Differences between International and Domestic HR - Research Paper Example

HUMAN RESOURCE Lecturer’s Two main differences between international and domestic human resource Domestic humanresource is involved with employees at the national boundary only while international human resource deals with county and national categories level of employees. Two major factors differentiate between the two that is there is a different level of complexity of operating in different countries and as well, a difference lies in employing different national workers categories. International human resource is much concerned in understanding and identifying how to manage geographically dispersed workforce’s human resource for global and local competitive advantage (Schuler, Budhwar, & Florkowski, 2002). Therefore, international human resource has a major role in balance achievement for coordinating and controlling of foreign subsidiaries and adopt local environment while the domestic human resource is only concerned with the local level. International human resource has a responsibility of managing the complexities of employing people and operating from different cultures and countries as compared to domestic human resource. Thus, it is important to understand the differences that exist in managing employees in a foreign and domestic environment. In terms of the range of activities, international human resource addresses a range of activities as compared to domestic human resource (Rowley & Warner, 2007). Two factors that drive standardization of human resource practices and their effectiveness for an MNE adaptation Controlling cross-border operations of multinational enterprise MNE around its procedures, practices and processes is important. The main goal of human resource standardization is to enhance transparency, consistency as well as aligning the enterprise workforce around common similar objectives and principles. This is important in the attainment of local responsiveness with respect to the traditions, legislation and cultural values (McMahan, Bell, & Virick, 1998). The organization strategy and structure are a major factor that drives the standardization of human resource practice in an organization. Companies operate in a context of worldwide conditions of inter-organizational alliances and networks. The structure and strategy influence human resource practice as well as goals of MNEs. Thus, it is essential for an enterprise to be supported by a corresponding organizational structure. The cultural environment drives standardization of human resource practices. Appropriate human resource management practices are important in helping the supporting cohesion between different MNE units; thus, human resource practices ought to match with the local values and norms. Multinational enterprises that standardize pursue multinational corporate strategies and are reinforced by a shared worldwide corporate culture (Chen & Huang, 2009). Subsidiaries Subsidiary can be considered as a company that is owned by another company and in other cases; it is either a state or government owned enterprise with the controlling company being the parent company. Subsidiary organizations are able to contribute to specific firm advantages. A subsidiary initiative has been strongly associated with entrepreneurial and leadership culture in the subsidiary. Moreover, a subsidiary not only contributes creation of firm-specific advantage but also is important in driving the process (Rabbiosi, 2011). Multinational firm subsidiaries play an essential role in the globalization of innovation. Innovation is crucial for survival, and it enables leaders to identify and implement innovative strategies to enhance local operations and add value to the corporation. There are four generic subsidiary roles namely integrated player associated with high inflow and outflow, the global innovator associated with high inflow, but has a high outflow. Implementer subsidiary has a low outflow and high inflow and local innovator associated with a low inflow and outflow. The global innovator subsidiary is the foundation of knowledge of other units. It is the best role for a new company in the market as it enables it to move towards a transnational model where individual subsidiaries act as a center of success for specific product lines. Thus, they provide significant knowledge for the units. Integrated players subsidiaries entail knowledge transfer to organizational units but also the organization is at the receiving end of inflows of knowledge from other units. Integrated players create and receive knowledge. Implementer subsidiaries do not engage in extensive creation of knowledge thus providing little knowledge to other units (Vora, Kostova, & Roth, 2007). Thus, implementers rely on the knowledge from the parent subsidiaries and are involved in creating a small level of knowledge for their own. For the local innovators, they are self-standing and do not engage in the creation of knowledge or transfer of the knowledge to other units in the organization and will not receive any information from them. For the local innovators, their role is the creation of relevant information and has complete local responsibility. Factors that drive localization of human resource practices of an MNE and advantages of localization There are many factors that drive the localization of human resource practices of an MNE. This includes the mode of operation involved, the size and maturity of the firm as well as the relative importance of subsidiary. Control and ownership are important factors mode of operation. Acquisition contains the ability of transferring management and technical know-how systems and human resource practices. Management is essential as it enhances skills, expertise and training skills. Also in the operation mode, wholly owned subsidiaries are essential as they provide greater opportunities for work practices transfer. The maturity, firm size, and international experience are crucial firm-level factors. Larger organizational corporation that are more mature calls for human resource localization (Tiwari & Saxena, 2012). The major challenge of multinational enterprises is the creation of a system that has the ability of operating effectively in many different countries through exploration of local differences as well as interdependencies to be able to sustain a global consistency. The major aims of localization include respecting local traditions and culture, enhance attainment of workplace practices and expectation of the employee and enhance the adaptation to local institutional requirements such as government policies and legislation (Beugelsdijk, 2008). Multinational enterprises need to pursue localized operational strategies and trends due to the increased hydridedadization of human resource management. Impact of culture and institutional context on selection and recruitment Selection and recruitment involve attracting personnel on a timely basis with appropriate qualifications. Under the utilization of appropriate techniques, suitable candidates are selected and recruited for career development. Proper staffing is essential for an organization to be able to build a sustainable competitive advantage in the marketplace. However, the organization culture and institutional context influence greatly on the recruitment and selection process as this is done according to the institutional policies and models. An example is within an organizational context that is low in-group collectivism where the personal achievements represent an important employee selection criterion (Tiwari & Saxena, 2012). The opposite is true in that in organizations with high collectivism, the recruiting process emphasis more on team related skills as compared to individual competencies. The reputation of selection and recruitment processes varies among different organizations as reflected in the recruiting process and selection criteria’s. Impact of culture and institutional context of training and development An employee training is essential in equipping employees with the right skills to perform their daily tasks enhancing organizational success (Beugelsdijk, 2008). Development can be achieved through employee’s job specialization and promotion as well as provision of educational opportunities for career advancement. Culture and institutional context influence development and training of employees. An example is in societies and organizations that are higher on gender egalitarianism where the female gender has an equal chance for career development as the men whereas in communities low on egalitarianism the female gender lack a chance of vertical advancement with few female managers in the top position. Impact of culture and institutional context on compensation Employee’s compensation is important in enhancing motivation. The environment has a great influence on organizational employee’s compensation. In organisation that are high on uncertainty avoidance employees will tend to be risk takers and prefer being fixed compensation packages while in organizations low on uncertainty avoidance, the employees will tend not to be risk takers and will accept high-income variability for performance-based pay. In an organizational context, the regulation of minimum wages as well as respective union agreements in regards to the employee’s compensation will impact on the corporation compensation choices with respect to their pay level and pay mix (Ahmad & Schroeder, 2003). Impact of culture and institutional context on task distribution Task distribution enables the organization achieves its stipulated goals and objectives to ensure organizational success. Organizational environment influences greatly on task distribution as organizations that are high on collectivism emphasize greatly on group work. On the other hand, organizations that are high on individualism emphasize more on individual responsibilities rather collectivism in the work system (Tiwari & Saxena, 2012). On the institutional context norms and legislation may support gender division of labor to a differing extent among different organizations. In some organizations, the percentage of female managers is more greater than in others while in other corporations the practice is not common at all. References Ahmad, S., & Schroeder, R. G. (2003). The impact of human resource management practices on operational performance: Recognizing country and industry differences. Journal of Operations Management, 21, 19–43. doi:10.1016/S0272-6963(02)00056-6 Beugelsdijk, S. (2008). Strategic Human Resource Practices and Product Innovation. Organization Studies, 29 (6): 821-847. doi:10.1177/0170840608090530 Chen, C.-J., & Huang, J.-W. (2009). 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