Companies and Organizations - Case Study Example

International Business – HRM Companies and organizations are made for people and by the people, and obviously their effectiveness depends on the behavior and performance of the people running these companies. The true importance of the human resource of any enterprise lies in its ability to respond favorably and willingly to performance objectives and opportunities and in these efforts gain satisfaction from both accomplishing the work and being in the work environment. Core areas of HRM include the individual, the organization and the social context of work and how all of these factors shape relations at work and result in organizational performance. To get the optimum from a satisfied and participative individual is considered to be the ultimate objective of HRM policies. The Human Resource environment as such is affected mainly by the following five factors; i. Economic: The economic environment of host country, inflation rates, growth factors and the levels of unemployment affect the HR policies. ii. Demographic: The demographic composition of the workforce like the communities involved, the caste consideration (this becomes a reasonable factor in case of some of the developing economies), the male-female composition, and the population density of the country / region also helps in devising effective HR strategies. iii. Socio-cultural: Religion and culture never tell a person to ‘not to work’, yet people of some socio-cultural background are found to be less workaholic than others. The effect of family systems like ‘Joint family system’ or ‘Nuclear family system’ become crucial factors in forming the habits of individuals and thus formulating of HR policies. iv. Technological: Rapid technological advancements have reduced the dependence on muscle power to a certain extent. Modernization and automation lead to increased accuracy and less redundancy in the output while increasing the comfort level of the workforce. v. Politico Legal: Prevailing political situation in the country, the party in power, the ideology of government functionaries affect the business environment. Whether it’s a democracy, autocracy, monarchy, one party system, or a multi-party system gives enough room for strategy planners to devise HR policies accordingly. The law of the land has always to be kept in mind while doing the recruitments or managing the human resources. For example in some countries, formation of ‘workers union’ is not allowed while in some others it’s mandatory. To expand business from UK to Russia, these very factors will prove to be a guiding force for our company. On whatever scale the company wishes to launch its operations in Russia, we need to have some minimum workforce. To start with the strategists can be from UK, but the supportive HR team will be composed of a good number of Russians, as they know the country best. Cultural differences are the one’s which take major share of differences in the HR policies. Russia is an extremely homogenous country. Four-fifths of the population is ethnic Russian, while the rest comprises of Tatars, Ukranians, Jews and Germans. UK on the other hand is home a big diversity as far as composition of society is concerned. There could be variations within the cultures of a nation. Hofstede argues that these variations can take different shades depending upon; Individual’s national identity Regional, ethnic, religious, or linguistic identity Gender profile of the people Generation difference Differences on account of social class Organizational practices and culture Hofstede used an onion diagram1 to illustrate his view of culture as a many-layered concept. At the heart of everything he placed Values. Values are defined as broad tendencies to prefer certain states to others among dichotomies such as ugly-beautiful, dirty-clean, unnatural-natural, abnormal-normal, paradoxical-logical, irrational-rational, etc. The next layer out is labeled Rituals, which stand for collective activities such as greeting, paying respect, social/religious ceremonies, etc. Beyond Rituals is the layer labeled Heroes, which refers to persons alive or dead, real or imaginary who possess characteristics prized in the culture. According to Hofstede, the cultural purpose of heroes is to provide models for behavior. The final and outermost layer is labeled Symbols. It is in this layer that Hofstede places words (language), based on actual behavior. Hofstede (1991) differentiated between cultures in the sense of education, upbringing and inheritance. Culture is therefore an essential part of conflict and conflict resolution. It is therefore under a set of constraints that our company will have to prepare the team of employees in Russia. As of now Russia, once a Superpower, is seeking to emerge from the burden of its troubled history. The country faces enormous social and economic challenges. Unemployment level is quite high, which may tempt us to recruit people at lower salaries. But we need to consider the reputation of our company and comparative remunerations prevailing in Russia in competitor companies or the industry before recruiting the most suitable workforce. Economy of Russia remains mired in corruption and inefficiency, the state apparatus is considerably weak and the enforcement of property and other rights is often erratic, particularly in the more far-flung and impoverished provinces. Therefore, our company requires taking into account the prevailing law and order situation of the province that we intend to set-up our facility. The process of hiring the team of experts, managers or other workers also depends upon the kind of strategy our company proposes to follow while expanding the business in Russia. For example in case of a ‘multi domestic strategy’, headquarters in UK will coordinate financial controls and major marketing policies while most of the other tasks will have to be carried out by the Russian subsidiary. On the other hand a ‘transnational strategy’ will mean that we enter into strategic alliances with the Russian suppliers, other business partners or the customers and thus save our time and capital. This would imply that we require skeletal HR team in Russia. Russia is fast emerging as a responsible democratic nation under the able stewardship of President Putin. Therefore, now our company will have the added advantage of having to deal with a democratic regime. The experience gained in another UK will thus come handy in dealing with HR issues in Russia. While UK has had a long history of being an icon of democracy, Russia has learned it the hard way after the lost decade of 1990’s. Following the collapse of the Soviet Union in 1991, the state of the economy declined precipitously. Industrial production more than halved between 1991 and 1998, whilst the total labor force declined by 15%. Botched privatization programs transferred swathes of the former state sector into the hands of organized criminals and corrupt former communist party officials. But things have started looking up once again. Following a GDP decline of almost 5% in 1998, it was up by 5.2% in 2004, driven largely by buoyant oil prices following the US invasion of Iraq, and, to a lesser extent, by a pick-up in investment flows in 2004. Therefore Russia is fast becoming a promising destination. Now a days Russia is fast emerging as a reliable ITES outsourcing hub together with India, China and some other Asia-Pacific countries. This goes on to show that there is plenty of talent available in Russia. In order to inculcate the Russian work force into company’s culture and environment, we need to have an extensive schedule of Training and Development, particularly during the early days. Training can be imparted by the professionals from our London office. To make the training programmes more effective, we need to have some Russian to English translators as well, since Russian’s are not known to have great command over English. Secondly, for specialized training. couple of Russians can be sent to UK which in turn will help train others back home. Creation and transfer of international human resource development programs may be carried out basically in two ways: Centralized: With this approach, training originates at the headquarters and corporate trainers travel to subsidiaries, often adapting to local situations. This fits the ethnocentric model. To start with our company will have to adopt this approach. Decentralized: In this approach, training is on a local basis, following a polycentric model. When training is decentralized, the cultural backgrounds of the trainers and trainees are usually similar. Local people develop training materials and techniques for use in their own area. In fact once the company is ready with couple of trainers, it can make fullest use of them in training the Russian workforce. This type of approach in training helps in reducing the cultural differences. In fact pursuing a person in his own native language and with similar attitudes makes him more amenable to adopt the desired work culture. This concept is elaborated by an age old Chinese concept called ‘Guanxi’. It denotes a personal connection between two people in which one is able to prevail upon another to perform a particular job, service or any type of favor or service. It describes a state of general understanding between such people. Part-II If the Sterling becomes stronger in comparison to a dollar, that means our exports to dollar dominated areas have become costlier. That means our exporters are at a disadvantageous position as compared to competitors from other nations serving the same market. Imports of course, become cheaper, which means now our manufacturing sector can get raw material from abroad at lesser costs OR that we can import goods and services from other countries at lesser prices. References: 1. Michelle LeBaron (2003), Culture and Conflict, Beyond Interactivity. Org. http://www.beyondintractability.org/essay/culture_conflict/ (Jan 14, 2007) 2. Kylie Nicolson (2004), ‘Cultural diversity, IBM style’. Human Resources. http://www.humanresourcesmagazine.com.au/articles/74/0C021774.asp?Type=60&Category=903 (Jan 14, 2007) 3. Donna Tatsuki (2001), ‘The Place of Pragmatics in the Teaching/Learning of Language and Culture’. Pragmatic Matters, http://www.pragsig.org/files/PM7complete.pdf (Jan 14, 2007) Read More