International HRM - Essay Example

 Contents Introduction 4 Definition of HRM 4 Historical evolution of HRM definitions 4 Outline of essay 5 The context and traditional conception of IHRM 5 Historical contextualisation of IHRM 5 Conceptual Frameworks of HRM 6 Accounting for complexities in implementing IHRM frameworks 7 The complexity of the contemporary context 8 History of internationalisation of economic and business activity 8 Globalisation as distinct from Internationalisation 8 Hyper-globalist versus global scepticism 9 International transfer of practice 11 Increase Anglo-Americanisation of IHRM practices 11 Emergence of homogenous & universal model HRM 12 Critical factors for the complexity 12 Systems of National Capitalisms 12 Resistance from ‘Cultural’ and institutional factors 13 Implications for theory and emerging practice 14 SIHRM as solution to problems of competing local, corporate, home country and global isomorphic pulls 14 Geocentric employee resourcing orientation 15 Policy diffusion and hybridity of practice 15 Conclusion 16 References 17 Introduction Definition of HRM Human resource management involves in hiring employees and developing them for the benefit of the company. By this process the organizational members become more valuable to the firm. Human resource management accounts wide range of activities. In the present business environment this process includes analysing personal needs, analysing organizational needs, job analysis, recruiting people, organizing training and development programs, managing salaries etc. With the help of all of these processes a company is able to develop its organizational policies and processes. HRM helps the company to use its human capital in most effective ways. Historical evolution of HRM definitions Earlier the definition of HRM was only limited to hiring and firing of employees. The HRM process of the company only focused on the increasing the productivity of the company by recruiting good employees. After the development of the trade unions the company started focusing more on improving its relationship with the organizational members. Then employee relationship was included in the definition of HRM. In the late 70s the companies started conducting training, implementing appraisal system, organizing welfare activities etc. All of these HRM processes helped the companies to increase their productivity and satisfaction level of their employees. In 1980 communication process was added to the definition of HRM. The focus of HRM definitions changed with the changing business environment. This is because earlier the companies were only concerned to increase their productivity but gradually they started realizing the value of employees. So they incorporated many new things in the definition of HRM for satisfying the employees and retaining them for long time. Outline of essay In this essay various concepts of International HRM have been discussed. There are many factors which influence IHRM process of a company. For these factors various complexities arises in IHRM which are highlighted in this case. The traditional concept of IHRM has many limitations for which modern theories of IHRM are used in the companies. The role of Globalization in IHRM is also discussed in this essay. The context and traditional conception of IHRM Historical contextualisation of IHRM In 1960s the companies operated their business process nationally. But after globalization the firms expanded their business operations in other nations. After 1970s the firms were dealing with many peoples of different countries. For this reason they felt the requirements of improving their HRM policies as per the international markets. The organizations started focusing on more on various factors which influencing the performances of their employees residing in other nations. In 1980 the first IHRM conference took place different parts of the world. With the help of these conferences many HR representatives exchanged their ideas and view regarding the policies of IHRM. From that time onwards IHRM was contextualised. Conceptual Frameworks of HRM IHRM has various conceptual frameworks that international organizations use to enhance organizational effectiveness by managing human capital. The three conceptual frameworks that are used in this context are as follows: Harvard Stakeholder theory – under this approach employees are considered to be the most critical resource. They are different compared to other resources and need to be managed using various qualitative techniques. They have different perception, attitude, learning, personality, etc that influences their behaviour which leads to their performance standard. The Harvard Map of the stakeholder theory focuses on human capital. Each and every employee is driven by different motivational cues and managing them becomes more challenging for organizations. The Stakeholder theory outlines for key areas that will lead to effective management of human resource, which are work systems, employee influence, and human resource flow and reward systems (Price, 2011, p. 79). The Matching Model – It is considered to be one of oldest models of HRM that focuses on organizational systems and structures that conform to the organizational vision and mission. The name matching concept was thus developed. It uses a human resource cycle that comprises four generic processes that are performed by organizations across the world. The generic processes are selection, appraisal, reward system and training and development (Ehnert, 2009, p. 35). The 5P model – It was formulated in 1992 and includes five functional heads i.e. HR philosophy, policies, programmes, practices and processes. The 5P model of HRM focuses on the individual functions that are aimed at delivering results that meet organizational objectives. The processes are aimed at enhancing organizational effectiveness through implementing, evaluating and managing HR policies (Ehnert, 2009, p. 62). Accounting for complexities in implementing IHRM frameworks Implementing IHRM framework does not have a universal approach. Organizations across the globe have different characteristics owing to economic, political, social, technological and environmental. Apart from these there are additional complexities that affect the implementation of HRM framework in organizations that have global presence. The additional complexities are changing global structures, cultural differences, etc. Cultural difference is the predominant factor that influences the IHRM framework. Culture influences attitudes to work, achievement motivation, perceptions and attitudes and ethical standards. The globalization age has compelled organizations to move to new locations for competitive advantage, greater market access, etc that has led to the problem of managing diversified human resource, environment and other social factors. Various frameworks and theories state that social and cultural factor shapes the perception, value system, attitude and communication that influence employee behaviour. Different influencing factors will have varied impacts on behaviour that will lead to the formation of organizational culture (Harzing and Pinnington, 2011, p. 152). It will further influence the performance standards. Organizations should try to adopt the culture of countries where it operates rather than establishing its own culture. This also has a trade off that needs to be balanced. Adopting new cultures might drain its own value system that will result in organizational conflicts which will lead to poor work standards. This is followed by decreased organizational effectiveness. Thus, organizations should implement IHRM framework that is adaptable and does not affect the local culture and values which also supports the core values of the organization (Budhwar and Debrah, 2001, p. 51). The complexity of the contemporary context History of internationalisation of economic and business activity Internationalisation economic and business activities started from globalization and trade liberalization. The companies started expanding their business in different parts of the world. With the growth of international trade expansion there was a growth of international economic activities. For achieving growth in the business the companies are trying to utilize its human resources in the best possible way. The companies started using various resources from different parts of the world. This influenced the companies to increase their business activities outside the nation. Business activities are performed on the basis of financial transactions. Therefore this leads to the growth of international economic activities (Triandis, 1972, p. 80). Globalisation as distinct from Internationalisation Globalisation means the process by which the policies of a country are assimilated for getting accepted by the other countries of the world. Every policies and practices of globalization are established in such a way which represents a worldwide view. Globalization creates impacts on different factors which affect the growth and development of the company (Trindis, 2004, p. 88). Internationalization involves in the process of generalizing and developing a product so that it can be handled by the people of various culture and language without having any problems. The process of Internationalization focuses on economic relations of different nations. With the help of this process the companies target their international markets where they can develop their business. Globalization involves in the integration of various cultures and modifying economic policies. But Internationalization deals in expanding business activities to other nations. It also involves in manufacturing different products as per the needs and requirements of other nations (Sparrow, Harris and Brewster, 2004, p. 29). Hyper-globalist versus global scepticism Hyper- globalist perspective of globalization involves in implementing economic changes which have cultural and political implications. It is a new approach of globalization. In this approach the importance and authority of the nations are reduced for getting more economic benefits in the global market. Values of different changes in globalization are analyzed with the help of this perspective. As per this perspective value of single global economy is diminishing with the development of many strong economic regions. The countries are de-nationalizing their economic activities (Saidy Khan and Ackers, 2004, p.133). On the other hand the perspective of global scepticism focuses on present international processes. These processes are very much regionalized and fragmented. As per this perspective the golden time of globalization was during 19th century. At present the world is experiencing the best of regionalization in globalization. This perspective highlights that the third world countries are not included in global economy as they tend to destroy the benefits of globalization (Schein, 1985, p. 39). Characteristics of globalisation Free Trade: After trade liberalization the companies are allowed to trade with other countries. The government does not put strong control on business process of a company as long as the company is following legal rules and regulations of the country. For this reasons many multinational company like PWC, Tesco etc have expanded their business indifferent parts of the world (Hofstede, 1991, p 56). Liberalisation: This process involves in free exchange of technologies, goods, services, capital etc from one country to other. For this process many MNCs outsource employees from different parts of the world. Connectivity: Different countries of the world are connected with each other with the help of various technologies and advanced processes (Hofstede, 1980, p.45). Expansion of economic activities: For globalization economic activities are not only confined to local market. With the expansion of business, economic activities have also expanded into international market. Multi dimensional process: Globalization has not only enhanced the business process of different companies but also helped many countries to develop themselves. Globalization is known as multi dimensional process. Political, economic and various other factors of a country improved by globalization (Hampden-Turner and Trompenaars, 1997, p. 67). International transfer of practice Globalization and internationalization of trade influence the business to transfer its HRM practices internationally. The MNC companies have operations in different countries of the world. This internal transfer process influences different policies and practices of the business. The MNCs transfer knowledge, processes, employees etc to its different offices (Beardwell and Claydon, 2010, p. 68). As per the needs and requirements of business process the companies transfer its practices to their various offices. Increase Anglo-Americanisation of IHRM practices Anglo-Americanisation of IHRM practices are increasing day by day. This HRM practices focuses on the establishing shareholder values by implementing good HRM practices. By following this approach the companies are able to achieve their organizational goals and objectives with the help of effective HRM policies. The employees of Anglo American countries focus more on building their career by working throughout the year (Khondker, 2004, p.9). The organizations which follow Anglo-American IHRM style tend to implement unitarist approach for increase their employee participation in different business processes. This is considered as one of the best approaches which influence individual employees to deliver their best performances. Development of bureaucratic careers in public sector economy has been seized for implementing Anglo-American IHRM policies (Freeman, 2006, p. 145). As a result many countries are experiencing economic developments. Global Labour Process Theory has been established for this which helped to globalise the working life of labours. With globalization the MNCs are expanding their business operations to the different countries of the world for which the economy of Anglo-American liberal market is becoming very important throughout the world (Edwards and Rees, 2011, p. 14). Emergence of homogenous & universal model HRM Universal model of HRM is established by homogenous business structure, corporate cultures, identity of the countries from which the MNC companies originally belong, replacing national home country etc. All of these factors help to influence and develop mindset of people. These help them to understand important business tasks and their responsibilities in international firms. MNCs are following corporate structure and strategies for improving their business process and increasing their shareholders value (Logger, Vinke and Kluytmans, 2011, p.144). The homogeneous structure of these MNCs does not consider any union or local powers for performing their business operations. Their universal HRM model motivates the employees to focus more on their work rather than to develop unions. The host countries influence more in the implementation of MNCs policies and practices of HRM. For example the business system of a MNC operating its business in German, Spain and France is influenced by host counties business patters (Schularick, 2006. p.339). Critical factors for the complexity Systems of National Capitalisms The concept of National capitalism is based on individual rights and capitalism for restoring national sovereignty. Capitalism encourages the growth of private business. As a result the businesses of the MNCs are expanding a lot for national capitalism. The differences in HRM practices in MNCs are influenced by institutional, cultural and various other approaches of capitalism. Asian, Mediterranean, Anglo Saxon and various other capitalist approaches influence the resourcing and strategic decision of the companies. These capitalist approaches are mainly used in UK, US etc (Schuler and Rogovsky, 1998, p. 159). Different concepts of capitalism are implemented by analysing organizational behaviour and employee relations. Holistic approaches of National Capitalism help the MNCs to analyse various macro and micro level factors which influences the business activities of the company. These approaches improve employee’s relation with the company. The MNCs are expanding their business in the developing countries of the world. As a result the developing countries are also influenced by the ideas of capitalism and they are trying to adopt different approaches of capitalism. Earlier the wages of the employees were kept low and the business spent less amount of money for satisfying its employees. In public organization this type of practises were observed more frequently (Vernon, 2011, p. 206). These practises were performed by the public sector companies for reducing inequalities among the people. The countries are trying to change their business environments for implementing capitalism. Resistance from ‘Cultural’ and institutional factors In MNCs employees of different cultures work together. Their cultural norms and values are different from each other. Language plays an important role in culture. This is because with the help of culture the employees share their information with each other. Language helps to develop effective communication. But sometimes values, norms, customs, attitudes of different cultures become restrictions for the companies in implementing IHRM policies and practices. Religion is also involved in culture. Many employees of a company are influenced by various religious factors (Ferner and Quintanilla, 1998, p. 710). These religious factors also influence the working habits of employees. Sometimes they refuse to accept IHRM policies which are against their social customs. Corporate culture of multinational companies influences the behaviour of employees. But employees belonging from strong cultural background are not always willing to accept modern corporate culture of MNCs. MNCs manage the cultural restrictions by implementing Schein’s three level framework theory. With the help of this theory cultural differences among employees are managed by influencing and motivating them at different levels which affect the MNC’s culture (Brewster, Sparrow, Vernon and Houldsworth, 2011, p. 104). For doing the business internationally the companies also use Hofstede’s theory. This theory helps the company to reduce various cultural differences among the employees so that the companies can establish good organizational culture. Implications for theory and emerging practice SIHRM as solution to problems of competing local, corporate, home country and global isomorphic pulls Strategic IHRM aims at achieving the desired results by implementing chart of plans that will include organizational structure and design, communication strategy, change programme, culture, value system, etc. It aims at developing strategies for each of the functions that will aim to manage human capital at a local level. Strategic IHRM ensures achievement of organizational goals after considering the local cultures and value system. The strategic approach includes certain exogenous and endogenous factors. The exogenous factors include industry characteristics, regional characteristics, market competition, cultural influence, technological factors, political influence, etc. It mainly considers the external factors that influence in formation of HRM strategies globally and locally. The endogenous factors include the internal characteristics of the organization which are structure, employee turnover, employee ratio, competitive strategy and international management experience (Earley and Singh, 2000, p. 42). Geocentric employee resourcing orientation With rise of globalization it has become difficult for organizations to strategically design their workforce. There is a particular trade off that organizations face when deciding on the workforce structure. An organizations key challenge is to maintain a proper ratio of local and home country’s employee so as to ensure mutual value systems. This will ensure cross cultural and diverse workforce. This will lead to better learning, cultural and value adoption among its global and local employees. Thus, geocentric employee sourcing approach has gained grounds as a strategic function of IHRM framework (Mabey and Lees, 2007, p. 71). Policy diffusion and hybridity of practice The HR policies for global organizations should be flexible enough to allow changes that are required to operate and function beyond domestic territory. It focuses on implementing cross cultural work practices that allows employee of the same organization to work at different locations. This has strategic implications that are aimed at developing individual effectiveness as well as balance the workforce that does not necessitate new and fresh hires. Thus there should be a mix of policies and practice of both the domestic and subsidiary organization that is aimed at achieving organizational goal which takes into account the interest of the local communities, countries and other related parties (Mondy, 2008, p. 137). Conclusion In this case study different concepts of IHRM and HRM are discussed in details. The basic concept of HRM is discussed with the help of different examples. The definition of HRM has changed for many times to match with the changing business environment and practices. The history of evolution of HRM definition has been highlighted in this essay. The traditional concept of IHRM was much different from the modern concept of IHRM. The concept of IHRM started during the time of globalization. Rules and regulation of the IHRM were formed during that period of time. Still now the policies and practices of HRM are developing and changing a lot for matching with the changing business environment. Globalization is different from internationalization. The MNCs incorporate both of these processes for expanding their business operations successfully. Different perspectives of globalizations are discussed in this case study which influences the IHRM policies and practises of MNC. Various characteristics of globalization are highlighted in this essay. The MNCs transfer their business practices to their different offices which are located in different other countries. This international transfer of practices affects the IHRM practices of MNCs. In the present business environment with the increase of international business expansion the Anglo-Americanisation practices of IHRM are gaining popularity. References Beardwell, J. and Claydon, T., 2010. Human Resource Management: A Contemporary Approach. London: Financial Times. Brewster, C., Sparrow, P., Vernon, G. and Houldsworth, E., 2011. International HRM, 3rd Edition. London: CIPD Budhwar, P. S. and Debrah, Y., 2001. Rethinking Comparative and cross-national HRM research. International Journal of HRM, 12(3) pp. 497-515. Earley, P.C. and Singh, H., 2000. Innovations in international and cross-cultural management. Thousand Oaks: Sage. Edwards, T. and Rees, C., 2011. International HRM: Globalisation, National Systems and MNCs, 2nd Edition. London: FT Prentice Hall. Ehnert, I., 2009. 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