International Human Resource Development - Research Paper Example

 International Human Resource Development Introduction The basic reason for the increased importance of international human resource development issues is the growth in globalisation and the operations of business without boundaries. While it might have been possible in the past to create and operate a company which has all inputs as well as outputs located in one country, it is certainly not the case today (Edwards & Kuruvilla, 2005). A company can have its head office in London, the production facility in China, the research laboratories in Germany and the support centre in Pakistan. While the individuals working for the company in different locations are likely to come from different cultures, the culture of the company itself can only be established with good HR policies and effective HR management (Hollinshead and Leat, 1995). Definitions In the simplest terms, International HRM is the practice of getting maximum value from human assets which are distributed across the world working under the umbrella of a single company (Ozbilgin, 2005). Historically, the cultural differences between the home office and the branch office located in a different country meant that sooner or later HR managers had to face culture clash (Faulkner, D. 2002). The cultural differences were largely ignored and it was thought that the culture of the company would prevail while the culture of the country where the company was located would not matter as much (Kamoche, 1996). However, recent evaluations have shown that culture conflicts might need to be actively countered and could even be used to motivate workers rather than put various managers in conflict (Bartlett & Ghoshal, 1998). The UK, China and Other Countries The central cultural difference that exists between China and the UK comes from the very basis of the culture i.e. language. While the predominant language in the UK is English, it is not used as the lingua franca in China and is only learnt as a second language. Translations of HR mandates therefore have to be carefully made since the message might not be there while the words are present. Bradhan (2006) suggests that the language barrier is particularly strong for production and industrial setups where the labour may not be fluent in English in opposition to the individuals holding management positions. Living Standards Another significant cultural difference which is important for managers to understand is the difference in the standard of living to which people in both nations are used to (Bean, 1994). Workers in Britain as well as many other western countries tend to place great value on their leisure time and have enjoyed a relatively high standard of life in the past while the majority of Chinese workers have lived in comparative poverty (Clark, 1996). Being sensitive to this difference is important because it can certainly affect the way individual salaries, increments and time based bonuses are handled by a company (Kidger, 1991). At the same time, it must be noted that such situations may not remain true in the long term. Even in China, the trends of living with less could be on a downward slope as the population gets used to having more than their predecessors. A twenty year differential study for the economy of china shows that between 1981 and 2001 the percentage of working class individuals living on less than one US dollar per day decreased from almost eighty percent to less than thirty percent (Bardhan, 2006). Therefore, a company which is based in England would have to carefully evaluate the cultural basis of salary structures when they wish to work in nations where the social setup is similar to China. The Formation of a Global Culture As companies become more diversified and things like outsourcing and off shore operations become the norm rather than the exception, a global corporate culture could develop with time. However, such a state is still far off in the future since societal norms and personal cultural backgrounds still have a greater influence than HR policies established by an organisation (Laurent, 1986). A simple comparison between China and the UK shows that even on the organisational level, China has only recently developed a culture of increased importance to the HR functions of a company. On the other hand, countries like the UK have been focused on the value of Human Resources for many years. With the development of a global culture, the differences may not remain that important but as long as they are present they have to be taken into account. The Capitalist Culture Hall and David (2001) place the firm at the centre of economic activity in both China and the UK where essentially different systems based on capitalistic theories are used. HR and Business related activities like training and education of labour, bargaining with unions, capital and asset acquisitions, even interactions with other companies are connected with the nature of capitalism used in the economy. Naturally, the human resource management in the country would tend to move towards a type which has inherent support from the national institutions and the government. Over a long period of time, the business processes and the HR policies would become similar to the methods used by the political and social institutions of the country. Different Capitalist Systems The British neo-liberal viewpoint that there is only one system of Capitalism in the world is put in doubt when examples are seen from China, Germany or Japan. One can see unionists sitting on the corporate boards of German companies and Japanese companies tend to focus more on stakeholders and employees than shareholders and clients. On the other hand, Chinese firms are often concerned more with profits and the input being made to the economy by the company to the exclusion of other factors (Block, 1999). At the same time, when the term ‘capitalism’ is used, the majority of the time it is used to describe the economic systems present in England or America. There is also evidence presented by Block (1999) to show that America is often the guiding force behind the creation of liberalised free markets as per the pressure it has levied on other smaller economies. These economies will resist this pressure simply because by being in a different variety of capitalism, they gain competitive advantages that make their country more attractive for investors. This is an automatic and natural organisation process which changes depending on the needs of the country (Hall & David, 2001). Clearly, with all the factors that put countries into economic conflict with each other, it is easy to see why international HRM has become important for the companies of the world today. Companies need to operate in several different countries and possibly have different setups for different countries where production or development is most economically feasible. However, since the cultures and economic systems of these countries may be on conflicting terms, HR managers have to ensure that different cultures and national influences can work together. The Importance of IHRM The primary method for a company to control cultural conflict between the home office and other locations is the establishment of proper HR policies which take into account these differences and are sensitive to them. To show differences in IHRM policies, a variety of examples can be given from companies spread across various countries (Hollinshead and Leat, 1995). Using the examples of UK and China, both the factors involved in IHRM as well as the problems faced by managers can be discussed in greater detail. At the same time, a discussion can be made of issues other than culture which often negatively effect the positioning of human resource related policies for international companies. The effective positioning of IHRM policies is a difficult thing to manage and a company can choose to take several different paths depending on its present situation. For example, GE is one such company which went all the way and summarily dismissed all individuals from service who were seen to have a cultural mismatch with the company (Welch, 2005). While that is one way to handle cultural differences, a company may not be in the position or have the ability to fire a significant number of workers at once. National Cultural Needs To make a single HR policy to manage all departments in all locations of a company would be more or less impossible. Managers who are situated in the company head office can not effectively translate their HR management policies for global locations without understanding and appreciating local cultures and customs. Strategic HR decisions should not be made in isolation since it would be difficult to implement these decisions with offices abroad (Edwards & Kuruvilla, 2005). In effect, the cultural differences between nations create a cultural need for international HRM which makes a company run better. Organisational Culture Needs Other than the national culture, there is also the concept of an organisational culture which has a definite impact on how things are run within a company. Laurent (1986) suggests that the organisational culture which is created within a company will take several cues from the national culture since the majority of individuals working for the company would be residents of the same location. For a brief time or in times of stress, the culture of the organization can be more powerful that the national culture but Laurent believes that the effect will be temporary and can be detrimental to the enforcement of HR policies. The management of human resources within multinational organisations is often a comparison between the cultures of the home office as opposed to the culture of the host nation itself. Laurent (1986) examines several situations where there is a possibility of a significant culture clash in terms of employee relationships and in terms of performance evaluations. Company Politics Global HR policies and international human resource management can not exist in a vacuum outside the company politics which may play out on a global scale if the company operates in several countries (Edwards & Kuruvilla, 2005). Formal authority coming from the home office can always remain the source of power in a multi-national company but some levels of authority have to be given to the people working in regional offices (Beardwell & Holden, 2004). Power distribution is also connected to the control of resources within an organisation so in case the home office wishes to retain power; resource allocation should remain with the home office. Edwards & Kuruvilla (2005) also warn managers who plan on doing so that such situation could create a feeling of resentment towards the policies of the home office and make the process of international HR management dependant on internal politics rather than the principles of good management. Taken to the extreme, the condition of the company may get to the point that local managers may seek to go against the HR policies coming from the home office managers. Local managers can create problems or managerial issues when the policy is being enacting and not even enforce the policy at all. Such situations can happen very easily when local managers see that their power is being taken away or their influence within the company is simply negated by mangers in the home office (Edwards & Kuruvilla, 2005). Learning from Others British managers have often been told to learn from the managerial practices of other nations which are considered to be better in HR management than the U.K (Bean, 1994). Practices which are followed in the U.S., Germany or Japan are held as guiding principles for what can be used to handle international HR issues (Broad, 1994). However, any manager who is considering importing a successful HR policy or idea from any country to another has to consider national culture differences which exist between them since many management practices may be dependent on the culture (Kidger, 1991). To use such IHRM policies, cultural awareness and understand is a primary requirement. Counterpoint to Culture On the other hand, there are critics of cultural influences on international HRM who suggest that giving culture too much importance decreases the position of how important unified HR policies can be. They further recommend that human resource managers should look at other factors which influence the success of HR management like the company’s division of labour and the level of authority given to local managers (Edwards & Kuruvilla, 2005). While this is a valid point, it seems that cultural awareness would still be required even in understanding how division of labour takes place in China as opposed to the UK and what level of authority is normally given to line managers in workshops and assembly rooms located around the world (Eaton, 2000). Conclusion International human resource management can only go so far in countering the limits to globalisation and helping a company create an organisational culture which transcends the local cultures where the company operates. In the present day and age, there are significant cultural differences which exist for managers to understand and appreciate (Beardwell & Holden, 2004). I feel that these differences are not necessarily bad because they can be used for the benefit of the company rather than to create problems between home and branch offices. Management experts and company analysts have given us several means and methods by which cultural differences can be understood and they have shown us why understanding these differences is important for managers of the future. However, it is always up to the individual managers who take up international HR positions in a company to come up with unique solutions which can be applied depending on conditions and situations. Armed with both the management skills required for the process as well as the cultural understanding which is needed for working on the international level, I feel that future manager should have little problems in international human resource management. Works Cited Bardhan, P. 2006, ‘Does Globalization Help OR Hurt the World's Poor?’, Scientific American, vol. 294 no. 4, pp84-91. Bartlett, C. & Ghoshal, S. 1998. Managing Across Borders: The Transnational Solution to Managing Across Borders, 2nd ed. Hutchinson, London. Bean, R. 1994, Comparative Industrial Relations: an introduction to cross-national perspectives, Thomson Business Press. Beardwell, I. and Holden, L. 2004, Human Resource Management: a contemporary approach 4th edition, FT Prentice Hall. Block, F. 1999, ‘New Thinking About Capitalism’, Dollars & Sense, vol. 12, no. 226, pp 19-25. Broad, G. 1994. ‘The Managerial Limits to Japanization: A Manufacturing Case Study’, Human Resource Management Journal, vol. 4, no. 3, pp 52–69. Clark, T. 1996, European Human Resource Management, Blackwell Publishing. Eaton, J. 2000, Comparative Employment Relations: An introduction, Polity. Edwards, T. and Kuruvilla, S. 2005, ‘International HRM: national business systems, organizational politics and the international division of labour in MNCs’, International Journal of Human Resource Management, vol. 16, no. 1, pp1-21. Faulkner, D, 2002. ‘International Mergers and acquisitions in the UK 1985–1994: A Comparison of National HRM Practices’, International Journal of Human Resource Management, vol. 13, no.1, pp106–22. Hall, P. and David, S. 2001, Varieties of capitalism: The Institutional Foundations of Comparative Advantage, Oxford University Press. Hollinshead, G and Leat, M. 1995, Human Resource Management: An international and comparative perspective, FT Pitman Publishing. Kamoche, K. 1996, ‘The Integration/Differentiation Puzzle: A Resource-Capability Perspective in International Human Resource Management’, International Journal of Human Resource Management, vol. 7, no. 1, pp 230–44. Kidger, P. 1991, ‘The emergence of international human resource management’, International Journal of Human Resource Management, vol. 2, no. 2, pp149-163. Laurent, A. 1986, ‘The Cross-Cultural Puzzle of International Human Resource Management’, Human Resource Management, vol. 25, no. 1, pp 91-102. Ozbilgin M. 2005, International Human Resource Management: Theory and Practice, Palgrave Macmillan. Welch, J. 2005, Winning, HarperCollins. Word Count: 2,613 Read More