International Human Resource Management and Transitional Strategies - Report Example

International HRM and Transitional Strategies Faculty Ann M Waugh Module International HRM 19 March 2006 I. Introduction II. Human Resource Management III. International Business Environment IV. Transnational Strategies V. Conclusion VI. References VII. Bibliography I. Introduction Globalisation has changed the business operations of any country and any company. The slogan think global and act local has been successfully accepted by various multinational organizations. Each country has its own characteristics. These characteristics are related to the culture, demographics, sociological pattern, economy and various other factors. All these things have impact on the attitude of employees. These factors also influence the way these multinational oragnisations deal with its employees. It is always challenging for the company to adopt transnational strategies in its operations. Despite the often strong arguments that competitive advantage comes through operationalising a truly ‘transnational’ strategy, in practice this is often extremely difficult as MNCs remain embedded in distinct national contexts. The first part of the paper covers various issues of Human Resource Management. The next section deals with the complications and benefits of the international Business Environment. The transnational strategies are discussed in the following part of the paper. II. Human Resource Management There are various concerns of any MNC operating in diverse business environment. The culture, politics, legal framework, job market and other factors influence there decisions regarding human resource management in that particular company. The overall work force planning depends on these issues and business goals of the organisation. The job analysis, job planning, recruiting, decisions related to type of job offer like permanent, contract, freelance and other options than screening and selecting new employees. Retention of employees is another core area in the countries where the job shifts are common trends for example, USA, India and others. The payment decisions, benefits and compensation decisions are also other area’s of concerns. The payment should be according to the parent country or host country, the kinds of benefits which should be included varies from countries to countries. In this regard the Indian paternalistic business environment of late eighty century and early nineteen centuries changed in a broad way by the introduction of MNCs in India. MNCs came with several benefits for the employees. The attitude of MNC and these traditional organisations were different. This helped in developing more employee concerned strategies for the local companies as well. Training of these employees is another issue. Employee orientations, career development, management development, personal developments, performance appraisal, and other issues, expenses related to that, analysis of the kind of developmental training require to employees differs from countries to countries. The most important factor for any MNC is incorporating the human resource policies according legal framework of the country. The functions of HRM have become complex due to the complexity of job market today. Understanding the ambitions of workers, providing them opportunity within the organisation, handling the communication and proper information flow, promotion, retrenchment, performance appraisal etc are some of the functions handled by Human Resource Department in any organisation. HR planning This is the function in which the requirement of human resource within the organisation is analysed and planned according to the business goals and objectives. e.g. If a company is increasing its production to serve new market or setting up new office the HR department will analyse the need of people and recruit and train them. Recruiting This is a process where the potential employees from the job market are attracted through various modes like advertisement etc. It will differ from the country to country. Selection This is the process of selecting the most appropriate candidate from the available choices. Countries where unemployment is high the large number of candidates would be applying for the similar position. It will give more choices but will also make the process lengthier. Training and development Through this process new employee are trained and developed for the particular job while the old employees get an opportunity to upgrade their skill to handle new job requirements. Compensation This is the process of rewarding the employees for their performances. This will differ from country to country and industry to industry. Performance management The records related to each employee is kept and updated regularly. Employees are evaluated against various parameters set for the particular profile. . Employee relations This is an important function of Human resource today. By maintaining proper employee relations organization can understand their ambition and goal and can motivate them to work harder. Transparency of communication, fair practices of the policies, equality and unbiased decision making and participative management will help the organization to improve the relationship with the employees. III. International Business Environment Multinational organisations leverage upon business opportunities of different countries face various challenges. These challenges can be due to internal factors or external factors. The external factors include social, political, legal and economic factors. The internal factors of the organisation are the organisation culture, values, leadership and communication and others. The environment of any multinational organisation can be characterised by the followings: Figure 1: Impact of Environment on MNC The educational environment of any MNC will have great constraint. The language used in the same corporation will differ from place to place. The Socio-cultural environment will be different based on the country. It will be highly heterogeneous. The authority, personal relationship among employees, level of involvements, social values, and mobility will differ from country to country. The political orientation will be transnational. The power and ideologies will be influenced by the countries these companies are operating in. Economic system and economic environment will have difference in them. This diversity not only applicable for the MNCs operating in different nations but also it can be for the similar nation or continent i.e. country like India varies a large in its socio-economic pattern, based on the domestic or local environment the practices adopted by the MNC might be different for the similar country as well. The global competitiveness and attracting and retaining employees is one of the challenges of the MNC. The overall economy growth, economic turbulence, trading blocks, market forces, state interventions and payment policies affect the human resource strategies. Any MNC has to operate within the legal framework of that country. The HRM strategies may differ from the developed to developing countries. Several countries have distinguished factors which influence the operations of the organisation. Multinational organisations develop different orientations working in different countries. It can range from ethnocentric to geocentric orientations. Polycentric Orientation: This gives great deals of freedom to the local management and staff. The staffing is done by local management and foreign subsidiaries. Regio-centric Orientation: The staffing strategy here would be based on the regional basis in the foreign operations. Ethnocentric orientations: The operations are based on the parent company’s views. Geocentric orientations: In this organisation is viewed as an interdependent system. This means a system which operates in many countries. This is the common orientation which most of the successful companies have adopted. IV. Transnational Strategies Transnational strategy is an approach of multinational organisation in which it integrates its global business activities with the domestic business environment. The cooperation among various braches of the organisation and its operations are required to run the business effectively. Human resource is one of the most important factors of the management today. The challenge increases in multi-folds when a company operates in a multinational environment. It is a management approach in which an organization integrates its global business activities through close cooperation and interdependence among its headquarters, operations, and international subsidiaries, and its use of appropriate global information technologies. A transnational strategy allows for the attainment of benefits inherent in both global and multi-domestic strategies. The overseas components are integrated into the overall corporate structure across several dimensions, and each of the components is empowered to become a source of specialized innovation.1 Figure 1: The Integration-Responsiveness Grid2 The transitional model in the above figure represents degree of global integration and degree of national responsiveness required by any MNC. It is a state where responsiveness to both the degrees is high. It is the compromising condition where the local autonomy and centralised decision making is defined. There is a continuous need to understand the forces driving the labour and job market in the industry. The strategic decisions in this areas shape the overall performance of the firm. Proper utilisation of company’s resources, understanding of structures, systems and culture helps company in shaping the organisation according to domestic and international organisational needs. The MNCs while entering to any company has partial knowledge of business systems and national environment. Several researches in various areas are done to understand the overall cultural and operational issues before entering to any nation. International organisations have to develop the overall strategy to understand the domestic factors and incorporate them with their business needs. By the mid-1980 the forces of global integration, local differentiation and worldwide innovations had all become strong and none could be ignored. To compete effectively, the company has to develop global competitiveness, multinational flexibility and worldwide learning capabilities simultaneously.3 The recent trends has been towards Improving quality and productivity, more focus has been given to customer service due to this fact the employee training are customer concerns oriented, the training are also focussed on improving the personal skills of the employees and personality developments, empowering employees, encouraging innovations, helping employees to balance their life and work and encouraging/enforcing ethical behaviour among employees. Developed Countries In response to economic and social changes, companies are exploring a wide variety of work-life quality programs, including flexible scheduling, dependent care, time-off policies, and financial assistance and health and wellness programs. For example, the percentage of U.S. firms offering employees a flexible, all-purpose, paid-time-off plan has increased from 21 percent in 2000 to 63 percent in 2004, according to a survey by U.S. business information provider CCH Inc.4 In the European Unions the trends is focusing especially retention of employees and data security issues. Cost savings, performance effectiveness, overall corporate culture and legal and ethical compliance are other issues. Companies are trying to control the overheads and reduce the operational cost. Old employees gain more experience and knowledge specific to their jobs, organisation and industry. Retention of these employees is important factor for the organisations operating in the European continent. Employee welfare, involvement of family and corporate social responsibilities are some other concerns of these organisations. Usually all the organisation these days have different social responsibility wings. European Union Legal Standards and International Labour Organization provide certain guidelines for the organisations. The healthcare products firm Johnson and Johnson has long been recognized as a leader in the work-life arena for its pioneering efforts to continually assess and respond to the personal needs of its employees. Its LIFEWORKS program provides information and counselling on a variety of personal topics.5 France: Legal-political environment influences the planning of the firms largely. The French Government aims at utilising countries resources at maximum level and avoids expansion in uneconomic areas. Germany: German business environment is characterised by the level of authority they exercises. Te political and legal environment to the labour laws influence the overall business of any MNC operating here. Japan: Japanese culture is known for the loyalty of the employees for any particular company. The loyalty factor is high among employees and the employee concerns are more prioritised within Japanese organisations as compared to any other country. USA: employees change companies more frequently for better profile and work opportunities in USA. The hire and fire rule is more prevalent here. Australia: Any company operating in Australia should take care of its moralistic grounds. Australian Business environment focuses on the social values, risk taking behaviour and achievements. Developing Countries: Few of the recent techniques of the HRM are promoting the flat structure of the organisations; Non-Hierarchical Structure, taking care of attitude and emotions of the employees, designing teams and analysing their performance on various standards, promoting employee referrals in new recruitments, adopting various employee terms like contract, for lease and freelance and flexi timings. BBC World Services Trust usually employs the head of any project in the concerned country and rest of the team would be taken either on contract basis for a specific period of time or freelance based on the job, availability of professionals and durations. The Community of Asian Association at Johnson & Johnson is designed to help advance the career opportunities and leadership abilities of its members. It is intended to act a forum for mentoring, networking and learning, which contributes to the business success of the Johnson & Johnson companies.6 India: The Indian economy is growing economy. The government polices and cheap labour force is available here. The labour organisations and political interference is high. The cultural environment is diverse. The socio-political factors are strong in this country. China: The government supportive attitude and availability of infrastructure along with cheap labour is the attracting factors for any MNC to invest in China. Africa: Impact of globalisation is prevalent in Africa. Countries here have changed foreign policies, deregulated foreign investment, liberalised their imports, removed currency controls and are adopting several other strategies. These things have resulted in the improvement of overall productivities o these countries. It has increased the direct investments and attracting multinationals to establish business operations here. V. Conclusion The transnational strategies adopted by the companies to operate in various countries. The companies get the transnational political orientations. The operations of one country of the similar MNC will be sometimes very different from the operations of another country. The human recourse policies will be very different. It is due to the fact that the political legal environments of the countries are different. The job market, demand and supply of the employees will be different. The companies gain competitive advantages to operate in that company. The multinational operations of MNCs are targeted to serve different markets and during these process not just products and services but also the human resource factors get influenced. It is becomes complicated due to the factors impacting the human resource decisions. These factors are sociocultural, political legal, educational and economical. These factors are different for different countries making the operations deep rooted in the distinct national contexts. VI. References BARTLETT, Christopher A., GHOSHAL, Sumantra.Managing Across Borders: The Transnational Solution. Boston: Harvard Business School Press,1989 Guidance note on European HR trends retrieved on 18 March 2006 from Brewster, C. and Hegewisch, A. (1994) Policy and Practice in European Human Resource Management: The Price Waterhouse Cranfield Survey, London: Routledge http://www.fedee.com/hrtrends.html Smith, Stephen; 2003, Labor Economics, 2e, London & New York; Routledge Taylor & Francis Group Fateh, K. (1996) International Management: A Cross Cultural Approach, Upper Saddle River N.J: Prentice Hall. http://www.hrmguide.co.uk/hrm/chap2/ch2-links8.htm accessed on 18 March 2006. http://www.leadingresearch.hbs.edu/archives/03.01/story02.html accessed on 18 March 2006. http://www.wcc-coe.org/wcc/what/jpc/effglob.html accessed on 18 March 2006. Bibliography Albrecht M.H. (2004) International Human Resource Management – managing diversity in the workplace. Oxford, Blackwell Publishing Bamber, G., Lansbury, R. and Wailes, N. (eds) (2004) International and Comparative Industrial Relations, London: Sage. Budhwar, P.S and Debrah, Y.A. (2004) Human Resource Management in Developing Countries, London: Routledge Clark, T. (Ed) (1996) European Human Resource Management, Oxford: Blackwell. Domsch, M. (1991) Managing the Global Manager: Pre-Departure Training and Development for German Expatriates in the PRC and Brazil, Working Paper, University of Hamburg. Kirkbride, P. (ed.) (1994) Human Resource Management in Europe: Perspectives for the 1990s, London: Routledge. Lazear, E. P. (1999), “Personnel economics: Past lessons and future directions”, Journal of Labor Economics, Vol. 17, No. 2, pp. 199-236 http://www.cranet.org/publications/uk/home.htm accessed on 18 March 2006. http://www.europa.eu.int/index_en.htm accessed on 18 March 2006. Read More