Main Differences between Domestic and International Human Resources Management - Assignment Example

HRM in MNE The The The The Compare and contrast two (2) main differences between domestic and international HRM. In the globalization context, international HRM activities differ materially from domestic activities. This is because domestic HRM only deals with one national boundary, whilst international HRM operates across national boundaries. In the book by Koohang, Harman and Britz (2008), domestic or national operations of Human Resource Management are different from country to country because of the factors of HR competence and roles, institution, culture, as well as business structure. Therefore, differences are primarily referring to the way they accomplish administrative functions in different settings. Broader Perspective Because of the diversity of workers in a global environment, human resource managers are supposed to have a wider view on all the human resource operations to ensure equity in the treatment of different groups (Dowling, Festing, & Engle, 2008). That is, a wider view that all expatriate workers should receive distinctive benefits such as expatriate premium and health insurance for taking on global assignments. More Involvement in the lives of Employees In the case of domestic HRM, involvement with the personal lives of employees is primarily confined to matters such as offering employee insurance schemes as well as assistance when relocating. However, when it comes to the family members, the involvement is limited. This is not the case with companies operating globally ( Hislop, 2013). International HRM must involve wider compensation, including recreational programs, transportation, children education, housing, employment of the spouse and family healthcare for local staff and expatriate. 2. Examine two (2) of the factors that drive standardization of HRM practices. Determine whether it is advantageous for an MNE to adopt a worldwide corporate culture for each of its subsidiaries. The aim of international standardization of HRM operations and practices is primarily to reach transparency, consistency as well as an orientation of geographically fragmented employees around common objectives and principles. The two major factors driving standardization comprise: Strategic issues In this case, multinational companies operate in an environment of all-inclusive conditions, including the external aspects of industry, region, nation and inter-organisational alliances and networks (Dowling, Festing, & Engle, 2008). These factors not only influence on international HRM practice and strategy, but as well on MNE goals and objectives. The organisational context This includes different organisational structures such as sales and export subsidiary to more intricate aspects such as the hierarchy and matrix, and their influence on human resource management. In addition, appropriate HRM practices and activities can support the interrelation between different groups and units of the MNE ( Hislop, 2013). The bottom line is that if HRM practices and operations do not match local values and norms, they are likely to fail in their endeavours. Based on the above factors, it is not advantageous for the MNE to adopt a worldwide corporate culture for each of its subsidiaries. This is because it is hard to change the culture of people in their respective countries, for instance, if the MNE is based in the United States and operates a subsidiary in the Asian region ( Koohang, Harman, & Britz, 2008). One thing for sure is that the two cultures are not the same and neither worldwide culture can manage to change anything. The American culture is highly individualistic and centred on top management of the company, but the Asian culture is collective in nature and centred in teams. Therefore, trying to change these with a different culture will be detrimental to the business. 3. Examine the role of the subsidiary. Compare and contrast global innovators, the integrated player, implementers, and local innovators as subsidiaries. Determine the best role for a company that is just beginning to expand internationally. Provide a rationale for your response. Every subsidiary is given a mandate or responsibility by their parent company ( Hislop, 2013). The mandate essentially defines the kind of activities the subsidiary is supposed to perform. Taking the example of EMC, its subsidiary in Ireland serves as an innovation centre where the parent company undertakes major R&D processes, and product testing. ‘Local innovators’ are primarily characterized by minimal knowledge transactions between different units of the MNE. Subsequently, local innovators are likely not accountable for businesses carried out by other units, and the performance advantage of local innovators does not depend on the cluster of larger subsidiaries. As subsidiaries, local innovators are measured on the basis of performance outcomes and not behaviour controls. In contrast, ‘integrated player’ subsidiaries require more support from their parent company in the form of a horizontal integration (Dowling, Festing, & Engle, 2008). On the other hand, ‘Implementors’ primarily apply knowledge obtained from other units or subsidiaries of the parent company. The bottom-line is that in a multinational company, not all units contribute significantly as competence centres with particular knowledge. Finally, ‘global innovators’ are characteristically self-sufficient particularly in their own knowledge creation and development, but have a great duty to share their knowledge creation with other units within their operations. The best role of a company that is just beginning to operate internationally is to explore ways of fitting into the local culture. According to Hislop (2013), a multi-national company entering a new country or market may face unfamiliar legislations, institutional procedures and regulations. Foreign companies collaborating with domestic or local partners seek to make use of their local knowledge and information. Companies must also adjust to how governments and buyers will react to setting up local production facilities or making use of the already available local suppliers (Dowling, Festing, & Engle, 2008). Furthermore, informal requirements that local customs, culture, as well as beliefs significantly impose are usually less obvious to the MNE. Even if the current strategy of the company remains important in the new country of operation, the capabilities and processes that supported its operation in the home market may not work well in the new setting. In addition, the level to which local variances will matter for an MNE also depends on the kind or type of business being carried out by the company. Therefore, the main role of the new company will be to find ways of fitting into the local culture, this includes laws, regulation and preferences of both employees and the target market. 4. Analyse two (2) of the factors that drive the localization of HRM practices for an MNE. Determine two (2) advantages of the localization of HRM practices. Type of Industry Essentially, for companies in a multi-domestic industry such as retailing, insurance and distribution, human resource management practices are mainly domestically oriented in both structure and orientation because the competition is fundamentally national or local ( Hislop, 2013). In this case, IHRM services may be required occasionally. Senior Management Attitudes In business, the final variable that differentiates international and domestic HRM is the senior management’s attitudes. When operating globally, senior managers are supposed to think internationally ( Koohang, Harman, & Britz, 2008). However, for some reasons such as inward looking, ethnocentrism, cultural insensitivity and inadequate information may result in the failure of the firm to develop international orientation amongst staff managers. Given such situations, business leaders may tend to overlook or minimize the variances between international and domestic settings, and mainly concentrate on the domestic aspects. Advantages of the localization of HRM practices First, localization enhances competition in the local market. There are some industries such as retail where the company must adapt local aspects to compete. Therefore, by localizing their HRM, the company is able to tap in local factors that promote its competitiveness. Second, it enables eluding of conflicts with both employees and clients. When operating in countries that value their culture, it can be detrimental for the business to introduce another culture. Wal-Mart is a good example. Their operations in China have been affected for the better part because it failed to adapt to local HRM practices. Employees have sued the company for not following the local regulations and laws ( Hislop, 2013). 5. Determine the impact of the culture and institutional context (environment) on: 1.recruitment and selection Most multi-nationals rely on the recruiting or hiring agencies to hire employees for them based on specifications ( Hislop, 2013). In this case, culture plays an important role; for instance, in Arabian context, all senior positions are supposed to occupied by men, and not women. 2. Training and development Training is very important for any company. Other companies hire or attract established employees who have enough experience from other companies ( Koohang, Harman, & Britz, 2008). Others such as Apple have their own centres where newly-hired employees, trained, and existing employees are developed. 3. Compensation Culture is an important factor to consider when it comes to compensation. In the Western culture, individuals are recognized and compensated for their accomplishments in the place of work. However, in the other cultures such as the Asian culture, compensation is given to the entire team as employees work in teams (Dowling, Festing, & Engle, 2008). Companies also may determine the type of compensation to give. Some companies give monetary compensation, others give non-monetary compensation. Non- monetary compensation may take the form of reserved car parking, scholarships for their children, paid holidays, and souvenirs. 4. Task distribution In most companies, project managers or supervisors are responsible for task distribution to employees. However, the culture plays a huge role in this process. People from same culture are likely to be assigned duties in a similar place to avoid conflicts. This is because; there is a likelihood of misunderstanding one another if the cultures are clashing. In the Western cultures, there are certain things that have completely different meaning when used to people from other cultures. For instance, direct confrontation is allowed in Western culture, but in the Asian culture, it is not allowed ( Koohang, Harman, & Britz, 2008). In addition, using jokes is a common feature in the Western culture, but in the Asian culture, it is only reserved for people who are close such as friends and family members. Therefore, culture and the organizational context play a huge role in the distribution to tasks to individual employees or team members. References Dowling, P., Festing, M., & Engle, A. (2008). International human resource management: managing people in a multinational context. London: Thomson Learning. Hislop, D. (2013). Knowledge management in organizations: a critical introduction. Oxford: Oxford University Press. Koohang, A., Harman, K., & Britz, J. (2008). Knowledge management in organizations: a critical introduction. Stanta Rosa, Calif.: Informing Science Press. Read More