How HRM Functions Differ in Terms of Operation and Implementation in an MNC and Local Company - Case Study Example

How key HRM functions differ in terms of operation and implementation in a MNC compared with a local company Introduction Human resource management (HRM) is concerned with the development and enhancement of the capacity of employees as key resource in the attainment of organisational goals (Scullion and Collings, 2011). HRM functions include,but not limited to job analysis, recruitment, job placement, training and development, compensation, performance evaluation, dispute resolution and disciplinary of employees. Strategic human resource management places HRM as an integral and strategic function of the organisation through creating HRM department that deals with employment relationship matters (Stahl and Bjorkman, 2006). HRM ensures that organisations plan, develop and manage employees appropriately in order to create a skilled workforce that results in higher organisational productivity. HRM managers conduct staff planning and job analysis in order to ensure the organisation has the right size and right skills that are needed. In addition, HRM balances the needs of employees and those of the organisation in order to satisfy the unique individual needs and contribute to attainment of the shared strategic organisational goals (Rao, 2008). According to Farnham (2010), the evolution of HRM is influenced by the growing demands of staff such as need of a work-life balance policies, the increasing competition for skilled labour, new employment legislation and complex business environment that is characterised by new technology and stiff global competition. Multinational companies need sophisticated HRM skills in order to attain competitive edge. Accordingly, competition for the most talented labour has intensified due to recognition of the fact that human skills are the core organisational resources. HRM managers must poses interpersonal skills, conflict resolution skills, effective negotiation skills, and leadership skills in order to handle different functions of HRM in multinational organizations (Scullion and Collings, 2011). MNCs operate in a turbulent external environment that is characterised by changes in the economic, technological and political environment. Accordingly, HRM functions of MNCs are influenced by socio-cultural environment since employees from different cultures have different employment expectations and personalities (Stahl and Bjorkman, 2006). MNCs employ people across countries and different cultures and sell their products in culturally diverse markets. MNCs HRM practices disseminate technical knowledge worldwide through their ability to establish foreign subsidiaries (Rao, 2008). HRM functions in MNCs differ significantly from those of local companies since multinational human resource managers must deal with wide range of international context matters such as international taxation compliance, expatriate relocation and host government relations (Tempel, 2001). HRM policies of MNCs are different from those of local companies due to the desire to attract culturally diverse staff and ensure competitive advantage in hiring practices (Cooke, 2003). MNCs subsidiaries have to be staffed and the organisations use different approaches in managing their workforce across the several markets. One common approach is the ethnocentric approach whereby the managers rely on the home-county standards and policies in their foreign subsidiaries (Rao, 2008). The approach is mainly used by Toyota company that has implemented quality management systems such as Kaizen across all subsidiaries in order to minimise costs and improve the efficiency of the workforce. Another approach is the regiocentric approach whereby host-country HRM practices are utilised in order to attain harmony. This approach is common at Coca cola since it ensures that MNCs comply with the host-country labour legislation and serve the unique needs of the staff. The last approach to HRM strategy for multinationals is the geocentric approach that is common with HSBC and entails interdependent, trans-national and global common strategy that involves small adaptation across the markets (Sparrow, 2009). MNCs in UK region use the geocentric strategy since most of the senior executives have international experience across several cultural markets and the strategy ensures collaboration between the UK headquarters and its overseas subsidiaries (Beardwell and Claydon, 2007). The organisations have formed international project teams and HRM practices entail two-way interactive processes. MNCs hire parent country nationals, host country nationals and third country nationals that undergo cross-border employee development and cross-cultural orientation in order to overcome the language barriers. Manpower planning Cooke (2003) asserts that MNCs have implemented strategic human resource management approach that entails anticipating future skills needs and planning how the organisation will acquire such skills. The HRM departments are tasked with conducting labour market research in order to understand changes in demography, technology and education standards in order to predict the future skills requirement (Sparrow, 2009). Unlike local firms, MNCs identify the projected growth in business sales volumes, the productivity of employees and technological changes in order to prepare for the future workforce demands. Selection and recruitment This HRM function involves job market analysis, job analysis and design, and retirement planning. MNCs conduct employee resourcing in order to ensure optimum workforce and fill current and forecasted staff needs. The HRM department is also tasked with job analysis that entails determining the roles, tasks and expected outputs of a particular job and writing down the job description that involves stating down the requirements of a particular job. Accordingly, the HRM will offer person specification that involves outlining the knowledge, skills, qualities and behaviours that are expected from the job holder (Sparrow, 2009). MNCs have implemented intensive job analysis and recruitment procedures that involve both internal and external recruitment. MNCs may use recruitment agencies and consultant for the managerial positions and graduate recruitment for the low-level skills positions. Another emerging characteristics of MNCs recruitment is the e-recruitment whereby the organisation utilizes internet technology in advertisement of vacancies such as virtual job fairs, social networking sites or the company website (Kramar and Syed, 2012). E-recruitment offers several advantages since it offers online processing of applications, it is less expensive and targets the required skills. MNCs have selection stages that lead to short-listing of the suitable candidates and main methods of selection include interviews, aptitude tests, psychometric testing, in-tray exercises and presentations. A case study is Milkround graduate recruitment that targets leading UK universities. Selection and recruitment is a critical HRM function that is undertaken by MNCs in the UK and involves the recruitment of culturally diverse staff that comprises expatriates and host country nationals (Sims, 2002). The MNCs consider the nature of the job, the required skills, ability of the expatriates and their families to settle in the host countries and cultural differences (Tayeb, 2005). The high-level managerial jobs requires cultural relational abilities since the expatriates must understand the host country culture and extend to which the managers are able to implement managerial skills that match the cultural requirements of the host country (Sparrow, 2009). Accordingly, some employees may be unwilling to disrupt their family life and leisure interests and thus may resist international assignments. On the other side, MNCs may hire local nationals in order to minimize salary costs, comply with national legislation and ensure cultural sensitivity in the staff (Lawler and Hundley, 2008). Training and development Multinational companies in UK use training and development to motivate staff and ensure high staff retention. The companies have developed their own training manuals and facilities while others have partnered with leading business schools and universities to offer continuous employee training. According to Sims (2002), the purpose of training is to prepare employees to new job assignments, enhance employee productivity and improve attitudes of the employee. In addition, MNCs train employees on team work, stress reduction skills and new technologies in order to minimise conflicts at the workplace. Unlike the local companies, MNCs do not strictly adhere with hierarchy in their training and development function, but focus on the skills deficiency in the organisation and the need to improve the quality of skills in the company (Tayeb, 2005). In this case, MNCs go further in their training to include aspects of work ethic, social responsibility skills and required attitudes in order for the employees to understand the changes in global labour value systems (Lawler and Hundley, 2008). However, MNCs have influenced the recruitment and retention strategies in UK through implementation of sharing resources with local partners and enhancing the benefit packages in order to attract and retain highly qualified employees. Multinationals offer apprenticeship, and graduate schemes in partnership with higher education institutions in order to improve their talent pool (Sims, 2002). Compensation management Multinaktional companies HRM entails compensation management policies that aim at attracting and maintaining talent employees through use of both financial and non-financial rewards. MNCs compensation and rewards programs encourage cooperation and individual initiatives. The reward packages attract young and more adaptable to the consistent and standardised HRM practices thus contributing to increased collaboration across the organisational units. Chinese and Japanese multinationals operating in UK region have adopted absorption localisation that entails use of modern management techniques such as increasing the number of UK nationals in the management level. MNCs offer higher benefits such as the fixed monthly wages and salaries, financial allowances, short-term incentives like annual bonuses and sales volume commissions. In addition, some MNCs offer housing allowances, transport allowances, free meals and recreational facilities, and long-term incentives such as membership to the company retirement scheme and share purchase plans. MNCs set their reward budgets according to the prevailing market conditions, salary surveys, internal equity needs, financial performance of the company and need to attract and maintain talented workforce (Shen, D’Netto and Tang, 2010, p 2166). In this case, MNCs have influenced the reward expectations in UK region and local companies are implementing reward systems that will motivate employees towards higher performance and support meritocracy (Sims, 2002). In addition, the companies in UK region are offering market competitive pay in order to retain the talented workforce and ensure equity among different categories of employees in the organisation. Performance management Multinational organisations have implemented performance-based appraisal systems that review the individual employee performance on regular basis. The performance management systems will obtain, analyse and record information on individual employee performance in order to allow for comparison between the expected performance levels and actual performance. MNCs identify gaps in performance levels and provide additional training and development in order to the employees to attain their expected performance targets. Accordingly, employees are involved in performance target setting and review of the performance. On the other side, local companies link their performance to the skills level, lengthy of service and age of the employee. Local companies in UK have seniority-performance measurement systems that discourage the highly skilled and younger generation in exerting more efforts in their tasks. The performance appraisal systems are largely based on the opinions of the executives rather that identifiable performance results due to shortage of highly qualified HRM managers that can implement and coordinate effective performance management systems. In addition, the HRM managers fail to offer direct feedback and opportunities for discussing the performance outcomes with the concerned employees thus hindering future performance improvement in the organisation. Employee welfare and motivation MNCs consider employees as the most valued asset and are keen on improving the welfare of employees through work-life balance and motivational programs. For instance, the MNCs in UK offer employee counseling and financial assistance programs, company parties and recreational activities such as annual tours and games in order to improve the social life of the staff. Accordingly, team building activities, appreciations for higher performance and recognition during annual dinners motivate the staff towards higher performance. In the recent past, local companies have started implementing welfare and motivational programs such as counseling facilities within the workplace, cheap loans and team building activities in order to maintain their staff. Workplace diversity Diversity in the workplace refers to consideration of the ethnic, age, cultural and language characteristics that make the people in the organisation different. Although MNCs have complied with labour legislation that requires equal and fair treatment of all employees, the HRM functions of MNCs have included diversity aspects especially in recruitment and promotion of staff. MNCs have an open and inclusive organisational culture that supports the personal needs of minorities and respects the cultural needs of the employees (Branine, 2011). MNCs encourage divertsity through attracting culturally diverse workforce in their recruitment policies and implementing diversity awareness in training and development programmes (Branine, 2011). The MNCs have minimises prejudices and unfair treatment of cultural-minority employees through addressing all potential biases and barriers that may limit their professional and personal growth in the organisation. A clear example is the gender balance in the senior positions such as board of directors or senior executives of the organisation in order to ensure affirmative action. In this case, MNCs have shaped the operation and implementation of affirmative action and cultural awareness in UK region since local companies have benefited from higher creativity and innovation that is associated with diverse workforce (Branine, 2011). Accordingly, MNCs have benefit from diverse workforce in their marketing activities due to understanding of global cultures and markets that enables ease of foreign market penetration and greater understanding of the consumption habits and preferences of a particular cultural market (Bratton and Gold, 2012). In addition, the diverse workforce associated with MNCs has ensured flexibility in organisational change and culture and group cohesion thus facilitating high employee performance. For instance, HSBC brand proposition is aimed at creating a diverse workplace where cultures and people are treated with respect in the multicultural environment. Another example is PriceWaterhouse Coopers (PWC) that appreciates the diverse nature of their clients and ensures employees diversity in order to cater for the changing needs of the clients. Industrial relations and employee legislation in the UK There is legislation that aim at protecting the welfare of employees in the UK. The Equality Act 2010 protects employees from all forms of discrimination through ensuring equal employment opportunities while and outlining procedures that will govern employment procedures such as hiring, grievances handling and dismissal. The UK companies are required to prohibit discrimination that may be based on age, disability, sex, marriage, pregnancy, gender or religious beliefs of the employee. The UK government advocates for fair dismissals and redundancies and ACAS is empowered to facilitate tribunals that review the decisions of employers pertaining to redundancies, disciplinary actions and unfair dismissals (DeCenzo and Robbins, 2007). Accordingly, the law has outlined the need for organisations to protect the health and safety of employees through eradicating health hazards and providing protective gear to employees that are exposed to health hazards due to the nature of their job. Compliance with the legal framework has enabled MNCs to foster excellent HRM practices and enhance corporate reputation. In addition, the firms have been able to avoid costly legal suits and build close relationships with employees through employee engagement and team building activities (DeCenzo and Robbins, 2007). Aswathappa (2005) claims that one critical concept that has been introduced by multinational companies in UK region is the concept of employee engagement that involves making sure employees are motivated and enthusiastic about their work. UK employees working in MNCs show positive attachment to their job, peers and the organisation through dedication, commitment and willingness to help their colleagues. The driving reasons for high employee engagement include the many training and development opportunities, efficient performance evaluation feedback channels, the freedom to provide ideas and participate in decision-making and information sharing in the organisations (Bratton and Gold, 2012). Multinational companies have made HRM relevant in the region through implementing accountable programs that outline the costs and benefits and monitoring the programs in order to ensure sustainability. MNCs measure their human resource policies based on costs, employee attitudes, services and employee productivity in order to ascertain the expected level of employee satisfaction and retention in the organisation (Stahl and Bjorkman, 2006). Conclusion Human resources are the key competitive resources in organisations since the attainment of the strategic organisational goals depends on knowledge, skills and attitudes of employees. HRM programs of MNCs focus on fostering the core competencies through enabling the employees to attain their professional and personal growth goals while at the same time motivating them to attain the collective organisational goals. HRM enhances productivity and growth through all its functions and ensures compliance with the existing social and legal obligations that safeguard the welfare of employees in the labour industry. MNCs HRM functions differ in terms of operation and implementation from those of local companies since multinational companies conduct manpower planning and focus on the need to ensure cultural diversity in their recruitment and retention strategies. MNCs employ expatriates and include language training, international transfer and cultural awareness in their training and development programs. In addition, MNCs offer additional non-financial benefits and employee welfare programs that aim at enhancing the productivity and employee satisfaction. MNCs also link their rewards to individual performance and have output-based performance appraisal systems unlike the local companies that lack formal performance evaluation and feedback systems and that link their benefits to length of service in the company. However, MNCs must comply with the host-country legal framework on labour Bibliography: Aswathappa, K. 2005. Human resource and personnel management: text and cases. New Delhi: Tata McGraw-Hill. Beardwell, Julie and Claydon, Tim. 2007. Human resource management: a contemporary approach. London: Prentice Hall. Branine, Mohamed. 2011. Managing across cultures. London: Sage Publications. Bratton, John and Gold, Jeff. 2012. Human resource management: theory and practice. London: Palgrave Macmillan. Cooke, William. 2003. Multinational companies and global human resource strategies. New York: Greenwood Publishing Group. DeCenzo, David and Robbins, Stephen. 2007. Fundamentals of human resource management. Chichester: John Wiley & Sons. 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