Divergence of HRM Practices in International Organisations - Example

Individual Report Table of Contents Introduction 3 a) The Forces Influencing the Convergence or Divergence of HRM Practices in International Organisations 3 b) Affects of Planned ‘Global Organisation’ Strategy on HRM Policies and Practices with Reference to International Managers 6 ii) Training and Development 6 iii) Performance and Reward Management 8 c) The Potential Benefits and Limitations to This Strategy In Relation To the Effective HRM, With Particular Reference to the Potential Impact on the German Operations 11 Conclusion 13 References 14 Bibliography 16 Introduction This report aims at elaborating the management concept of “Global Organisation” in retail market, which has been recently introduced in the business arena. The term ‘global organisation’ involves changes in the management practices, which further refer to the improved Human Resource Management of a given organisation. In this case, the concept of management will be applied and tested on an American MNC, J&M international. As the company plans to implement a new and innovative internal management concept that will result changes in the recruitment and selection process, reward and talent management, it is likely that the implementation of the global organisation concept will help organising and encouraging the duties and responsibilities of the managers. J&M has recently planned to expand their business across Asian market wherein the expansion of retail business in different nations and implementation of new HRM concept has increased focus on the role of international managers (Mintz & Currim, 2013). Hence, the purpose of the report is to study the changes planned and implemented by J&M in their organisation, emphasising the changes affecting the employees in the organisation. The study will further attempt to analyse whether that changes introduced results in higher profit margin for J&M. a) The Forces Influencing the Convergence or Divergence of HRM Practices in International Organisations To compete with the international markets, J&M has planned to implement changes in the Human Resource Management (HRM) process. To be considered in this context, in the competitive world, effective utilisation of human resources has become essential and thus, J&M needs to identify, recruit, and select competent work force into its business activities. International HRM is a concept of managing human resource that is accepted globally. This includes the process of recruitment, selection and placing them in required job so that their knowledge, skill and experience can be utilised in achieving total quality management. IHRM is based on three main factors i.e. the geographical location where the business operates, types of work force required for completion of the jobs and HR activities. In case of J&M, the various HR activities can be identified in terms of planning, hiring work force, training and development, performance appraisal and welfare activities among others. Notably, when applying the concept of IHRM, J&M should be concentrated on involving three employee cultures, the one belonging to the host country, home country, and third country nationals (Schuler & et. al., 2012). According to Bartlett and Ghoshal (1991), multinational companies generally follow innovation strategies and knowledge developed beyond the national boundaries of the country and thus, are not confined within the home country only. Correspondingly, as an MNC, majority of the activities in J&M are carried out in its headquarter in the USA. Thus, in subsequence, the planning regarding manufacturing processes and technology implementation are developed at the home country itself. Global organisations are often identified as based on economies of scale and are dependent on human resources from not only their home country but also in their host countries as well as target markets. In such case, the effects of continuous innovation and development are observed to help the developmental pace of both the host and the home countries. It is in this context that as a MNCs following transactional strategy, J&M will develop innovation and implement them within the entire network. Such MNCs are controlled by the workforce within the organisation that allows mutual development of innovation and knowledge. Therefore, J&M will have to select the strategy according to the environment in which it operates (Bartlett & Ghoshal, 1991). In general, the strategy implemented by MNCs mainly focus on domestic markets of its home country as well as its host country. It is in this context that J&M follows the strategy of differentiating products and/or services in order to understand the changes in consumers’ tastes and preferences. On a wider scale, it has been observed that following this strategy helps the company to identify the opportunities associated with multinational flexibility. As it is a country based approach, learning and knowledge remains within the nations’ boundaries whereby the main aim is to exploit the local opportunities available in the market and to become self sufficient nationally. However, J&M is in process to become a global organisation and should follow a prominent strategy of utilising the resources available in an integrated manner and to manufacture standardised products in a cost efficient way. To be noted in this context, the difference between multinational and global strategy indicates that in case of implementing a multinational approach, the businesses are no more confined to the national boundaries of competition but are expanded in the global paradigm, wherein players from around the world tends to affect the operations (Schuler & et. al., 2012). One of the challenges faced by multinational companies is designing an organisational framework through which, J&M can achieve its objectives of international business expansion. Notably, the selection of best strategy is quite essential wherein the implementation of the strategy finally depends on the organisational structure and process. To be noted in this regard, Stopford and Wells developed a model to show how MNCs adopt different organisational structures at different stages of business expansion. The model classifies structure in three types, i.e. international division structure, area division structure and product division structure. International division structure can be applied by J&M, when both sales and production is low. All the activities are accordingly considered to be focused on international division and thus, the structure neglects the domestic domain that can affect the company’s overall efficiency; whereas, in areas division structure, the world is divided into geographic locations depending upon the market for products. This structure is mainly followed by the company’s with narrow product line. In case, the company has wide ranges of products, the product division structure is followed. In this kind of structure, the products are classified under different categories wherein each division is different and independent to each other (Shah & et. al., 2012). In case of J&M, which is a retail company, its operations can be observed as involved in various businesses including consumable items, electronic goods and clothing among others. This indicates that the company has wide ranges of products owing to which the global matrix structure is found suitable for the company. This structure combines the advantages of variety product line, areas operating under business and local demands for the existing products (Shah & et. al., 2012). b) Affects of Planned ‘Global Organisation’ Strategy on HRM Policies and Practices with Reference to International Managers ii) Training and Development To operate in an international environment, the HR department of J&M must involve in various activities like recruitment and selection and training, as the probability of success depends on how it trains and manages the work forces. It is important for J&M to consider human resources as a key factor in developing and surviving in a competitive business market. It is in this context that appropriate training and development of the personnel serves a variety of purposes like transfer of knowledge and skills between the host country and parent country. It also assists to maintain communication between the nations involved in the business. To maintain a global position in the competitive world, personnel are given the opportunity to get trained in different areas. Contextually, it is the responsibility of the managers to ensure that the employees are provided with the opportunity to develop, so that not only their skills are improved but that ensures benefit to the business as well. Managers are also expected to act as a mentor in J&M to motivate the personnel for effective career development, rather than being confined to limited knowledge and skills. The increase in number of organisations operating in the international environment indicates a substantial increase in connections between the countries that would result in cultural differences among the people (Beheshtifar & Ziaadini, 2012). In such a case, effective leadership style is required to be implemented by the leaders, wherein the probability of cultural conflict can be removed. Authoritarian leaders are regarded to have succinct idea of the needs and the steps to be taken and when and how to implement their leadership tactics. This type of leaders make decisions independently and thus, it is often noted that the followers lack opportunities to take part in the decision making process. It is owing to this reason that the decision making process is less creative in case of authoritarian leadership. This leadership style is applicable in case, where there is no time for group decision or where the leader is more knowledgeable and qualified than the members. Democratic style of leadership is also regarded as most effective, as the leaders offer guidance to the followers and also motivate the members to take active part in the decision making process. However, stating theoretically, Laissez-Faire style of leadership is minimum productive as the leaders offer little or no guidance to the followers in decision making. In this case, the followers are free to take the decision among them, while in Bureaucratic Leadership Style the leader manages everything according to the procedures or policies of the company (Schuler & et. al., 2012). Apart from various leadership styles, other factors also influence employee satisfaction and organisational performances to a substantial extent. Considering the work culture of J&M, it is likely to have employees from different family backgrounds with different personalities, owing to which, the leadership style of the manager depends largely upon the individual employees and their responses. Contextually, under such circumstances, cultural awareness training should be designed in order to introduce cultural awareness among the personnel and to practically implement the programme as a guide to remove cultural barrier. It is in this context that the training makes individuals aware about the cultural impact of one nation on another. Cultural training programme also helps to develop a set of skills that is essential for conducting global business and communicating effectively with different cultural teams. This in turn assists the trainees to become competent in solving disputes wherein the inter cultural training programmes build cross cultural competencies in managers and raise the level of confidence within the work environment (Beheshtifar & Ziaadini, 2012). iii) Performance and Reward Management Motivating the employees within the organisation requires a complex framework. In this context, the key factors to be considered by J&M can be noted as reward management system and performance and compensation management system dimensions. IHRM is concerned with compensation of employees in international structure model, as in this model the compensation management system is developed and administered in the headquarters. The parent nation herewith deals with the reward management system wherein there is no involvement from the host nations. Reward system also attracts and motivates the personnel to perform more efficiently, encouraging desirable employee behaviour among them. Maintaining such reward system also assists the company to retain its potential employees (Peltonen & Vaara, 2009). Total reward strategy can be used as a modern method by the managers of J&M that will not only improve the performance level of the personnel but can also act as a key factor in the decision making process, as the employees feel motivated to share their knowledge. Modern reward management system also involves monetary benefits as well as non-monetary benefits to some extent. In other words, motivation is a function of reward system, as it motivates the personnel to improve work quality and encourages learning as well as adapting new skills. According to Maslow’s need hierarchy theory, when designing total reward system, an employee’s multiple needs must be considered that can assist an organisation to reach its planned expectation. Total reward system hereby supports cost saving simultaneously building effective employment brand, which is likely to contribute to both the long run and short run objectives of the business. Individual incentive has greater impact on employee performance, as those employees who contribute more are paid more. However, in some cases, monetary benefits may not act as a motivation factor for the employees. If contingency approach is seen as an unfair practice from an employee’s point of view, it can result into dissatisfaction rather than satisfaction at work (Rahman & et. al., 2013). Correspondingly, with an individual based reward system, the employees tend to perform only reward based tasks while avoiding others. On the other hand, if the reward system is based on performance of employees, it will have a negative impact on the quality of work and team effort. The principle aim of team-based reward is to encourage the type of behaviour that can retain and raise the team performance. The team members are also encouraged to take responsibilities as it enhances problem-solving skills. Nevertheless, problem arises often due to the cultural differences and personal distances amid team members hindering individuals’ potentiality within the team. Merit based pay is a traditional mean of rewarding the employees. Notably, the approach can be successful if a proper system of measuring and evaluating individual performance can be implemented. It is in this context that employees must identify the requirement of their jobs and understand the basis on which their performance is measured. Fairness in performance measurement is also essential for merit based reward system to work successfully. Cost of living allowance can further be considered as another approach to provide monetary benefit to the employees in case of increase in inflation rate. This approach helps the workers to cope with the increase in price of essential items. Adapting this approach also indicates that the company has to bear extra costs for the employees. Apart from all these financial benefits, J&M can also provide non-monetary benefits to the employees. Potential non-financial benefits may include flexible working hours, good working environment, as well as training programmes to enhance the skills of the personnel. Incentive scheme must also take into account that would enrich satisfaction among employees. A balance between financial and non-financial systems is essentially to be maintained to satisfy various needs and interests of the employees (Jiang, 2009). c) The Potential Benefits and Limitations to This Strategy In Relation To the Effective HRM, With Particular Reference to the Potential Impact on the German Operations J&M is a mixture of the polycentric and ethnocentric firm and therefore, has a successful operation in Germany. Although America and Germany, both follow different organisational structures, despite the fact the nations have worked together collectively as a group, enriching the business environment therewith. To be mentioned in this context, Germany developed a dual system of training, where training is provided to the employees within the premises of the organisation, termed as on-the-job training, while training provided outside office premises is denoted as of-the-job training. To be mentioned in this context, the training operations are updated with time and according to the need of the organisation, which are mainly focused on vocational needs of the business. Vocational training through a systematic approach imparts vocational skills, knowledge, competencies necessary to perform skilled activities of the business. Dual training can also be considered by J&M, which is likely to be beneficial for both the industry as well as the people who are involved in training. This kind of training motivates personnel to work efficiently and increase loyalty of the company, being practical and possessing high applicability while working in the company (Jiang, 2009). Mostly trainees favour flexible or single training method, as in some cases, the personnel may not be able to take two varieties of training at a time that may in turn, de-motivate the employees. Consequently, ineffective training may also impose a negative impact on the employees in J&M, affecting their work life along with their performance level. Along with dual training approach, J&M has also provided training through external sources wherein various institutions of Germany have assisted in providing training to the personnel. Training provided by such external institutions involves modern techniques of working and is expected that in such case, it may cause difficulties for the employees to adapt the modern methods of training. Apart from training from external sources, the employees were also provided opportunities for in-house training, where the personnel could learn new methods of working and could apply to their work being in the job with J&M. Such initiatives also widen the scope of betterment in its German operations where onsite training can be provided in different topics including sales training, and various management programmes. In house training involves less cost per trainee as when compared to institution training programmes. It is in this context that the trainee members are not required to travel outside office premises and bear extra costs. Group training can also prove effective for the members to focus on the company objectives to allow them discuss real problems, while on the job training. In house training also encourages teamwork as personnel from various departments holding different job functions are trained together under a common trainer. On-the-job training methods also have disadvantages such as misuse of company resources and lengthened period of improvement in productivity level. Another major challenge the company may have to face when conducting operations in Germany after the changes introduced in its IHRM functions is retention of talents. In such a case, monetary incentive and non-monetary benefits like providing various welfare facilities to employees also act as an effort to retain the potential employees (Dybowski, 2005). Conclusion The recent trend of the global organisations indicates a majority of these participants to adopt various methods and tools for developing a strong culture that is linked with the goals of the company. Most of the practices are in relation with human resource management and leadership. From the report, it was identified that companies use training and development not only as a way to enhance knowledge and skills of the employees but also to manage and solve cultural conflict between J&M and Germany. In the same context, it was observed that on- the-job training as well as external training methods used for leadership development and to build a new organisational culture, based on company’s core principles and business ethics. To compete with other businesses and remain globally competitive, J&M should emphasise creating an effective blend of a mixed organisational culture and formulate different strategies. International human resource management can be considered as the basis of success for any multinational company, like J&M. It is in this context that effective HRM not only plays a vital role to improve employee’s effectiveness to achieve company’s goal but also assists an employee to perform different tasks and to face the challenges from other emerging retail companies. MNCs thus need to adopt strategies and policies those are sufficiently competitive in nature. In addition, leadership competency is effective in managing human capital in terms of encouraging the personnel to perform effectively. Hence, it can be concluded that the type of leadership style followed by leaders is also a crucial factor and responsible in maintaining a balance between organisation, its environment, and structure. References Bartlett, C. A. & Ghoshal, S., 2009. Global Strategies for MNCs. BusinessMate. [Online] Available at: http://www.businessmate.org/Article.php?ArtikelId=13 [Accessed January 21, 2015]. Beheshtifar, M. & Ziaadini, M., 2012. To Promote Job Involvement via Talent Management. Science Series Data Report, Vol. 4, No. 1, pp. 44-49. Dybowski, G., 2005. The Dual Vocational Education and Training System in Germany. Federal Institute for Vocational Education and Training. [Online] Available at: http://www.bibb.de/dokumente/pdf/a23_internationales_dybowski-taiwan_april-05.pdf [Accessed January 21, 2015]. Jiang, Z. & et. al., 2009. 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