Globalization and Human Resource Management Practice - Essay Example

Globalisation and Human Resource Management Practice Table of Contents Introduction 3 Convergence of HRM with Globalisation 3 Factors Fostering Diversity in HRM Practice 3 Issues Relating Global Management of People 4 In The Selection Process 4 In Management Process 4 Significance of HRM in International Organizations 4 Approaches to Human Resource Management 5 Framework of Internationalism and Globalisation 5 Consequences for Human Resource Management 6 Consequences for Human Resource Development 6 Various Factors Involved Managing Human Resource 7 HRM’s Impact on Various Changes 7 Impact on Political Changes 7 Impact on Economic Changes 7 Impact on Social Changes 8 Impact on Technological Changes 8 Conclusion 8 Introduction The term globalisation circumscribes a wide range of changes such as political, social and economic (Daily and Huang, 2001). Globalization is concerned with escalating and accelerating the exchange of ideas over long distances. Globalisation has a huge impact on human resource management. The transformation of the human resources management (HRM) is a result of a wide range of complex challenges faced by today’s modern business. Hence the renovation of human resources today is a result of brisk changes in the businesses due to globalisation. Due to the increasing global competition, the decision making process in the organizations has turned out to become obscure and long-winded (Peng, 2001). The increasing relevance of globalisation is influenced by numerous factors including talent shortage in developed countries, low cost labour accessibility and technological development. The aim of the study is to draw attention to the key issues relating to the global management of people, significance of human resources management in international organizations, globalisation leading to convergence in human resource management practice and the human resource impact relating to various changes (Paik, Chow and Vance, 2011). The objective is to conduct an in-depth study on globalisation and its impact on human resource management and then derive a conclusion to the study. Convergence of HRM with Globalisation In the developing countries, globalization has a giant impact on the human resource management (Rowley and Benson, 2002). It has led to unionisation and homogenization of the strategies of an organization. It led to the convergence in the structures and processes of an organization as well as in the consumer’s choice. In the increasing stage of globalization, the organizations felt the need to change and the new trends came into existence in the management of the human resources. Globalisation resulted in changing the organizational structure improving competence but the negative result is that the staff numbers had to be reduced (Edwards and Kuruvilla, 2005). The employees have been minimised in various sectors such as telecommunications so that the organizations can gain a competitive advantage. The human resource planning strategy is focussed on having limited workforce in the core areas which enabled the organization run profitably. The organizations outsourced for the noncore jobs which led to increase in independent contractors in the service industry. Globalisation hence can be said to have an extraordinary impact on the developing countries (Akhtar, Ding and Ge, 2008). Factors Fostering Diversity in HRM Practice In order to deal with the complex and changing business economy, the organizations need to develop diversification strategies. In the global market diversity in the organization is inevitable (Wei and Lau, 2005). There are few difficulties in implementing diversity in the workforce. Firstly, individuals prefer working in harmonized groups. In addition, employees and the organizations to which the employees belong tend to oppose change. Factors fostering change can be cultural, demographic such as age, gender and nationality and organizational such as functions of the employees in an organization. In order for the organizations to gain benefit from the diversity, the employees of the organizations must change their method of interacting and realise the need of diversity. Issues Relating Global Management of People In The Selection Process Due to the increasing globalisation, the human resource professionals are dealing with the complexities in their role in order to identify and develop human capital. Various multinational companies develop various strategies in selecting the staff. Most of the multinational companies prefer developing talents in their host countries in order to reduce relocation costs and also because the local national understands the local marketplace better than an outsider (Bowen and Ostroff, 2004). The people who are responsible in recruiting staff for their multinational business are faced by many challenges in order to determine the appropriate selection criteria. In the selection process of the global companies the factors that affects the selection decision are technical ability, level of suitability in cross cultures, language issues and country or cultural requirements. In the recruitment process, the company must try to eliminate the issue of equal employment opportunity for the workers in every employment locations. Multinationals may have to forcibly select from the diminishing pool of candidates who can turn out to be less qualified hindering the selection process. Management need to develop strategies to cope up with such recruitment issues. In Management Process Global human resource management is the method of developing, employing and rewarding staff in global or multinational organizations. It includes people management worldwide (Christmann and Taylor, 2001). In an international organization, the operations happen in subsidiaries overseas, which solely depend on the business proficiency and the manufacturing capacity of the organization. The human resource managers of these organizations should take into consideration the international influences on their business. Some issues in human resource management faced by international companies include: the existence of a number of international models, the issue of managing people from unlike cultural background (Pitelis, Sugden and Wilson, 2006). Another issue is the human resource management’s procedures and policies differ in diverse countries. Another issue is the approaches used by the company to select, organize, develop and compensate workforce who could be of the same nation as of the parent company or the nationals of other countries who run their business abroad in subsidiaries of the parent organization. These companies or organizations adapt their own management attitudes and business styles in addressing their issues (Wright, 2008). Significance of HRM in International Organizations In the era of globalisation, the business organizations do not remain confined to one country. For exploring new markets and prospect, the international operations of an organization expands. According to Carpenter and Fredrickson (2001) in order to manage subsidiaries in various nations, the approach to human resource management has to be modified to as per the needs of the management. Alternatively, Shin (2013) explained that managing subsidiaries according to the needs of the government is not legitimate, and other factors for managing subsidiaries should also be considered. The human resource management practices of an organization should be adapted in order to execute the strategies of the organization efficiently. International human resource management can be explained as how the strategies made by human resource department of an organisation are dealing with issues of the human resource management and the problems that rose through expanding their business internationally (Minbaeva, Pedersen, Björkman and Park, 2003). Every strategy has its pros and cons and hence is applied by the organizations depending on the nature of the business and the organizations past experience. Culturally responsive and adaptive human resource practices are brought to use by the international organizations in order to create a competitive advantage in the abroad operations. With the coming years, all the business organizations are focussing on the field of international human resource management and hence its relevance is supposed to grow in the upcoming years. Approaches to Human Resource Management In an international organization, the way of managing and employing affects the nature of worker that the company demands. The goal of choosing the right candidate for the right job is to measure the balance between internal corporate consistencies and sensitivity to local labour practices (Akhtar, Ding and Ge, 2008). Performance evaluation is carried out on a frequent basis in the organizations for the purpose of administration and development (Rowley and Benson, 2002). In the administrative process, performance evaluations are necessary for deciding on the work conditions of employees and for their rewards and promotions. Development intention of performance evaluation involves developing the skills of the employees in order to improve their work performance. The functions of the labour relations are defined as the roles of management and the workers in an organisation. The labour relation laws are different in various countries and even in some countries the government is in charge of regulating the labour relations practice. Depending on the concept of labour relations that the nation follows, the business organization in that country should define the role of the management and its workers (Bellini and Canonico, 2008). Framework of Internationalism and Globalisation The concept of globalisation contrasts with the internationalism (Brewster, 2006). The term globalization implies some rational imperatives in the support of accountability, and also focuses on the search of interest on the global level by efficient entrepreneurship. Internationalism is the process of connecting individuals directly around the world by not taking into account the difference of cultures and nations (Doorewaard and Benschop, 2003). The emphasis of the internationalism is on transferring into other international society, eliminating the national boundaries. Internationalism emphasises on accepting the relationships among various countries and building mutual relationships at a national level. Globalisation leads to an increase in the organizational networks across the world. In addition, it can be stated that globalisation increases the tendency that occurrence of an event in one part of the world will have an impact in the different parts of the world (Bellini and Canonico, 2008). Consequences for Human Resource Management There are numerous consequences of internationalism and globalisation for human resource management. Internationalism has made it necessary to take into account various ways through which human resources can be managed efficiently. Most of the organizations in this era of globalization are adopting the initiative of human resource management for managing their human resources effectively (Allen and Ogilvie, 2004). Due to increasing globalisation, the business environment has become much complex and competitive. To survive through this new era of globalisation, the businesses should emphasise more in developing their competitive strengths and develop long term strategies. The key factors in achieving competitive advantage in the globalised market are being innovative and cost leadership which importantly demands a quality human resource of an organization (Ernst, Markel and McHugh, 2003). Human resource satisfies the conditions that are necessary to obtain sustainable competitive advantage human resources are uncommon and are not imitable. Though it may seem easy for the competitors to duplicate the competitive advantage gained via innovative technology, but it will be hard for them to duplicate the competitive advantage gained by effectively managing its human resources (Bae and Rowley, 2002). Consequences for Human Resource Development Globalisation including the internationalism of business impacts on the interconnectedness of the economic performance in different nations (Pudelko and Harzing, 2007). International human resource development is a central part of international development work. International human resource development helps in promoting every aspect of research that investigates the issues relating to individual, group along with organizational learning and performance (Batt, 2002). In the globalisation of the employing organizations whether it is profit or non-profit entity, human resource development professionals played an active role. The human resource development professionals carried out individual executive and management coaching for cultural competence, training and development to facilitate teamwork and provide cultural awareness training to the employees residing in home or host nations. Positively, the human resource development research and practice reports in various multinational organizations within a country and across various nations are increasing in number (Armstrong and Taylor, 2014). Without effective development of people and management, the strategic advantages within the international settings are hard to realise. The international human resource development is affected by various factors and a number of factors among them require special attention in designing and managing human resource development strategies (Taylor, Beechler and Napier, 1996). These factors consist of distinct socioeconomic conditions, different styles of teaching and learning, the perception towards the profession of teaching and finally cultural differences. Thus, it can be understood that there are many consequences of internationalism and globalisation on the human resource development process (Salvendy, 2012). Various Factors Involved Managing Human Resource Managing human resources involves some challenges as the employees in multinational organizations belong to various cultures. The various obstacles that come on the way of effective human resource are adapting to cross-cultural environment, distinct organizational values, management style differences and the management turnover. Adaptations are required in an organization in order to do business worldwide (Fui-Hoon Nah, Lee-Shang Lau, and Kuang, 2001). It is important that the management sees these factors to be interrelated as they tend to do business and establish their business operations globally. The various factors to be considered in managing human resources are political, economic and cultural factors. Cultural factors affect ethics, beliefs and performance of the different groups of employees. Involving different people of various ethnic or tribal backgrounds in working together may turn out to be difficult in some countries. There are different economic systems in different countries that can affect managing of human recourses (Piva, Santarelli and Vivarelli, 2005). Human resource laws are different in various parts of the world. In some countries, laws deal with the issues like employment discrimination and sexual harassment and in other countries due to ethical or religious differences. It is important that a Human resource professional reviews the political environment and employment related laws before setting up their business in a country (Harzing and Sorge, 2003). HRM’s Impact on Various Changes Impact on Political Changes The political changes in practices of human resource management reflect the control of the market forces (Greenan, 2003). The meaning of the factors influencing human resource political changes is to design an innovative approach in human resource management. It is complex to analyse the political changes to human resource management. They help in determining the characteristics of working relationships and impacts on the economic and social contexts. The major political challenges encountered by the human resource management are concerns relating to poor wages, removal of hard fought remuneration (Cummings, 2004). Another major challenge is company’s relocation to third world countries that are cheaper. Also the companies in order to cut costs get indulged in outsourcing. The key factors involved in deriving a political climate are: the amount of external regulations involved, different labour legislations and the type of work contracts. Such political factors never tend to change and as a result the political nature of human resource management is meant to remain constant (Wei and Lau, 2005). Impact on Economic Changes The economic changes in human resource management need to adopt an approach which is market-driven and also needs to manage diversity in a mounting multicultural workforce. There are various ways through which human resource management strives to meet the economic changes like implementing strategies within the organization in order to sustain in the global market (Gomez-Mejia, Balkin, and Cardy, 2004). Another way of addressing challenge is by training the workforce in order to become more consumer-focussed and reactive towards the needs of the market. Next way of coping up with the economic changes is enhancing the skills of the employees in order to promote adaptability and dexterity (Qiang, 2003). Another way is through implementation of different motivational strategies. By implementing these strategies it can address issues generated as a result of economic change. Hence, it can be understood that the economic changes in the human resource management within an organization results to a challenge to get the right people, ready at the correct moment and at the correct place (Jeong, 2012). Impact on Social Changes Human resource management if done effectively can lead to a positive impact on social changes. An effective human resource management of a multinational company hunts the best talents across the countries and recruits the right person for the right designation (Chan and Dimmock, 2008). This in turn will increase job satisfaction among employees leading to a decreased rate of employee turnover. Employees sustaining in the organization for a longer time will achieve more success through their work experience which in turn will lead to their increased compensation and attain a quality life. Thus, a huge number of employees attaining a better lifestyle will bring in a positive social change and improve the country’s economy. Also a reduced turnover rate will lead to reduced unemployment bringing in a positive social change (Held, 2001). Impact on Technological Changes Technology has an important role in changing the business organizations over a long time (Yew Wong, 2005). In addition, there are many businesses that cannot even function without the use of internet and the computer technology. Hence, technology also proves to have an impact in the human resource management practices. One way though which technology impacts human resource practices is in the recruiting process (Poor, 2004). Before the invention of internet, the company used to rely on the publications such as newspapers in order to post jobs and get prospects for their vacancies (Dayasindhu, 2002). It was not possible for them to post a job in various locations and have lots of people to see them at the same time. Through innovative technology the recruitment process became more efficient. Human resource department records and retrieves a huge amount of data regularly. By using electronic imaging, the company effectively stored and accessed the files in an electronic format (Mishra and Akman, 2010). Performance management in the organizations got enhanced through the invention of modern technologies. In order to survive in the global market, almost all the organizations are becoming adaptive to the technological changes (Bjorkman and Lu, 2001). Conclusion The detailed study put emphasis on the affect of globalisation on human resource management practice in various internationally spread organizations. It has been observed that in the era of globalisation, the major challenge for the organizations is the requirement to put much emphasis on strengthening their human resources through developing various strategies and upgrading to useful competencies. The relevance of globalisation is increasing due to a number of factors which includes talent shortage in developed countries, low cost labour availability, the rising number of consumers all over the world and the technological growth. The human resource managements impacts on the technological, social, economical and political changes. The human resource departments of the multinational companies should assemble data on factors including employees hiring, compensation, ethnic, cultural and national distributions and should be loaded on data warehouses. 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