Similarities in the General Human Resource Practices - Article Example

Introduction The article is going to allude to the similarities and the differences in the General Human resource practices and the International Human resource management. The main topic of debate will be the evolution of International Human resource management due to the internationalisation of the various businesses across borders. We will conclude with the fact that International Human resource management is the integration of Human resource practices in an international environment. Human resource is a term which many organisations describe as the combination of traditionally administrative personnel functions with performance management, employee relations and resource planning. The objective of Human Resources is to maximize the return on investment from the organization's human capital and minimize financial risk. It is the responsibility of human resource managers to conduct these activities in an effective, legal, fair, and consistent manner. Ideally Human resource practices follow a fixed cycle: selection, performance, evaluation/appraisal, rewards, and development. International Human resource management is described as a set up in an international environment, ideally a multinational setup, which is involved in the process of acquiring, allotting and effectively utilising the human resources. In early times the international business was done by the firms which were involved in extraction of oil, mining etc. In modern times every form of business entity is going international which brings about the need of internationalisation of Human resource practices. Thus the need of International Human resource management arose. "The more broadly defined field of IHRM is about understanding, researching, applying and improving all human resource activities in their internal and external contexts as they impact the process of managing. Human resources in enterprises throughout the global environment to enhance the experience of multiple stake holders including investors, customers, employees, partners, suppliers, environment and society" Dennis R. Briscoe, Randall Schuller 2004(page 20) The global economy is expanding largely and the bringing about tough competition on a global basis as most of the firms operate outside their area of origin. It becomes quiet inevitable to increase the skills& knowledge of the managers in the international arena. This will give them a strong foot in the international market. Thus the parent country HR practices are applied directly to its foreign subsidiaries or it tries to merge its personnel practices with those that are common in the host countries.The main responsibility of IHRM is to select and prepare the employees to be spread across all international locations of the firm, shaping up general HR practices for international assignees and create and launch HR practices and policies for it's foreign operations. One of the key features of Multinational companies is to transfer its HR practices across borders. If the company wants to succeed, the extent and the impact of the transfer should be high. There are various perspectives which influence such transfers. "One perspective suggests that transfer is driven by whether or not managers perceive a clear competitive advantage from engaging in it; a second perspective sees transfer as conditioned by cross-national variations in business systems; and a third perspective is that transfer is shaped by the interests of various groups of actors within MNC's and by struggles between these groups". Tony Edwards, Trevor Colling, Anthony Ferner 3 July 2007 (Page 201-217) Once the perspectives of the transfers are understood, we need to understand the various possible approaches used by the MNC's for such transfers. "A wider-ranging view of the MNC-environment relationship, which has further implications for IHRM, has been provided by Rosenzweig and Singh (1991). They argue that there are many different factors that determine the trade-off between integration and adaptation, such as: legal and regulatory constraints, industry, technology, parent country culture, cultural distance, work force composition, type of subsidiary establishment and dependence of the host country on the MNC. Drawing on the open-systems approach, as well as resource dependence and institutional theory, they emphasize the importance of both organisational and national environments" Barbara Myloni, Anne-Wil Harzing Hafiz Mirza Version July 2006 One approach talks about the viable pressure that the firms experience in transferring the best practices across the borders. The pressure is identified as a "market based approach" which when experienced from finance, labour and the market etc act as a driving force of the management course of action. The best practices are identifiable and help in the diagnosis of the firms needs accurately. The basic principle of the market approach is very logical. When the MNC's face competitive pressure, in order to be in a better position than the competitor, they are required to look into exploiting the organizational competencies. Such transfers are not governed by only one group of actors. Such organizations exhibit competing rationalities by different actors. The other approach used is the cross national comparative approach . "The most popular variant, culturalism, argues that MNCs bear the legacy of the values and attitudes characteristic of the home country; transfer is shaped by this and by host country cultures. Cultural approaches emphasize how organisational actors are influenced, often unconsciously, by taken-for-granted processes. In this way, an organisation's course of action reflects what has become 'natural' in a particular cultural setting". Tony Edwards, Trevor Colling, Anthony Ferner 3 July 2007 (Page 201-217) Cultural differences can bring about great constraints in the transfer of the policies. The transfers in such cases where there are cultural barriers are either blocked completely or they are altered to a significant extent. The strong affinity with the home country culture gives them a better edge over the subsidiaries, thus making it tougher to be moulded or adapted as it is. "Torrington (1994) concluded that international HRM is not simply human resource management on a grander scale. He considered that several familiar aspects of HRM, such as recruitment, selection and employee relations are actually outside the scope of international HRM because of the different (primarily national) legislative frameworks to which they must adhere. For example, he stated that: "Employees are selected in one country or another, and wherever the selection is undertaken there are a range of conventions and legal requirements that have to be met. The person appointed will usually have a contract of employment that will fit within the legal framework of one country but probably not another". Of course, supra-national bodies such as the European Union are attempting to 'harmonize' such differences out of existence." Alan Price April 2007 The intuitionalist approach has also been used to suggest the "reverse transfer" theory that the processes and policies are transferred from the foreign subsidiaries to the MNC's domestic operations. The other approach is the "micro political" approach which talks about the ways the actors protect or advance their own interest, the kind of resources used and the way they resolve the conflicts. It is now prevalent that the expansion of the multinational companies is a major phenomenon in the international economy today. Due to the globalisation of the world economy, General human resource practices have evolved to turn into a strategically important function. We can recognise the human resource function as the core reason for the interlinking of global organisations. It is termed as hard core mechanics to co-ordinate and control international operations. Many MNC's are in favour of transferring their Human resource management abroad. However, it has also created many problems due to the international environment which works on a different tangent altogether. The cultural and the institutional factors influence such transfers. Such transfers bring about a vast change in the functions of general Human resource practices. The International Human resource practitioners are expected to be more diligent than the general Human resource. The reason why such a need was felt was due to the diversion and the expansion of the work arena of International Human resource as compared to the General Human resource. The various tasks are employment and human resource management, salary administration, employee benefit schemes, training and development, employee satisfaction and relation schemes, equal employment opportunity, safety etc. Internationally the liability of tax is heavier. Thus, that aspect needs to be monitored extensively. It is varied due to the complicated tax law variation across host counties. The other task is the orientation and relocation activities. It involves predeparture training, housing and lodging, travel details, immigration and also deciding upon the salary compensation including the overseas allowance etc. Domestic managers handle a group of similar nationality who have a uniform compensation programme and are taxed by a single government. Their international counterpart has to design policies and compensations for parent country nationals, host country nationals and third country nationals. They might work at the same locations but will be governed by different tax laws and compensations. A greater degree of involvement in their personal lives is required for selection, training, and effective management of expatriates. "The research of (Acuff 1984, morgan) in press suggest that International Human resource management is different from Human resource management in six important aspects: 1. perform more functions and activities 2. need to maintain a broader perspective 3. are more involved in employees personal lives 4. deal with multiple employee groups 5. are subject to greater risk 6. contend with more environmental pressures" Edward K. Y. Chen, Peter Enderwick, John H. Dunning 1994 (61) The task of managers in handling the International Human resource challenges is more than the general Human resource practices. If the MNC's are simply opening up small offices in foreign locations to monitor the export of their products, the task of the International Human resource management is quiet simple. However in larger setups, the task becomes far more tough than the domestic counterpart. The main task of the human resource manager is to integrate the policies and the procedures in many foreign locations in order to achieve their goal at a corporate level. At the same time, these cultural activities should also be very flexible so as to make significant changes in it as per the different businesses and cultural settings. "Even when dealing with one particular HR function area such as compensation, the international HR manager is faced with a great variety of national and international pay issues. For example, while dealing with pay issues, the HQ-based HR manager must coordinate pay systems in different countries with different currencies that may change in relative value to one another over time. An American expatriate in Tokyo who receives a salary of $100,000 may suddenly find the buying power of that salary dramatically diminished if the Japanese yen strengthens in value relative to the US dollar. A US dollar purchased 248 yen in 1985, but less than 110 yen in 2000. In the case of fringe benefits provided to host company employees, some interesting complications might arise. For instance, it is common in the United States to provide health insurance benefits to employees and the employee's family, which usually means spouse and children. In some countries however, the term "family" may include a more extended group of relatives-multiple spouses, aunts, uncles, grandparents, nephews, and nieces. How does the firm's benefit plan deal with these different definitions of family" Cynthia D Fisher, Lyle F Schoenfeldt, James B Shaw. Published by Biztantra Conclusion The integration of General Human resource practices in an international environment requires the transfer of its policies and practices. While executing the above said task, its is very important for companies to understand that at a corporate level, the Human resource plays a supreme role. However they also disrupt or encroach the practices to different degrees. It revolves around the host country environment. Thus all practices should accord with or be sensitive to its rules and regulations, local laws and policies. The intergration of the two brings about competitive advantage to the MNC's Reference List Alan Price April 2007.Human Resource Management in a Business Context 3rd edition Topic: Culture and international HRM http://www.hrmguide.net/hrm/chap5/ch5-links1.htm Barbara Myloni, Anne-Wil Harzing Hafiz Mirza Version July 2006 The effect of corporate-level organisational factors on the transfer of human resource management practices: European and US MNCs and their Greek subsidiaries http://www.harzing.com/download/hrmxfer.pdf Cynthia D Fisher, Lyle F Schoenfeldt, James B Shaw. Published by Biztantra Excerpt from 'Human Resource Management' http://www.expresscomputeronline.com/20050103/technologylife05.shtml Dennis R. Briscoe, Randall Schuller 2004(page 20) http://books.google.com.ph/booksid=BeNneWI2QP4C&pg=PT75&lpg=PT75&dq=general+hr+practices+used+by+international+hr&source=web&ots=qsVbuJJ9jz&sig=g8YT1TfGPUBqeIdTw9sy7-ATDKM&hl=en#PPT40,M1 Edward K. Y. Chen, Peter , Enderwick, John H. Dunning 1994 (61) Transnational Corporations and Human Resources Vhttp://books.google.com.ph/booksid=dk9pHZ0gYpsC&pg=PA56&lpg=PA56&dq=what+is+the+similarity+between+general+human+resource+and+international+human+resource&source=web&ots=WsC5xuP7sJ&sig=u_-acvdbW-o6gTEXVIKErNMH_-k&hl=en#PPA56,M1 Tony Edwards, Trevor Colling, Anthony Ferner 3 July 2007 ( Page 201-217) Conceptual approaches to the transfer of employment practices in multinational companies: an integrated approach Human Resource Management Journal Volume 17 Issue 3 July 2007, Introduction page http://www.blackwell-synergy.com/doi/full/10.1111/j.1748-8583.2007.00042.x#THE%20CASE%20STUDY%20FINDINGS(conceptual Read More