International Human Resource Management - Case Study Example

International Human Resource Management Introduction In the modern world, international human resource management has become increasingly important for global companies. There are regional and international issues that must be kept in mind by HRM professionals and many of these issues have been discussed at length by the analysts working in the field. One company which has faced issues in the past with international HRM is General Electric and as a result of handling those issues, the company changed its approach to how it views HRM issues on a global scale. The approach used by the company fits the functionalist paradigm of HRM and is based on a humanistic approach to management. To get a better understanding of international HRM, it becomes important to understand the issues that GE faced and then understand the measures taken by GE to control the problems which came up in terms of international HRM. The Company The primary aspect that must be kept in mind with regard to GE is that it is truly one of the few international companies in the world. Its diversity is not only based on the number and variety of people that work for the company but also with regard to the businesses and markets that GE has entered into. GE has eleven separate technology, finance and services related business units each of which could be an international company in their own right. In terms of total employee strength, the company employs more than 300,000 individuals who are spread in more than 150 countries all over the world (GE, 2006). Despite being large and long-established, the values, management systems, culture and the rate of technological adaptation have remained the same wherever GE operations are maintained. GE deals with a variety of products and markets which range from computer systems, aircraft engines, energy plant development, finance and capital services, moulded plastics, illumination devices, health tools and military equipment. Regardless of the nature of business they get into, GE focuses on converting powerful ideas into real products for the collective benefit of their stakeholders (GE, 2006). As a market leader, no company few companies in the world are as well respected as GE (Demos, 2006). Throughout their existence, and more recently in current years, analysts from various fields such as management, business administration, human resource management and those who study organisational behaviour have all given high accolades to GE (Fisher, 2006). A large part of this respect comes from the way GE takes care of the human resources which are recruited by the company. These methods fit well with the humanistic approach to management and the functionalist paradigm as can be observed from GE’s behaviour with their Hungarian operations. GE Staffing Issues in Europe While this process of managing human resources is seen to be successful by individuals such as Fisher (2006) and Demos (2006) who consider GE to be one of the best companies in the world. The company faced severe issues when it first entered into Western Europe after the fall of the Berlin Wall (Welch, 2005). The external environment of a company can greatly influence the workings of an organisation and even cause the company to announce layoffs or other changes to its human capital structures depending on the needs of the company (Stredwick, 2005). This is also discussed by Burns and Stalker (1961) who suggest that if a company is to obtain maximum performance then its structure should fit with the changes that come to the external environment. In this regard, GE’s operations in Hungary were completely out of sync with the external pressures and the company was losing money due to inefficient operations connected with HR problems (Welch, 2005). In Hungary, GE discovered that it had a strong structure of local managers all of whom were very hesitant to change the Hungarian setup with regard to the organisation of the regional operations. The cultural norms of GE in Hungary focused on the length of service and personal seniority as a basis for establishing the top management of the company while GE internationally focused on merit and what the employee brought to the table. GE lacked local managers who could appreciate the position of the company in terms where it wanted to be with regard to its position on HRM and this was hurting profitability (Welch, 2005). The solution to this problem was to slowly remove such managers based on their performance evaluations. GE could not terminate them at once since the company was afraid of bad press and litigation which could be brought against the company. However GE knew that the weakness in the company human resource situation in Hungary could only be removed if such employees could be taken out of the picture and others brought in to change the culture of the company (Welch, 2005). Local Environments and HRM The local environment and the managerial systems employed at GE were certainly in conflict with what GE wanted. To counter this, GE expanded the HRM requirements for the Hungarian operations by making Hungary the base of their European initiative. This put their Hungarian managers in competition with other European markets where management culture was very different. In terms of recruitment, new employees were screened for having a good cultural match with GE and the company hired those individuals who were willing to accepting to change. Based on their output, they obtained quick promotions which brought them to higher levels of management within the company (Welch, 2005). These promotions for performing employees were balanced with the threat of termination for those who were not willing to adapt to the new vision of management. This falls in line with the functionalist paradigm of human resource management where it is expected that individuals will behave rationally and be motivated with rewards and avoid the pain of being jobless (Burrell, 1979). This concept of motivation through establishing a merit system is also supported by Bach (2005) who suggests that merit and individual performance should be the primary factor for rewarding and promoting employees. For recruitment as well as internal promotions, GE in Hungary behaved purely as a meritocracy with the idea that there was no place for poor performers. This idea remains true for GE operations around the world as the bottom 10% of the employee strength across the company is removed each year. For recruitment purposes, it means that the HR team continually gets fresh blood to replace outgoing people who simply could not make the cut (Welch, 2005). Recruitment Historically, the recruitment processes of GE and many large similar companies of the 20th century were founded on the principle of getting college graduates to join GE with the promise of working in a linear, segmented, and hierarchical promotion system. This approach was based on the recruitment systems used by governments and the basics of the recruitment methodology had been created long ago (Ashkenas et al, 1995). In recent years however, the trend for large recruitment drives at GE has been phased out with targeted recruitment which is specific for departments as well as the location where GE operates (Welch, 2005). This means that information flow between the company and the prospective recruits in a location or a department can be effectively controlled by the company itself. The CEO of Ogilvy & Mather, Shelly Lazarus has been on the board for GE for many years and she makes it clear that the process of establishing a cultural link between the company and the employees begins as soon as a recruitment contact is made. According to her, being offered a job with GE is a cause for celebration since GE creates leaders who are taught to take up controlling positions at the top of the company’s business units (Colvin, 2006). It is easy to agree with this idea since an established recruiting process with interviews and rewards should go a long way towards motivating the employees to work towards something lofty goals throughout their careers. Welch (2005) reports that GE recruits from all over the world and does not run after colleges or universities which are famous because of their image. Second tier universities can produce applicants who are just as good as Harvard or MIT and this is certainly applied in how GE seeks recruits. In this manner, the people working for GE do not come with a chip on their shoulder and remain competitive without demanding high salaries which the graduates of top universities might expect to be given. Through the interview and testing process before recruitment, GE looks for employees who not only have the skills necessary to perform a specific function but also looks at their commitment and drive. Since GE seeks leaders, various evaluations tests become necessary for the company before a hiring decision is made regarding an individual. Welch (2005) reports that some of the qualities they seek in applicants are communication skills, management skills and most importantly, the drive to perform. As the demands of the company change with regard to the people it needs, GE does experiment with what kind of individuals it hires and how it maintains a good relationship with those employees. Of course, large multinational companies such as GE have the financial capital and the human resources to experiment in situations like the one they faced in Hungary since they can afford to learn from their mistakes. However, fledging companies or organisations that are not that strong may have to take a lot of factors into consideration before they recruit or mark an individual for promotion. For small companies, this creates considerable challenges for HR managers as they have to create a recruitment process that best fits the situation of the company before implementing it (Drucker, 1999). The Future As GE continues to expand around the world, it will need to further develop its recruitment processes to take into account the various cultural differences and social issues that may come up. This is particularly important for them as they venture into newer places around the world where significant differences may exist between the home culture at GE and the local culture at their regional offices (Beardwell and Holden, 1997). Within the company, different departments may need to have their own recruitment processes and promotional procedures to get to their highest level of efficiency and productivity. As suggested by Drucker (1999), several recruitment procedures leading to different departmental structures can certainly coexist and even overlap in a given company. Therefore, GE may need to keep in mind the requirements of their departments while moving quickly to secure recruitment opportunities that may come up. The company could also look into getting middle management personnel transferred from their home base to work as guides in international locations since they would most likely be firmly entrenched with the culture that GE wants to create. This could make the recruitment process much easier since those mangers would be able to create teams which are good cultural matches for the company. While there may be some initial communication problems between managers from the home office and the recruits in a new country, such initial problems may be much easier to handle than long term issues that affect the overall organization. In conclusion, it is not difficult to see that recruitment is an essential part of the process while a company is seeking to expand globally or entering new markets around the world. However, the process of ensuring the right cultural match and making sure that the employees who come in can handle the pressures of working in the way that the company works can be quite challenging. Towards this purpose, the systems and methods established by Jack Welch would certainly be very helpful for GE in terms of their recruitment needs for the future. Word Count: 2,133 Works Cited Ashkenas, R. et. al. 1995, The Boundary less Organization, Jossey -Bass. Bach, S. 2005, Managing Human Resources: Personnel Management in Transition, Wiley Beardwell I. and Holden L. 2001, Human Resource Management: A contemporary approach, FT management. Boxall P. and Purcell J. 2003, Strategy and Human Resource Management, Palgrave & Macmillan. Burns, T. and Stalker, G. 1961, The management of innovation, Tavistock Publications. Burrell, G. 1979, Sociological Paradigms and Organisational Analysis, Heinemann Educational Books. Colvin, G. 2006, ‘What Makes GE Great?’, Fortune, vol. 153, no. 4, pp. 90-96. Demos, T. 2006, ‘The World’s Most Admired Companies’, Fortune, vol. 153, no. 4, pp. 72-73. Drucker, P. 1989, The Practice of Management, Heinemann Professional. Fisher, A. 2006, ‘America’s most admired companies’, Fortune, vol. 153, no. 4, pp. 65-76. 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