International Human Resources - Case Study Example

International Human Resources Table of Contents International Human Resources 1 Introduction 2 Factors that Influence the International Human Resources in MNC of USA 3 Cultural Context of United States 3 Economic Condition of the Country and MNC 5 Policies and Regulation 5 Organizational Culture of the MNC 6 Challenges in IHRM 6 Role of the HR manager 8 Conclusion 10 Reference 10 Bibliography 13 Introduction Proper management of labor and manpower is essential to ensure efficiency and productivity of an organization. Manpower planning includes important tasks like recruitment, selection, training, development, performance appraisal and maintaining a healthy environment for staffs working within the organization. Proper execution of human resource responsibility is the major challenge of the human resource department (HRD). These challenges become all the more tough when expatriate managers are given the charge of managing international human resource. The expatriate managers are given the responsibility of synchronizing different cultures while managing human resource for a multi-national corporation in a foreign country. The culture and business environment of a multi-national corporations vary with regions and countries. ‘International human resource management’ deals with the HRM activities of a multi-national corporation. It assists the expatriate HR managers of multi-national corporations to understand the organizational culture of the MNC and the local culture of that particular country. The functions and responsibilities of domestic human resource management and international human resource management are different in many aspects. The latter requires greater responsibility as it necessitates greater level of coordination, risk, involvement in personal lives of employees. This paper will attempt to analyze the human resource of Ford Motor Company of United States of America (USA). In the next section, the cultural context of USA MNC and the local culture will be discussed and the challenges faced by the expatriate managers will be analyzed. The overall findings will be concluded and some essential recommendations will be provided to overcome those challenges. Factors that Influence the International Human Resources in MNC of USA Cultural Context of United States The core functions of the human resources management are similar irrespective of countries and organizations. However, the difference in cultures poses certain hindrances for the expatriate managers. Differences existing between Asia Pacific, Middle East and USA are difficult to assimilate. The culture of USA is an immigrant one, along with the Native Americans many immigrants from different countries have been residing in USA. Greet Hofstede has identified six dimensions of the cultures that vary from country to country. These dimensions are “power distance index (PDI), individualism (IDV), uncertainty avoidance index (UAI), masculinity (MAS) and long-term orientation (LTO)” (Falkenreck, 2009, p.59). Figure 1 depicts the ‘Greet Hofstede cultural dimensions of United States’. Figure 1: Greet Hofstede™ Cultural Dimensions (Source: itim International, 2009) The above figure shows that high individualism characterizes the USA culture. The attitudes of people are very individualistic. The bondage among the people of USA is quite loose. The ranking on Masculinity (MAS) in USA indicates that the roles of genders are highly demarcated. USA ranks lowest in long term orientation (LTO), which signifies that the people are more focused on short term goals over long term ones. However, low social power distance (PDI) in USA implies less discrimination in society in terms of social class. There is a greater level of equality in the organizations and society. Low uncertainty avoidance (UAI) portrays the poor control system of outcomes in USA. The rules and the policies of USA do not consider the results and outcomes. However, it also indicates that USA culture is able to assimilate a wide variety of thoughts, ideas and beliefs (itim International, 2009). The above discussion has given an overall idea about the prevailing culture in USA. In order to manage different functions of an MNC in USA, it is very necessary to realize the local culture. For example, Onkvisit and Shaw have commented that “it is difficult for an American salesperson to entertain foreign clients without an understanding of the local culture” (Onkvisit and Shaw, 2004, p.422). The nature and behavior of the local USA employees, clients, etc should be observed by the expatriate HR managers. Economic Condition of the Country and MNC Economic condition of the host country is another important factor that influences the human resource policy. The pay packages, remunerations of labors and other such factors depend on the economic condition of the host country. For example, the standard of living in USA is high; therefore, the employees should be given higher pay packages. “Differences in economic systems among countries also translate into intercountry differences in HRM practices” (Sim, 2002, p.370). The expatriate manager must realize the overall economic condition of USA. Policies and Regulation Another factor that influences the business of an MNC is the prevailing policies and regulation of the host country. Generally the management of MNC formulates policies taking into account the policies of the government. For example, the Department of Human Resource Management of USA has developed a set policies related to employee benefits, compensations, programs, trainings etc. The human resource manager must go through these policies of USA Government in order to understand the legal aspects of employee rights. “Power of the trade unions, industrial relations legislation, health and safety regulation, and workers right are some of the major areas over which there are huge differences between various countries” (Tayeb, 2005 p.103). Organizational Culture of the MNC The basic culture of an organization is influenced by its parent company, its management style and its technological development. The culture of the host country is an important factor that affects the human resource but “there is considerable room for variation across firms within the same country” (Fisher, Schoenfeldt & Shaw, 2004, p.805). Each organization has its own work culture. The management level, organizational structure, its basic orientation, involvement of employees in decision making process etc are some of the areas that influence the internal culture of an organization. The HR managers must recognize these factors before making any decision on human resource. The nature of the parent company and its policies also influence the subsidiaries located in different countries. Ford Motor Company has a good experience of the international market as it has expanded in most of the major countries of the world. It follows the global strategy called “One Ford” (Ford Motor Company, 2010). All the subsidiaries of the Ford Motor Company follow this strategy and therefore the HR department of each subsidiary tries to incorporate a similar strategy in its operations. The expatriate managers also need to understand the technology and overall aim of the MNC. A comprehensive understanding of these internal factors of an MNC will provide a better insight into the organizational culture. Challenges in IHRM With businesses crossing the geographical boundaries, it has become increasingly important for the management to understand the concept of international human resource management. Often poor HR policies have deteriorated the performance of the work force. Therefore, it becomes imperative to nurture a proper understanding of the prevailing organizational culture before developing the HR policies. A manager who belongs to a different country will face several challenges when he or she has to manage human resource in a foreign country. As the manager does not have a proper understanding of the cultural and ethical issues of the local community, hence there is a high possibility of mismatch between the HR manager and the local employees (Hodgetts & Hegar, 2007, p.535). In US, the employees are more open-minded and practice high degree of professionalism. They prefer to retain a formal environment in the organization. On the other hand in Asia Pacific region, the employees prefer to develop a more personal relation with their managers which is a kind of ‘father-son like’ relationship. Therefore the HR managers who are managing the US employees should be well aware of the behavioral differences among the employees working in different parts of the world. If the HR manager fails to realize this cultural difference then there is a possibility that the manager will not succeed in developing a healthy organizational culture. The HR manager is responsible for conducting performance analysis and for developing training programs for the employees. If the HR manager is not well aware of the foreign culture, then the results derived from such programs will prove to be biased. As for example, in US the employees are more concerned with their job responsibility and hardly pay much attention towards quality improvement or problem solving activities. On the other hand, employees in Japan and other Asia Pacific regions take active part in quality improvement activities. If the HR manager is not well aware of these differences, then the performance analysis process may fail to give the correct feedback. This may affect the training programs also. Hence, all the cost incurred and the time spent in implementing the training program goes in vain (Fisher, et al., 2008, p.21). The communication channel used in the organization is also influenced by the cultural and ethical issues followed by the employees. In a developed country like US, employees prefer flow of information through a formal mode of communication whereas in developing countries, informal channels of communication are more preferred by the employees. If the HR manager fails to realize this fact, it becomes quite difficult to develop a healthy communication and smooth flow of information in the organization (Vance, et al., 2006, p.99). Therefore, the HR manager should try hard to identify the mind set and living style of the employees while developing the HR policies. A single mistake can cause damages beyond repair. Role of the HR manager As discussed earlier, the HR manager in the organization is responsible for developing a healthy organizational culture and for enhancing the productivity of the employees. When a foreign manager takes up the responsibility of managing the HR, he or she should try to introduce certain innovative practices in the prevailing organizational culture. The role of HR manager is highly diversified; it comprises selecting the right kind of person who has an ability to fulfill the job responsibility in the best possible manner (p.211). The job responsibility of the employees not only depends on the organizational culture, but it also depends on the ethical as well as cultural factors prevailing in the region. In US, the employees prefer to collect in-depth information regarding their job responsibilities beforehand. Therefore, the HR manager needs to develop a suitable selection and recruitment policy for the organization. Role of a manager in an international company can be categorized into four distinct groups. These are, finding the correct person as per the requirement of the organization, assigning these employees different positions, developing the employees through training and development processes and finally evaluating as well as rewarding the employees (Ferris, et al., 1995, p.223). Ford, being a multinational company, possesses a highly diversified workforce. The employees belong to a different culture so they have a highly diversified requirement. It is the responsibility of the HR manager to introduce flexibility in the HR policies. This will assist in fulfilling the individual requirements of the employees. The career requirement of the employees varies from region to region. In US, the employees are more concerned with monitory gains and individuality. This factor should be taken into consideration while developing the motivational strategy for the employees. The HR manager should use this knowledge for setting targets and monthly goal for the employees. The appraisal process should be fair and transparent because the US culture is a more open and transparent. The employees often ask for the process and evaluation technique used in the appraisal process. Therefore the HR manager should undertake all these factors while managing the employees in the Ford production unit in US. Conclusion Due to globalization, the organizational culture of MNC is modifying at a fast rate. Many a time the employees have to work in a foreign country that possess a different culture. In this project some of the important factors regarding international human resource management are discussed. It has been found that the culture of the region has a strong influence on the HR policies. If the management wants its employees to be productive, it needs to modify the HR polices as per the cultural and ethical issues prevailing in that region. The other vital factors are economic condition, the legal system, the demographic profile of the nation and organizational culture of the MNC. While discussing the factors, some of the challenges faced by the HR managers in international environment are also discussed. It appears that the main challenge for the HR manager is to understand the needs of the employees, so that effective HR policies can be developed. In the later part of this project, the basic role of the HR manager in the international HRM is also discussed. In near future, human workforce will be more diversified. Hence the HR policies should be developed after undertaking all the major issues that can lead to mismatch between organizational culture and the prevailing culture followed by its employees. Reference Falkenreck, C. (2009). Reputation Transfer to Enter New B-to-B Markets: Measuring and Modelling Approaches. Springer. Ferris, G. R., Rosen, S. D. & Barnum, D. T. (1995). Handbook of human resource management. Wiley-Blackwel. Fisher, C.D. Schoenfeldt, L.F. & Shaw, J.B. (2004). Human Resource Management. 5th Edition. Dreamtech Press. Fisher, C. D., Schoenfeldt, L. F. & Shaw, J. B. (2008). Human Resource Management, 2008 Ed. Dreamtech Press. Ford Motor Company. (2010). One Ford Mission. [Online]. Available at: http://www.ford.com/about-ford/company-information/one-ford. [Accessed on July 23, 2010]. Hodgetts, R. M. & Hegar, K. W. (2007). Modern Human Relations at Work. Engage Learning. itim International. (2009). Geert Hofstede™ Cultural Dimensions. [Online]. Available at: http://www.geert-hofstede.com/hofstede_united_states.shtml. [Accessed on July 23, 2010]. Onkvisit, S. and Shaw, J.J. (2004). International marketing: analysis and strategy. 4th Edition. Routledge Sim, R.R. (2002). Organizational success through effective human resources management. Greenwood Publishing Group. Tayeb, M.H. (2005). International human resource management: a multinational company perspective. Oxford University Press. Vance, C. M., Vance, C. & Paik, Y. (2006). Managing a global workforce: challenges and opportunities in international human resource management. M.E. Sharpe. Bibliography Denisi, A. S. & Griffin, R. W. (2005). Human Resource Management (2Nd Ed.). Dreamtech Press. Harzing, A. & RuysseveldtJ. V. (2004). International human resource management. SAGE. Read More