The Best HRM Approach in Managing Large Multinational Corporation - Case Study Example

The Best HRM Approach in Managing Large Multinational Corporation Introduction The HR management approach used in managing large multinational corporations is totally different from those used in managing public sector organizations and family-owned or small- and medium-scale business enterprises. By critically analyzing the best HRM practice that will help improve the business performance and overall employee satisfaction, this study will focus on examining the HRM approach that is commonly applied when managing large multinational corporations. Eventually, reasons why emotional labour can be beneficial on the part of the service organization but not in the case of the service employees will be provided in this study. Prior to conclusion, significant changes in the payment scheme over the past thirty years will be thoroughly discussed by considering the ways in which the pay setting has changed. Particularly with regards to the use of performance-related pay, reasons why the use of this type of payment scheme should be considered fair to all workers will be explained in details. The Best HRM Practice to Improve the Business Performance and Overall Employee Satisfaction in Large Multinational Corporations Importance of Work Diversity Because of the influence of globalization in the world market, the best HRM practice that can enable large multinational companies to improve the overall business performance and employee satisfaction is to promote and incorporate the importance of diversity at work within the organizational culture (Marchington and Wilkinson 2005, p. 16). The word ‘diversity’ means as “to include a variety of racial or ethical backgrounds and characteristics of humankind” (College of the Mainland 2008). Therefore, the study of cultural diversity is focused on acknowledging one or more socio-demograhic traits like gender, race, ethnicity, and age (Janssens and Zanoni 2005). As a paradigm that forms a strong pattern of acceptance and respect among the employees, cultural diversity at work – also known as multiculturalism is about integrating culture in terms of employees’ age, gender, mental or physical abilities and characteristics, race, ethnic heritage, sexual orientation, geographic location, work experience, income, religious beliefs, language spoken, organizational role and level, communication style used, family status, work style, and/or educational background (Loden 1996). Organizational culture is “a pattern of behaviour developed by an organization to cope with problems related to external adaptation and internal integration aside from enabling the employees to feel and think positively” (David 1999, p. 143). Knowing that there is a strong relationship between a successful business organization and satisfied employees, incorporating diversity at work can effectively improve the working process and overall business performance and profitability since employees are inspired to deliver their best performance at work. Significance of Corporate Responsibility According to Marchington and Wilkinson (2005, p. 17), corporate responsibility is about the business organizations’ committment to develop sustainable working environment by reaching out to the needs and wants of employees, employees’ family members, and the local community members. By improving the people’s standard of living, a large multinational company that is involved in corporate responsibility could not only make its employees satisfied but also increase the company’s overall sales and profitability because of continuous patronage coming from the company’s target consumers. Corporate ability which refers to a wide range of elements in terms of a company’s expertise and competency such as its ability to generate new products and services through a constant innovation based on the creativeness of its employees when combined with corporate social responsibility could positively influence the customers’ perception on the products and services the company is offering (Rust, Moorman and Dickson 2002). In order to gain benefits from corporate social responsibility initiatives, Handelman and Arnold (1999) argued that companies should be engaged in activities related to corporate social responsibility for good causes and at the same time offer high quality products to its consumers. The main intension of the company’s effort in investing on the CSR initiatives is an important factor that could affect its success or failure. Since the implementation of corporate social responsibility initiatives could backfire and result to a lower purchase value and a negative perception1 (Sen and Bhattacharya 2001), HR managers should be very careful when studying the main purpose of the proposed corporate social responsibility activities by examining how employees, employees’ family, the local community, and the society could benefit from the project. Based on the observation of Drumwright (1996), the use of advertisements together with a social dimension is gradually increasing. In line with the increasing importance of CSR, several marketing studies shows that social responsibility programmes have a significant direct and indirect positive effect on several customer-related outcomes. (Bhattacharya et al. 2004; Brown 1998) Maintaining a good relationship between a multinational company and its valued customers enables the customers develop a positive attitude on the company’s products (Berens, Van Riel, and Van Bruggen 2005). Since most of the companies who are knowledgeable on how to take advantage of the CSR initiatives have proven that social participation could result to a better relationship with the satisfied customers, investment on CSR is considered as “the smart thing to do” (Smith 2003, p. 52). Importance of Work-Life Balance Because of the changes that took place in the global market, work-life balance is gaining importance in today’s work environment particularly among the single mothers (Fleetwood, 2007; Doherty 2004). As a result of the constantly changing economic condition, non-standard working arrangement such as the act of offering part-time, contractual, and temporary job to qualified employees is becoming a common trend in large multinational companies (Chang and Liao 2009). In fact, work-life balance can be used as the best HR appraoch in terms of increasing work productivity, reduce employees’ turn-over rate, and increase the business’ cost savings (Beauregard and Henry 2009). Using either authoritarian or paternalistic attitude, unitary approach highlights the importance of establishing a harmonious and integrated system within a business organization such that employees are able to develop a unified organizational goal while working as a team whereas pluralist approach acknowledge the presence of different groups within a business organization which often result to internal conflicts between employer and employees (Gennard and Judge 2005, pp. 55 – 56). To resolve organizational conflicts, establishing a collective relationships among the stakeholders is necessary. In a unitary approach, it is assumed that employers and employees have a commonly shared interests such that internal conflicts which may arise between employers and employees is a result of poor HR management. With regards to employment opportunity, unitarism approach provides qualified applicants with a long-term employment opportunity. However, a unitary perspective can be considered as insufficient and ineffective in today’s HR strategies since bargaining process between employers and employees is not applicable (Ghoshal 2005; Adams 2001). Under a pluralist approach, internal conflicts which may arise between employers and employees are considered inherent within the employment relationship (Kochan and Katz 1988, p. 6). Since a pluralist industrial relations allows the freedom between employers and employees to enter into a negotiation process, HR problems related to the agreed wages, employment packages and benefits, or business profits can be easily arranged accordingly. To increase employees’ work motivation, there is a need to offer them monetary rewards on top of their salary and wages (Cameron, Mcphail and Ailkinson 2008, p. 198). In line with this, the combination of unitarist and pluralist approach can also be applied in case of remuneration or awarding employees for an outstanding job performance. With regards to remuneration, it is possible for an employee to want a higher wage. Specifically the use of pluralist approach can provide the HR manager with the option to enter into a bargaining agreement with the employee. As a result of a win-win negotiation process, employers will be able to increase the loyalty of their employees. Developing and implementing remuneration policies for qualified employees is equally important. Therefore, the use of unitarist approach should not be disregarded when rewarding employees with bonuses. For this reason, the application of a combination of unitarist and pluraist approach is more effective as compared to the use of unitary approach alone when managing contigent workers such as those who have either part-time or freelance jobs. Reasons why Emotional Labour can be Beneficial on the Part of the Service Organization but not in the Case of the Service Employees Emotional labour is referring to the act of incorporating positive emotions in facial reactions or body gestures while working. For service employee to practice emotional labour, service employees are required to have a strong control and ability to modify their own emotions aside from ways on how they can accurately express emotions they need to project while at work (Grandey, 2000; Gross, 1998). Since the use of emotional labour can make more customers satisfied with the quality service they are receiving from a service employee, we can conclude that the application of emotional labour at work is beneficial to the overall business performance of a service organization. On the other hand, there are some available literature reviews suggesting that the application of emotional labour may not always be beneficial on the part of the service employee. Suppressing one’s true emotions can be dangerous to the health of employees in the sense that the act of suppressing emotions could increase their risk of developing tumours and cardio-vascular diseases (Schaubroeck and Jones 2000). By regularly controlling one’s own emotions, employee who practices emotional labour could often end up feeling burn-out with work. In line with this, Ashforth and Mael (1989) explained that the more employees are exerting more effort in identifying themselves with their role as a service employee, the higher the chances that a service employee will experience the negative impact of emotional labour. The use of surface and deep acting emotions can lead to emotional exhaustion (Maslach, Schaufeli and Leiter 2001). In worst cases, excessive use of emotional labour can lead to depersonalization among the service employees (Totterdel and Holman 2003). Each time a service employee failed to incorporate positive emotions in facial reactions or body gestures while working, there is a strong possibility that the service employee would feel useless and ineffective in fulfilling his/her work responsibilities (Burke 1991). In the end, there is a strong tendency that service employees would lose their desire and motivation to perform emotional labour at work. Significant Changes in the Payment Scheme or Reward System over the Past Thirty Years HR managers are responsible in ensuring that each employee who works in either small- or large-scale companies receive proper treatment. Aside from listening to employees’ ideas and personal opinion on how the financial institution could improve the services they provide to their valued customers, HR managers should develop effective motivational strategies that will increase their work efficiency and overall work performance. Rewards can either be intrinsic or extrinsic. Intrinsic reward is a motivational approach that uses a sincere acknowledgement for a good performance like thanking the employees for their effort at work (Shamir et al. 1993). On the other hand, extrinsic rewards can be in a form of increased salary or bonus given to employees. The type of company rewards offered by any multinational companies contributes a lot in the quality of work performance and job satisfaction of its employees. Although the use of traditional reward system such as compensation and promotions are still effective in some employees, this type of reward are slowly becoming ineffective in terms of motivating the generation X and Y employees (Craig 1989). Excessive use of material rewards such as cash incentives could even result to demotivating the employees (Anthony, Dearden and Bedford 1989, p. 57; Cecil Hill 1989). In line with this, several studies show that the use of ‘pay-for-performance’ strategy does not guarantee the improvement in employees’ work performance, retention rate, and job satisfaction (Bowley and Link 2005; Sherwood and Wechsler 1986; Lawler 1971, p. 151). With regards to the relationship between the use of pay practices and employee retention, the study that was conducted by Guthrie (2000) revealed that the use of skill-based pay system is better than the use of group-based compensation in terms of imrpoving employee retention. The author also reported that the use of group-based compensation is very much associated with higher rate of employee turnover (Guthrie 2000). Eventhough extrinsic rewards such as increase in pay or bonus given to employees could still be effective in terms of motivating employees and increasing their job satisfaction (Heywood and Wei 2006), a study shows that the use of intrinsic rewards such as congratulating the employees for a job well done either verbally, written on a personal note, through public recognition, or implementing a celebration for success in work performance is more effective in motivating employees to increase their work performance (Graham and Unruh 1990). Reasons why Performance-Related Pay should be Considered Fair to All Workers The use of performance-related pay in large multinational companies is a fair reward system to all workers. Normally, payment scheme used in large multinational companies is highly dependent on employees’ ranking such that the top-level managers are often the ones who are able to receive high salary whereas the bottom-level employees are the ones who are receiving less payment for their services. Given that large multinational companies would implement performance- related payment scheme, there is a higher chance that the low-ranking employees will have the benefit from receiving higher payment based on their overall work performance. Strictly implementing the performance-related pay could somehow narrow down the payment gap between the higher- and lower ranking employees. For this reason, increasing the overall business performance and employees’ satisfaction is possible. Conclusion HRM approach in managing a large multinational company should focus on developing work diversity by establishing organizational culture that strongly accepts work diversification policies. By practicing multiculturalism at work, employees would feel more respected and highly appreciated despite the individual uniqueness of each employee. Aside from giving importance to work diversity, HR manager should maintain work-life balance in order to increase work productivity, reduce employees’ turn-over rate, and increase the total business’ cost savings. HRM should also develop corporate social responsibility that is focused on developing projects that are designed for the benefits of its employees, family members of the company’s employees, the local community members, and society as a whole. Basically, the implementation of effective corporate social responsibility could lead to higher employees’ satisfaction and improvements in overall business performance. Therefore, HR managers should make it a habit to maintain good relationship between the company and its valued customers. Emotional labour is more beneficial on the part of the service organization but not in the case of service employees. The use of emotional labour is more advantageous on the part of the service organization because more customers will feel more satisfied with the quality of customer service they are receiving from a service company. On the other hand, emotional labour could harm service employees not only in terms of their overall work satisfaction but also lead to possible negative health consequences as a result of suppressing employees’ true emotions. With regards to motivating employees who are working in large multinational companies, HR managers should carefully examine the kind of reward strategies effective in terms of increasing the work satisfaction of employees from top- to bottom-level employees. *** End *** References Adams, R., 2001. Choice or Voice? 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