced challenges for HRD professionals. Such challenges include issues to do with the linkage of units, development of common corporate cultures, mission and vision, and formulation of structures that enable sharing of information and knowledge across the units that have been merged. Conclusion The increasing level of globalization continues to change the operational environment of MNCs significantly and the roles played by HRD professionals. The international context in which MNCs operate is a complex one, defined by diverse cultures and multiplicity of units, which consequently require HRD professionals to add value to the organization and facilitate competitive advantage. However, concerning MNCs, this requirement has further complexity to a domestic organization in terms of forces of convergence and divergence. In this regard, the strategies adopted and employed by HRD professionals in MNCs are majorly influenced by both the international and local contexts in addition to the need to gain competitive advantage. As a result, the roles of HRD function are constantly increasing, changing and/or transforming as a rejoinder to the prevailing external and internal organizational factors. MNCs can organize HRD roles in a variety of ways including shared services, corporate HRD functions, and strategic partnerships. Finally, given the changing environment in which MNCs operate, it is imperative that the HRD function adopts new roles, which however present them with new challenges and necessitate the development of new competences in order to achieve competitive advantage. References Boud, D. & Garrick, J. 2001. Understanding Learning at Work. Routledge Boxall, P., & Purcell, J. 2003. Strategy and human resource management. Basingstoke, UK: Palgrave Macmillan. Bui, H., & Baruch, Y. 2010. Creating learning organizations: a systems perspective. The Learning Organization, 17(3), 208-227. Carter, A., Hirsh, W., & Aston, J. 2002. Resourcing the training and development functions. Brighton, UK: IES. Clardy, A. 2008. The strategic role of human resource development in managing core competencies. Human Resource Development Review, 11, 2, Wit, B., & Meyer, R. (Eds.). 2004. 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Foundations of human resource development. San Francisco: Berrett Koehler. Read More