Strategic Problems Facing HRM - Essay Example

Running Head: Strategic Problems facing HRM Strategic Problems facing HRM [Institute’s Table of Contents Introduction 3 Discussion 4 Compensation and Reward Systems 4 Training and Development 7 Job Expectations and Motivation Policies 9 Conclusion 11 References 12 Introduction The swiftly changing business scenario indicates that there are at present several human resource management problems which will carry on evolving in the upcoming times. HR departments actually have to be including genuine business value to their companies. Even though the restraints of the economic depression are not ended yet, organizations are becoming aware of the fact that they will have to take steps to maintain their staff (Kumar, 2014, p. 98). This could be by means of an enhanced stress on developmental programs or by means of investing in fields that will optimize spending, for instance, integrated technology arrangements or enhanced systems to draw candidates. This paper will talk about the possible strategic problems faced HR managers while working in multinational organizations. The three key problems discussed here are ‘Compensation and Reward Systems’, ‘Training and Development’, and ‘Job Expectations and Motivation Policies’. The symptoms are that HR departments are getting ready to take full advantage of their capital as well as staff when businesses need to progress. One of the most frequently talked about criticisms regarding HR is that several experts do not have the progressive thinking and strategic counseling focus considered necessary to be an successful business partner (Ulrich, 2013, p. 22). They do not use the time to know the business they sustain as well as concentrate additional on transactional HR activities that do not have the influence the business needs. HR managers have to be trusted consultants to the organizations as well as to the leaders they work with. They have to be effectual coaches and are responsive to their vital part as to successfully review workforce abilities and facilitate scheduling for potential requirements (Becker & Huselid, 2006, p. 899). HR should concentrate on turning into a trusted mentor to their business with the aim of give power to managers to drive better organizational performance. Discussion Human resources departments are in front of major problems as their responsibilities turn out to be broader as well as more strategic in the recent times. HR is “more than a basic function” (Dowling et al, 2008, p. 32) that includes appointment, development and retention of workforce. It is a main factor in developing a workforce that focuses on the objectives of the business. With bigger significance comes bigger hindrances - according to a study by Shipton et al (2006), the major problems faced by HRM are compensation and reward systems; training and development; job expectations and motivation policies; leadership development; and organizational effectiveness. Compensation and Reward Systems The international business development presents problems to MNCs’ HR managers that they never had to deal with at the time when their global functions were confined inside national limits. They deal with different political structures, regulations, and customs, and different financial environments; however these variations form both problems as well as opportunities. Opportunities produced by these variations have been the key force of inspiration for MNCs to develop their global business functions. As MNCs develop globally, the independence of their international functions can cause major variations in the levels as well as forms of compensation and rewards plans offered by every country (Boxall & Purcell, 2003, p. 84). MNCs are operating in every location with varied culture, financial growth, regulations and policies, and the function of labor unions. All these different aspects among global communities influence compensation systems for HR managers at MNCs. As a result, deciding for the correct technique for MNCs to settle on a compensation and rewards package within a global market is turning out to be a ‘nightmare’ for HE managers. The conventional task of pay to draw, maintain and encourage workers has not altered. Nonetheless, the stress has moved from the attraction and maintenance tasks to the inspiration role. MNCs are required to ascertain that the experienced workers are compensated for accomplishing objectives that make the global business functions a success (Wright et al, 2001, p. 711). While different countries have different standards for human resources compensation, MNCs’ HR managers should take into account the motivational application of incentives and rewards among global community. For the majority of Americans, money is expected to be the motivating force although no monetary inducements, for instance, status, freedom, and power may be motivational factors. Some cultures emphasize more on admiration, job safety, a rewarding personal as well as professional life, social recognition, progress, or authority (Colbert, 2004, p. 345). Because there are a number of substitutes to money, the rule is to match the incentive with the standards of that culture. MNCs’ HR managers are in front of the difficult factors of global compensation and rewards system on a daily basis as they make effort to handle human resources across national borders. One of the major determinants of an MNC’s achievement within an international endeavor is the efficient management of its human resources. This achievement relies on the connection among global human resource management and the strategy adopted by MNC. MNCs’ HR managers must take into consideration the following points when deciding the appropriate compensation and rewards system: (1) meeting business objectives in home country as well as in a foreign country, (2) keeping workforce motivated, and (3) operating in accordance with organizational resources (Priem & Butler, 2001, p. 31). This strategic point of view on the connection among IHRM and strategy is very significant for an MNC’s accomplishment. MNCs that can develop a greatly qualified, flexible, as well as motivated global workers is in a strong position compared with its rivals, mainly if that workforce can be utilized strategically to follow business objectives. It is necessary that there is synergy between company goals, hiring, and compensation. An appropriate compensation and rewards system a key to global business achievement and should be a key interest of senior management. Global compensation and rewards systems are turning out to be all the more demanding for HR managers as MNCs become more and more global (Bartlett & Ghoshal, 2002, p. 105). With the rise in globalization of business, the compensation of global managers as well as circumstances of service vary a lot among different labor pools of nationality categories of workers and it as well fluctuate among different MNCs. This globalization of business includes a number of management problems with reference to global compensation and rewards system. MNCs’ HR managers are concentrating on their strategic goals and forming a comprehensive compensation plan, with respect to base pay, short term as well as long term incentives, benefits and developmental prospects. The purpose of this type of strategy is to ascertain that both MNC’s long term as well as short term goals coexist within the compensation system “without overlap” (Chew, 2004, p. 7), which would copy a particular compensation system for the similar goals. The objective of the planning is to make sure that the compensation system draws and retains the preferred human resources and that it encourages s them to take the steps that are useful for the business plan. These global compensation strategies can create severe internal differences within an MNC during any phase of globalization (Farndale et al, 2010, p. 165). Compensation incorporates earnings, incentives and benefits. There are broad differences both among countries as well as among companies within countries with respect to the way of compensating employees. The major issues are salary levels for the similar job and the jobs are not same among countries in which the MNC functions. Global compensation and reward systems can have a key part in supporting MNCs’ international prospects. The cost of labor is among the major motivators for global business growth. MNCs’ HR managers can utilize compensation packages to improve the efficiency of workforce (Baruch & Altman, 2002, p. 243). Nevertheless, compensation and rewards system can lead to differences if local nationals contrast their salary packages to the expatriate’s and think that they are being dealt unjustly. For instance the compensation package prepared for an expatriate is more difficult as well as costly. Expatriate pay structures are mostly quite different from those adopted for host country workers within a subsidiary. In a number of cases, expatriate workers make additional money as compared to local ones who have jobs of equivalent or better significance as well as intricacy. These variations mostly can cause host country workers to think that they are being treated dishonestly. This state can lead to anger as well as resentment on the part of HR managers; it can lower their self-esteem as well as efficiency (Scullion et al, 2007, p. 311). MNCs’ HR managers should pay the forms of worker groups who do the similar job the similar pay despite the local compensation situation. Training and Development Multinational organizations know that human resources play a key part in expanding as well as maintaining a competitive lead in today’s extremely aggressive international business scenario. The training and development of the human resources carry out several objectives, for instance, to obtain and shift knowledge, to handle overseas subsidiary and to keep up communication coordination as well as management among subsidiaries and head office (Collings et al, 2007, p. 201). Within international and a bit in global organizational models, training initiates at head office and business trainers approach subsidiaries. To stay internationally competitive, the global human resource management should categorize workforce with international potential and offer them a number of training and development chances. The future accomplishment of any business depends on the capability to deal with a varied pool of talent that can carry pioneering initiatives, viewpoints and opinions to their job. The problems caused by diverse training and development needs of the workforce of a multinational company can be turned into a strategic organizational benefit if an organization is capable of taking advantage of this “melting pot of diverse talents” (Taylor, 2007, p. 340). With the combination of abilities of different cultural settings and lifestyles, a company can act in response to business prospects more quickly as well as imaginatively, particularly within the international scenario, which must be among the key organizational objectives to be achieved. More significantly, if the organizational setting does not sustain this approach largely, one risks losing capable workers to rivals. This is particularly accurate for multinational companies who have functions on international level and utilize individuals of various countries and cultural settings. As a result, a HR manager has to be careful and may make use of a ‘Think Global, Act Local’ stance in the majority of training and development plans. In addition, the HR professional should reassure the local experts that this overseas aptitude is not a danger to their career development (Ferner et al, 2004, p. 374). In a number of ways, the success of training and development programs is reliant on the skilful harmonizing performance of the HR manager. One of the most excellent techniques to handle this issue is via initiating the mentoring program. This could lead to involving various divisional heads in a training and development program to instruct and give opinion to workers who are different from them. For the program to function effectively, it is sensible to offer useful training for these executives or try to find assistance from professionals and specialists in this field. Generally, this sort of a program will persuade organization’s members to talk about their views and gain knowledge of the way to resolve issues. More significantly, the use of this mentoring program is to persuade members to move further than their personal standpoint to identify and make the most of the efficiency potential (Farndale & Paauwe, 2010, p. 358). The job of the HR manager should correspond to the requirements of the training needs of the organization. Successful organizations are turning out to be more flexible, quick to modify, and customer focused. Within this situation, the HR experts must find out the way to manage efficiently through scheduling, systematizing, training and developing the human resource and stay well-informed about the new trends in training and workforce development. Job Expectations and Motivation Policies As the recognition techniques progresses into its second decade, multinational companies are moving away from local plans and developing to the international phase. Motivating across time zones, however, still needs strict observance to core recognition factors to make these investments valuable (Taylor et al, 2008, p. 511). Motivational policies should be directly associated with the organization’s strategic objectives. Mostly, motivation is presented as the core of management approach; however, for many HR managers it still continues to be an enigma. Contrasting capital, technology or other aspects of production, people are considered as a more important factor for organizations. HR managers capability to motivate the staff is an important aspect for ascertaining the uninterrupted functions of the company. Motivation needs synchronization among communication, structure of the company and remunerations. Hence, the task of HR manager - being the “‘catalyst’ factor” (Chew, 2004, p. 16) of the team - is to recognize and direct workers towards better performance by adopting proper motivational approach. Incentive measures, for instance, wages, fringe benefits, and intangible incentives, appreciation or sanctions have conventionally been utilized to motivate workers. Motivators may be positive and negative. Incentive policies are there within every organization. Regardless of the fact that whether it is based on perception or actuality, organizational motivational policy do have a major influence on the performance of workforce and consequently, on the organization in general. Possibly the most pervasive motivators and incentives are “located at the collective level” (Collings et al, 2007, p. 200), for instance, job security, rules and regulations, investment scenario, or organizational structure helpful for workers’ involvement. Identifying the needs of global workforce is important for organizations to prosper in a harder fiscal environment and strategic employee appreciation can facilitate multinationals in developing a collaborative as well as motivated workforce. Nonetheless, for programs to have a positive and long-term influence, they have to be localized and focus on key cultural as well as demographic issues. The objective of any motivational strategy should be to
ascertain that business standards “resonate with employees” (Dowling et al, 2008, p. 192) by means of constant communication and modified reward plans. HR managers should work with their international groups to confirm that the needs of their workforce are fulfilled across different countries. This is helpful for multinational organizations in effectively involving and motivating workers. There are a number of motivational systems that progressive multinational organizations can establish to persuade their workers to give their best on the job, therefore, leading to better employee efficiency as well as enhanced organizational performance. It is also believed that the successful as well as efficient requirement considered necessary to motivate staff to provide their best possible for organizational objective accomplishment. Conclusion During the last two decades, there has been an extraordinary raise in the amount of businesses that have globalized their functions. The global movement of labor that has been “concomitant” (Morley & Collings, 2004, p. 490) with such growth of global business has meant that problems related with the management of human resources across global perimeters are more and more significant to international human resource managers. This creates a lot of problems for HR managers in MNCs. The contemporary business cannot successfully function in the business world if the human resource is not well equipped with the most recent expertise as well as techniques (Liu, 2004, p. 504). This is the duty of the HR manager to appropriately prepare the workers and to observe the basic things the human resource requires to attain the competitive gain. A large number of debates on this issue has been continuing for quite a lot of years and undoubtedly human is a significant component of every organization; however, because of quick alterations within the business world, globalization, alteration in customer needs and requirements, latest systems of production, human within the organization are now in front of different sort of issues, to handle this circumstances the today’s HR manager is as well facing a range of concerns as well as challenges on the way they can best handle as well as resolve all these concerns and tests in impressive manner. Each and every organization should train their human resources. Human resource manager will have to build or expanded such a structure that permits flexibility to expand such a workforce that will be the as effective tomorrow (Paik & Sohn, 2004, p. 67). References Bartlett, C., & Ghoshal, S. 2013. Building competitive advantage through people. Sloan Mgmt. Rev, 43(2), 102-113. 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