Cross-Cultural Challenges in HR Practices as Performance Interventions in a Multinational Context - Coursework Example

MANAGING HUMAN RESOURCES As a global HR specialist, what are the cross-cultural challenges you may face in attempting to use HR best practices as performance interventions in a multinational context? Critically evaluate this question by utilising the appropriate academic literatures to justify relevance and effectiveness of the HRM/OB tools under consideration. The scope of human resource management has evolved over time as a result of technology and globalization. Historically, the major function of HRM was to manage labor and human relations in the organization. Over time, human resource management has changed its role from primarily administrative to a more influencing and facilitating position with an aim of adopting a commercial approach to HRM. Human Resources Management is business today is the hardest duty of a manager as coordination of capabilities of humans is central to the business’s achievement of the set goals. However, HR manager is faced with challenges as humans are constantly in conflict with their psychology, assumptions, aspirations and attitudes. HRM involves activities such as development strategies, employee training, coordination of employee benefits, performance management and recruiting and hiring employees (Tichy, Fombrum and Devanna, 1982). Although both human resource management and personal management are concepts involved with management of human labor in an organization, there are notable differences between the two concepts. Personal management is a traditional style while HRM is the new and modern version. Personal management is more inclined to focus on labor relations, employee welfare and personnel administration as opposed to motivation and sustainability and acquisition and development of human resources. During the 1990s when the concept of HRM took root in organizations, the two concepts were interchangeably used to mean the same things. However, social and economic development in the structure of organizations since 1990s have seen the evolution of HRM in order to cope with the needs of the ever changing business environment. Key areas of distinction between HRM and personal management can be examined in relation to leadership and management roles, contract of employment, job design and pay policy and the nature of relations. HRM has been described as a concept that takes two different forms; hard and soft HRM. The soft model is concerned with the humans and their self-direction with a view of emphasizing centrally on self- regulating behavior, trust and commitment. On the other hand, the hard model emphasizes on instrumental approach to management by focusing of performance management and rationalism of strategic fit. In practice, there has been numerous tensions and conflicts both within and between hard and soft models in organizations. An empirical study on the perspectives of application of the two models in business practice allows managers to review and challenge the foundations upon which the theoretical basis of both hard and soft models are founded. This is because, even if most organization’s HRM rhetoric is ‘soft’, the reality on practice is that the model is ‘hard’ as individual’s interests are subdued in favor of organization’s interests. The resource-based view (RBV) influences the empirical and theoretical development of HRM. A number of research on this topic have reported that the two concepts have converging points on different issues. RBV has been largely instrumental in the development of HRM as RBV moved its emphasis from external factors to internal firm resources which serve as a competitive advantage to a firm (Drucker, 1954; Stewart, 1996). Firms may fall prey to easy challenges during times of financial difficulties due to a culture of easy justification of their expenditure on employee involvement systems, reward, staffing and training. As such, the application of RBV helps to bridge the gap between the different strategies of HRM by taking into consideration the specific benchmarks. RBV holds the assumption that different companies have different strategic resources and therefore they need to be analyzed on a different and way specific to the needs of a particular firm. The concept of best practices is used in firms to bridge the gap between the practices of the business and the organizational external environment. The concept of best practices are aligned with the efforts to achieve the goals of the firm by focusing its capabilities and resources. As such, the intersection between HRM and best practices is made by emphasizing the role played by the employee’s commitment to the achievement of organization’s goals. Best practices in HRM therefore involves the application of strategies and functional activities that are employed with a view of improving the profitability of the organization. The strategies in this case are actions that are results-oriented to achieve a desired outcome. Pfeffer, (19998) is a proponent of best practices who argues that best practices are effective in committing employees to the goals of the organization. However, opponents of the concept hold that its application is limited as its application is dependent on specific context (Marchington and Grugulis, 2011). This can pose a challenge in the context of globalization as multinational companies (MNCs) cannot be analyzed using a case-specific model. Due to variation in culture of different regions that need to be addressed, a specific model will be limited and therefore ineffective (Purcell, 1999). There are many cross-cultural challenges in performance management that arise in the management of MNCs. The underpinning notion in this analysis is that cultural difference in the different countries are influential in affecting the operations of the MCNs thereby hindering globalization in aspects of human labor. This scenario will in turn affect the productivity of the organization in the long run. Improving the performance and capabilities of human labor by supporting the cultural drive change which has the potential of bringing the cultural gap between global firms. For purposes of this analysis, a balanced scorecard will be utilized as a tool of evaluating the challenges faced by MNCs. The primary conceptual foundation of performance management lies in expectancy theory and goal setting theory of motivational theory. According to Locke and Latham, (1984), goal setting theory holds that assignment of specific goals to a business activity results in improved performance and therefore improved outcomes. Assuming goal acceptance is also a rigger of increased performance. This is because it increase the difficulty and challenge of the goals thereby increasing the motivation (Mitchell et al, 2000). On the other hand, expectancy theory affects performance level of humans by assessing the satisfaction that is likely to be enjoyed by the individual as anticipated. This is because of constant changes in human behavior depending on their expectations. A balanced scorecard is one of the most effective tool that is applied when measuring the impact of employee performance and their ultimate contribution to the organizational success. The balanced scorecard applies to four criteria; financial perspective, customer perspective, business perspective and innovation and growth perspective. The results reveled from the balanced scorecard on different aspects of the organization is influential in measuring the extent of organizational success and the contribution of employees commitment on the organizational progress. This is a source of response information that points out to the level of employee competence. The measures developed by Robert S. Kaplan and David P. Norton give the top management officials and the managers a comprehensive focus on performance of the organization for both results and process measures. The use of a balanced scorecard is effective for not only evaluating performance at the organizational level, but also at the individual level where every human labor in an organization is analyzed in order to determine the need for employee performance appraisal. During employee appraisal, there needs to be an effective way of measuring the performance of all the employees in order to determine the real contribution of the employee in a complete look as opposed to a partial view. The results provided from the balanced scorecard together with best practices are shared with managers, employees, teams and supervisors in order to direct the employee performance towards the achievement of organizational goals. The analysis of the internal/business perspective on the balanced scorecard indicates that culture plays a major role in the performance of the employees and that of the overall organization. MNCs operate in different regions under different cultures and therefore the expectations of both the shareholders and customers are different globally. When measuring performance of the organization, it is therefore necessary to take into consideration the cultural implication of the differences in expectations. For instance, the UK business market is very liberal and capitalistic compared to that of Asian countries such as Chain where the market is relatively collective and conservative. As such, to satisfy shareholders and customers in UK and in China, different measures have to be used. As such, collective society such as china will be concerned with ensuring that individual needs are met while a capitalist society will strive to ensure financial growth of the company through individualistic growth. On the financial perceptive, the same case applies. MNCs exist in order to earn shareholders return on their investment. As such, different cultures influence the financial perspective of the MNCs. Depending on whether a country is appeals to femininity, masculinity or individualistic, the shareholders get different impression of the organizations. The application of a balanced scorecard allows businesses to avoid appraising employees as outstanding while not knowing that the company has major problems and cannot meet the organizational goals (Kaplan and Norton, 1996). As such, it ensures an organization sound financial growth by preventing expenditure on areas that do not deserve and areas that do not deliver effective outcomes to the organization. However, there are critics of this tool of measuring the extent of organizational performance as its opponents are in the opinion that the whole process of preparing and analyzing results through a balanced scorecard is a tedious burden that is not worth the trouble. Furthermore, a balanced scorecard has limitations of lacking the capability of analyzing qualitative data. As such, the results produced do not impact the final outcomes (Norreklit, 2000). Performance management in MNCs can be measured using a balanced score card. However, the application of a balanced scorecard in measuring organizational performance is faced by various challenges as a result of difference in culture among the different global organizations. The major concern to consider is the need to develop am effective approach by which to ensure that culture does not become a weakness but instead, it is converted to strength in order to ensure efficient transformation of such challenges into ‘best practices’. Globalization and establishment of MNCs have led to the realization that management systems are specific to different context and cultures. There is a difference in the measurement of organizations and individual performance, not only between organizations of two different regional cultures, but also organizational cultures between firms operating in the same regional culture. As such, cultural diversity is a great impediment in the process of measuring performance of MNCs (Hofstede, 1984; 1993). There are three different types of cultures that determine the process by which organizations learn and grow competitively in the global sphere; executive, operator Culture and engineering cultures. These cultures influence the process of measuring performance of MNCs as they affect the evaluation of employees. The executive and engineering cultures share the same viewpoints and therefore share a common technology in their working environment. Their reference groups are outside the confines of the organization. The definition of ‘best practice’ therefore is faced by conflict as the inside and outside of the confines of the MNCs define them differently. Also, the different cultures are perceived to be different, but also valid in their viewpoints. This is because all of them are doing the exact purpose they are designed to do; the executives are concerned about the financial performance while the engineers are concerned about innovation of new ideas and business concepts. As such, there should be an easy blend among the different cultures in order to facilitate increased organizational performance. These cultures are also founded on the assumption that people are the problem as they are the origin of error of costs. As such, efforts that are taken to satisfy the need for increased individual performance will lead to increased costs and errors thereby impacting negatively on the shareholders (Schein, 1996). The diversity of culture can also be analyzed by analyzing the cultural differences of MNC s based on the different type of cultures developed by Hosfede, (1986). The types of cultures are distinguished as power distance, uncertainty avoidance, individualism vs collectivism and masculinity vs femininity. When a balanced scorecard is applied to evaluate the performance of MNCs, they should be aware of the types of cultures that influence the performance of employees depending on the culture they operate in. as such, it is prudent to acknowledge that results of the balanced scorecard that are seen as positively influential in satisfying the goals of the MNCs in UK may have reverse effects when applied in Nigeria, China or India. Organizations should also take into perspective the needs and cultural requirements of the employees and the public before formulating their goals or implementing the results of the balanced scorecard (Hosfede, 1986). In conclusion, it is imperative to note that MNCs are faced by a wide range of cross-culture barriers that influence the performance of both the individuals working in an organization and the progress of the MNCs. 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