Multinational Enterprises and Human Resource Policies - Literature review Example

Multinational Enterprises and Human Resource Policies Table of Contents Introduction 3 Discussion 3 Cultural dimensions theory 5 Conclusion 8 References 10 Introduction In the era of globalization, the future of maintenance of competitiveness in the multinational corporations is vital in the global market to adapt and alter their human resources policies and strategies. The implementation of business strategies for maintaining competitiveness within the organization must be unified with the human resource divisions. The facilitation of successful business strategies is determined by sustainable compatibility with the human resource practices and strategic plans of organization. It is crucial for organization to implement effective approach to culture such as critical, interpretive and positivistic. In recent years, the practices of human resource management policies in overseas countries have been one of the chief subjects of attention. The movement of business across the national boundary requires regulation of operative human resource practices and strategies. The prime purpose of the paper is to provide vivid detailed analysis on impact of human resource practices and policies across the national borders on multinational enterprises. Discussion According to Westney, the execution of effective HRM practices beyond the national boundaries will never be viewed as the original (Diller, 2010, p.29). The creation and application of effective human resource policy is vital for any successful multinational corporations. The emerging sources for MNCs to gain competitive advantage are the human assets. According to Ghoshal and Bartlett, human resource management practices and policies are critical for every organization (Ghoshal and Bartlett, 2002, p.87). This is mainly due to the fact that it acts as mechanisms for control and co-ordination of international processes. Furthermore, human resource systems and values help to outline the people and culture of organization. On the other hand, Ghoshal and Bartlett also argued that the pivotal reason behind the implementation of global strategies in multinational companies to lessen the emergence of complexity to manage and hire people from diverse cultural background and contrasting national. On the basis of diverse human resource strategies, new roles of human resource management have been emerged in the international environment (D’Almedia, 2007, p.52). According to Lengnick-Hall, there four new roles of human resources that has to be measured in the universal economy (Cox, 2004, p.38). The human capital, knowledge builder, relationship builder and swift development specialist are four of the new human resource roles. According to Barlett and Perlmutter, the proportion of multinational corporations subsidiary approach are classified in o geocentric, polycentric based on multi-domestic strategy and ethnocentric based on global strategy regardless of the locations, these classification provides vivid information to companies to apply effective practices and policies for enhancement of the organization performance. The differences between the host and parent country determines the degree of adaptation of human resource management policies and practices (Edwards and Rees, 2011, p.8). Moreover, this extent of adaptation is based in terms of culture, institutions and national regulations. In the period of globalization and technological advancement, the benefit of quality and cost of global effectiveness is anticipated to provide adequate values to the customers. Furthermore, these advantages of quality and cost disdain characteristic differences of customers in acceptance of standard products and preferences (Srinati, 2004, p.39). In multiple environments, the role of subsidiary is viewed as the limited and local to other activities within the organization (Berger and Huntington, 2002, p.48). The execution of effective HRM policies and practices within the organization is vital to maintain sustainability. In case of multinational enterprises, it is expected to maintain uniformity through the national borders by implementation of operative HR policies. The role of HRM is pivotal for achieving goals and objectives of organization. Cultural dimensions theory The cultural dimensions theory of Hofstede is a framework based on cross-cultural interaction. This theory has been implemented in cross-cultural communication, international management and cross-cultural psychology. According to the theory, a derivative configuration from the factor analysis is used in to describe the effects of a culture of society on the standards of other participants in the organization. This theory is regarded as the first framework which helps to observe the cultural different within an organization and could be calculated. For multinational corporations, it is significant to observe and calculate the cultural different across the national borders (Samovar, Porter and McDaniel, 2013, p.12). Culture is one of the prime factors which determine the extent of regulation of human resource practices and policies. Each and every country has own cultural rituals and cultural activities. Hence, organization must use certain framework which is significant for the development. The cultural dimensions theory of Hofstede is based on four dimensions such as masculinity, uncertainty avoidance, individualism and power distance (Cardon, 2000, pp.150-165). This cultural dimension theory is determined as the one the human resources strategies that is applied by multinational organization to calculate the observed cultural differences in organizations. The power distance dimension is based on determining cultures and societies with low and high power distances. Hofstede stated that individuals with high power distance can accept orders. The individualism dimensions are determining the difference between collective and individual values. On the other hand, the masculinity dimension is based on differentiating the co-operation and assertiveness (Madlock, 2012, pp.169-184). Finally, the uncertainty avoidance is based in shaping the rate of risk aversion. According to researchers, the power distance in Germany and United Kingdom is much lower than that of USA and Japan. On the other hand, the uncertainty avoidance is lower to United Kingdom than that of Japan and Germany (Wood and Smith, 2004, p.41). A parent-country national is regarded as the individuals who are residents of home country of other organization are sent offshore to complete an assignment. Toyota Corporation is one of the organizations which implemented this strategy to manage foreign operation (Lauring, 2011, pp.231-255). A team of Japanese executives are send to United States of America to start new operations. Numerous worldwide consultancies are using the work of Hofstede in their business form. ITAP International, ITIM International are some of the worldwide consultancies that are offering the coaching, training, management consultancy based on cultural dimensions theory of Hofstede (Tannen, 1995, pp.134-148). The McDonald’s is regarded as one of the largest food chain restaurants of hamburger. According to Ohmae, it is crucial for multinational corporations to be global and maintain competitiveness. On the other hand, Levitt states that the success of large companies is dependent in the capability to globalize (Hallinan and Jackson, 2008, p.21). Therefore, one of the pivotal objectives of McDonald’s is to standardize the taste of the products. The prime characteristics of McDonald’s are to effectively manage the relationship with employees across communal and societal boundaries. This paternalistic management style of McDonald’s is accepted by execution of exceptional comprehensive and rigid processes and guidelines (Hogan, 2012, p.87). This is the chief reason which provides opportunity for McDonald’s to take advantage of the marginalized and fragile divisions of the labour market. There are several cases where McDonald’s has to face the issue of trade unions over the execution of effective human resources practices across the national borders. In most of the cases, McDonald’s has implemented policies and strategies to function without collective bargaining provisions and trade unions. The organization has opted to introduce form of policy that is perfect for maintaining employee relations outside the local. In many European countries, agreements for secretarial level of collective contracts were enforced on the organization. Furthermore, this execution of laws on the organization has not impacted the conditions of the workers and mode of operation within the McDonald’s corporation. This involvement of unions and introduction of varied of contracts have created bad publicity and damaging conflict for the McDonald’s (Hugman, 2013, p.19). Therefore, it can be analyzed from the statement that in some of the European countries, the decision of taking part in the cooperative bargaining engagements do not notify and characterize a fundamental modification in the rules and values of the McDonald’s corporation. Moreover, it becomes difficult for trade unions to retain and recruit members of union. The human resource policies and practices have been modified by McDonald’s to lessen the issues of workers participation and worker representation (Royle, 2000, p.112). Additionally, the cultural differences in many European countries have made difficult for some of the MNCs like McDonald’s to grow their market share globally. The human resources practices are being effectives analyzed and filtered to find best possible strategy to nullify the issues (Edbarg, 2012, p.72). The concept of employee participation is favoured by McDonald’s to allow employee working be involved and participative in the decision making procedure. At McDonald’s, the process of participation is meant as notice boards, crew meetings, grievance procedures, opinions surveys and RAP sessions (Naylor, 2001, p.28). This process of participation is formerly adopted in United States of America. Some variations are implemented in the process is based on diversified languages in different countries. McDonald’s have also shown interest on implementation of total quality management style (Morgan, 2005, p.19). This process of TQM can enhance the quality of team action and motivate crew and managers to bring together and work as a unit (Parvis, 2013, p.31). There are some multinational corporations which have failed in certain countries in an attempt of accomplishing sustainable competitive benefit. Wal-Mart is multinational retain corporation in America. The company failed to extend their market in German market and eventually opted to exit in the year 2006 (Tieney, 2013, p.44). The industry was at maturity stage in the product life cycle and made decision to undertake several initiatives to expand their market beyond parts of the United States. The Wal-Mart company entered in to the German market by two acquisitions. Researchers states that, one of the acquisitions of the company is regarded as flaw and failure. The cultural integration between German team and United States management team was weak and in due course lead to friction. The failure of cultural integration, bad strategy for acquisition and failure on low pricing strategy have been primary flaws of the Wal-Mart Corporation (Christopherson, 2007, pp.451-469)). The lack of cultural incorporation within the organization has forced many employees to leave the company after acquisition. This flaw strategy of the company created mistrust between existing employees and new management (Thyer, 2010, p.62). The lack of effective cost-leadership strategy leads to reduction on market share and upsurge of competitors. Hence, it is important for multinational enterprises to effectively integrate successful strategy that can be replicated as effective in foreign nations. Conclusion This can be concluded that strategically analyzed human resource practices and actions are vital for multinational enterprise to enhance their bottom line and top line by internal expansion. Over the last decades, multinational organizations have been confronted and challenged by the rapid upsurge of competitive environment. There are several forces which facilitate globalization such as the global integration of production, the liberalization of internal grade, marketing and study by foremost multinational corporations. Furthermore, the emergence of superior economic areas such as European Union provided opportunity for businesses to invest in the overseas market to maintain and gain competitive advantage over other competitors. Wal-Mart failed in Germany by execution of flawed strategy. One of the primary reasons behind the catastrophe of mergers and acquisitions is lack of cultural assimilation. 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