Human resources are essential to the organizational success. Human Resource (HR) management deals with the design of formal systems in an organization to ensure the effective and efficient use of human talent to accomplish organizational goals…
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Human resources are essential to the organizational success. Human Resource (HR) management deals with the design of formal systems in an organization to ensure the effective and efficient use of human talent to accomplish organizational goals.A multinational enterprise is one in which organizational units are located in foreign countries. Typically these units provide goods and services for the geographic areas surrounding the countries where operations exist. Today's increasingly global, competitive marketplace has led to considerable changes in labour markets, and has transformed the practice of Human Resource Management. All Multinational enterprises face a range of challenges in managing their businesses in a country like China, which restraint, prohibit or limit market access and ownership rights. Nestl is the multi-national enterprise selected for the purpose of this study. The changes Nestl had to implement in its International Human Resource policies to start a subsidiary in China are discussed upon in the following sections.China has one of the world's oldest civilizations, consisting of states and cultures dating back more than six millennia. It is a communist country, where state-owned enterprises still produce about one-third of the country's GNP and so government has more direct influence on corporate strategy in China (Dessler, G., 2006). According to Dessler, G. (2006), the existing human capital pool in China is influenced by the following factors:
Government influence- The government's 'Iron Rice Bowl' approach consisted of practices including lifetime employment, cradle to grave welfare coverage, no layoffs/firing policies, government based pay systems, and group based rewards. It restricted the entry of unemployed into the cities through the 'Hukuo' registration system that severely restricts labour mobility. The government also insisted on the personnel file system which requires employees to transfer their government-administered personnel files to new employers before changing jobs.
The Cultural Revolution- This revolution largely lowered and belittled formal university education, closing down universities and schools.
Shortage of labour- The problem is that most of China's new jobs are and will be in or near cities, while most of the labour force is still in rural areas. China is therefore undergoing one of the largest human migrations in history. Shortages are not confined to professional and managerial personnel.
Global competition- The managers in China face an intensely competitive global industrial environment. Whether expanding into or out of China, the challenge in globalization is competing with world-class businesses in their own markets.
Therefore efficient Human Resource management is the key to success in China. A multinational enterprise like Nestl has to make certain changes in its international human resource management policies to survive in China.
Nestl is a multinational packaged food company founded and headquartered in Vevey, Switzerland (Nestl, 2008). It was started in 1905 by Henri Nestl to provide an infant food product. Nestl has a wide range of products across a number of markets including coffee, water, other beverages, ice cream, infant foods, performance and healthcare nutrition, seasonings, frozen and refrigerated foods, confectionery and pet food.
The company has set up factories locally, employed personnel from the country concerned and relies on indigenous raw materials in many countries. Nestl has a subsidiary in China. After 13 years of talks, Nestl was formally invited into Shuangcheng, China in 1987, by the Government of Heilongjiang province. There are various differences between the two countries which are discussed in the following section
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The main objective of the international human resource management is to minimize the risks related to the global human resource (Czenter, 2002). International Human Resource Management also attempts to evade cultural risks along with regional differences.
This trend requires strategic management considering numerous variables to be confronted within an unpredictable business climate. In such phenomenon of uncertainty, innovation is required (Beinhocker, 1997). As such, human resource management should be strategized with sensitivity to uncertain future, of variegated change processes, and of competition inherent to this type of business (Manning, 1998).
The discussion focuses on the importance of abiding by the international regulation by the MNEs. The MNEs should be cautious of not violating the regulations in order to ensure its sustainable existence in the country it is operating in. Therefore, the MNEs need to deal with the various issues or laws of the different operating countries along with special focus on the human resources properly.
This has raised new challenges for the managers. Companies face pressing needs of international human resource management (HRM) in the present age particularly with respect to recruitment, training, and compensation of the global employees. Differences between the countries affect the HRM processes of a company in a variety of ways.
The international aspect of HRM has come about mainly as a result of the emergence of international conglomerates with branches across the globe. Such large organisations have increasingly faced the challenge of applying their HRM regulations to different persons in different places governed by different laws and cultures.
Things have changed a lot in the last century, the rationales have changed, such as in early 1800's it was a rational behavior to take a decisions for profit maximization ignoring human resource of the company and exploiting their rights and motivation, where as now a days the rational behavior and sense of the profit maximization in the long run says that one should consider the human resource factor of the organization before making any strategic decision.
The most important of these changes and adaptations are defined by the nature of human resource demands. Human resource can be said to be the most vital asset of the company since they formulate operations and work plans necessary for business. Multinational
The author states that International Human Resources Management deals with the implication of the general practices of human resources management pertaining to recruiting, staffing, training and development, compensation and other appraisal and evaluation methods carried out in the international context.
Every organization is developed for several benefits of individuals, such as small businesses, corporations, religious institutions and political parties. The goal of organization is to produce low entropy and provide a force that can help to motivate action.