Human Resource Management in International Joint Ventures - Assignment Example

Human Resource Management in International Joint Ventures Executive summary International joint ventures present two different business entities from the same or different countries to come together and explore a common business agenda. In instances where a foreign business entity wants to enter a market with making complete responsibility of cross-border transactions, joint business ventures are foreign with a domestic business. International joint ventures are strategic business decisions which assist businesses to tap on the potential available within a distinct market without making full foreign investments which are liable to risks. The decision to engage in IJV must be supported by the right strategic decision making as far as human resource management approaches are concerned. The recruitment of professionals to manage the joint venture must appreciate several cross border issues including cross cultural differences, communication challenges and employee selection approaches. An individual assigned with the role of managing such an entity must have the right qualification and understanding of the cultural differences and the right communication approach in order to mitigate any potential challenges in the future. Introduction The management of joint ventures requires the use of professionals with the right experience, cultural exposure and ability to manage the diverse workforce. In environments where business come together to meet the goals and objectives for which the venture has been established, the right human resource approach must be adopted. Internal and external recruitment approaches are adopted by organizations based on the needs, organizational culture and the pressures associated with the job. In most instances, organization adopts external recruitment in order to bring in people with a wealth of experience, communication skills and ability to handle employees from diverse cultural background Chen, Park & Newburry, 2009). According to the account provided by Quinn Marrow, the challenges that the company has faced since the establishment of the joint venture can be attributed to their decision to use internal managers to oversee the operations of the joint venture. As an organization with internal interests, the company should embrace modern recruitment approaches that consider the professional, cultural and diverse background of the employees in order to address the emerging issues within the joint venture. a) Using your understanding of relevant theory and practice in the areas of human resource planning, recruitment and selection, reward and retention, culture and training, prepare a report for senior management identifying the main problems faced by this company and explain why such problems arise in this type of organization. The management of human resource within international joint ventures is more dynamic and challenging as compared to the formal mergers or intricate partnership agreements. International joint ventures represent a long term collaborative strategy but calls for the development of a variety of human resource approaches. Human resource management that is considerate of cultural issues and employee diversity is important in international joint ventures to ensure the success and continued collaboration of such engagements. As a company, the decision to engage in the joint exploration venture in Australia was considered on economic grounds without highlighting the impacts that it will have on the performance of the employees. The decision to bring on board an internal engineer with extensive experience on the management and culture of the organization was well thought of. However, other important aspects of human resource management within international joint ventures were ignored which contributed to the failure and challenges currently witnessed. A number of human resource approaches are available for international joint ventures which are considerate of cultural differences, organizational objectives and diversity of the employees. The decision to pick a manager to oversee the operations of the international joint venture must consider a number of factors which are likely to affect the behaviour, attitude and cooperation of employees from both side of the organization (Lung-Tan, 2006). The failure of this joint venture as far as proper management and recruitment of top officers are concerned cannot just be associated with the recruitment of Ed Alison to stand in as the general manager of the joint venture. The two companies failed to appreciate the overall approaches adopted in the development of international joint ventures which appreciates the cultural, diversity and capital availability of the two entities (Reuer, Klijn & Lioukas, 2014). The development of an international joint venture musty incorporates a number of approaches and step which are likely to eliminate issues associated with cross cultural management. During stage one of developing joint ventures; the two entities must understand the important issues which are likely to affect the success of the venture (Lung-Tan, 2006). The two companies must first understand the reason for engaging in the venture and the way such a decision is likely to affect its operation, success and organizational culture. Such early planning was absent within the joint venture and this contributed to lack of adequate consideration of the cultural and management differences between the two companies. Every company must understand how the joint venture is likely to improve its human resource management approaches in order to eliminate the challenges associated with disagreement and failure to manage diversity (Chang, Chung & Moon, 2013). Once the joint venture is formed and agreements between the tow companies signed, human resource management, recruitment and selection approaches must be streamlined. This decision contributed to the challenges faced by the venture as the inconclusive recruitment approach failed to appreciate cultural and managerial style differences between the two companies. Though the company has a home field advantage over the partner, an overall manager will be tasked with communicating and supervising the operations and work of all employees from the two companies (Kist, 2004). Without proper cultural understanding and communication skills, the management was bound to face numerous challenges, sabotage and failure to cooperate among the employees. As a home company with the home field advantage, the entity should have shared the business and cultural environment of Australia with partners in order to move the advantage to the partnership and benefit the international joint venture as opposed to one entity. Though the venture was signed and particulars agreed between the two companies, Quinn and his company were interested in the benefit they are likely to gain from the venture as opposed to the success to the success of the joint venture (Lung-Tan, 2006). As a result, consideration of a manager from a different organization was not considered as the company believed that such a decision will take away the advantage they possess. The success of joint ventures is influenced by the commitment towards the venture and individual company entities as was demonstrated by Quinn. The board of directors in an environment where the operations and success of the venture is shared will be made equally of employees from both organizations irrespective of the country of establishment. Though the chief operating officer or the general manager can be sourced from the host company, such an individual must not necessarily come from the company. Knowledge and skills about the management of joint ventures, diversity, cross cultural communication must be considered before such a decision can be made. As the joint general manager, Alison is expected to manage and oversee the operations of employees from all companies. The company had the discretion of appointing Alison into the position of managing director, but it failed to apply cross cultural training before deployment. Alison has worked for the company over the years and has experience on its human resource management approaches, organizational culture among other objectives of the business (Yan, 2003). His commitment to the company despite the high turnover that it has faced demonstrates that he is loyal and determined to give the company the best of his efforts. He was qualified for this position but his low cultural aptitude score was overlooked in his appointment, a situation that significantly contributed to the failure. Though he passed on other areas of the recruitment tests, the company failed to appreciate the importance of cross cultural management in joint ventures by assigning him managerial roles despite his weaknesses (As-Saber, Dowling & Liesch, 2008). To mitigate the low cultural aptitude test, the company should have enrolled Alison for cultural training, together with other employees from the company and the other company who will be engaged in the management of the joint venture. Cross cultural training is an opportunity to improve the understanding and skills of employees to work in a diverse environment and enhance the communication skills. As an individual that has poor communication attributes based on Quinn’s assertion, Alison was bound to meet challenges in supervising the function of employees from the partner organization whose language of communication is diverse (Yan, 2003). The decision to engage the services of Alison in the management of the joint venture was also contributed to by the fact that the company was unwilling to improve its reward and salary package to the position. Though more than 20 people expressed interest in the position, they later declined when the reward and salary proposal was made by the company (Demerens, Le Manh, Delvaille & Pare, 2014). Based on their estimate, the salary was low and could not be enough for the position which has high expectations, pressures and the need to coordinate the functions of the two companies. In joint ventures, the salary package should be on a range of expatriates in order to attract the attention of professionals with the right skills in the management of cross cultural and diverse work environment (Schuler, 2001). In a joint venture, employee and employer expectations vary which affects the pressure on the managers and senior employees in the organization. Quinn and his company must appreciate the need for better and commensurate employment package that motivates and increases the commitment of the employees. The failure of Alison can be attributed to the low employment package which failed to improve his motivation and efforts towards ensuring that the joint venture meets its goals. b) Could a better system of appointment have been devised for this post? If so, what form would the system take and why? The right personnel selection approach is important in the success of any joint venture and must therefore be approached with knowledge of the different models and their benefits or risks. To remain operational and successful, joint venture partners must adopt the right selection approach, provide the best compensation package and adopt the right recruitment model for the employees (As-Saber, Dowling & Liesch, 2008). The best manager to recruit must understand the dynamics of international joint ventures, regional bureaucracies and the impact of cross cultural issues and diversity in the success of the entity. The company should adopt a joint recruitment process in order to ensure that the person assigned the responsibility of managing the business has the right skills, abilities and experience with the management of international joint ventures. External sourcing is the best approach for the recruitment of top ranking employees to manage international joint ventures. With an external sourcing approach involving all partners in the venture, an individual with the right qualifications, skills and experience will be selected which will improve the success rate of the venture (Gutterman, 2009). Joint entities have wide needs and desires which are likely to create tension if the recruited individual serves the needs of one partner while ignoring those of others. Failure to communicate and engage employees from both sides will also create internal disagreement which is likely to cause tension and lack of cooperation among employees. External sourcing therefore allows the partnership to bring on board an individual with the right skills, experience and ability to manage the venture but no vested interest in the success of either of the partners. c) How would you tackle the problems that exist for both the short and long term? Tackling the problem in the international joint venture is critical in the success of Quinn’s entity and the foreign partner that is an entity to the venture. A number of approaches can be adopted in the process of improving the success of the joint venture and eliminate the issues that have so far crippled the needs of the partnership. First, the right human resource management approach is necessary in ensuring that the venture exists in a cohesive manner with a common human resource management approach. Developing a common recruitment approach by the two companies will eliminate issues associated with cross culture and diversity and improve coordination and cooperation among the employees (Gutterman, 2009). As an international venture, cooperation and commitment is important in the success of the objectives and goals of the venture as a common and shared plan will be developed. The second issue which has been attributed to the current challenges is failure to develop the right compensation package which is competitive and attractive. An international joint venture must attract employees with the right skills, knowledge and experience in order to succeed. However, this is unlikely to happen if the company fails to adopt a competitive and attractive reward and salary scheme. In order to improve its rating and attract the best employees, the joint venture must revise its package for all employees including the managers and low levels employees who need to be motivated to improve their commitment. Conclusion Quinn’s decision to engage the services of Alison in the management of the joint business ventures was supported by the desire to maintain the organisational culture and reduce costs associated with recruiting a new person. However, Quinn failed to appreciate the dynamics of international joint ventures by considering the performance of Alison on cross culture management and communication during the interview conducted by the outsourced company. Recruitment from a different company may be an expensive venture but presents an organisation with the opportunity to bring on board an individual with new capabilities and experience in the management of international joint ventures. References As-Saber, S, Dowling, P, & Liesch, P., 2008, The role of human resource management in international joint ventures: a study of Australian-Indian joint ventures, International Journal Of Human Resource Management, 9(5), pp. 751-766. Chang, S., Chung, J., & Moon, J., 2013. When do wholly owned subsidiaries perform better than joint ventures?’ Strategic Management Journal, 34(3), pp. 317-337 Chen, D., Park, S., & Newburry, W., 2009. Parent contribution and organizational control in international joint ventures, Strategic Management Journal, 30(11), pp. 1133-1156. Demerens, F, Le Manh, A., Delvaille, P, & Paré, J., 2014. An ex ante analysis of change in reporting methods: the example of Joint Ventures, Gestion 2000, 31(4), pp. 65-89. Gutterman, A.S., 2009. A Short Course in International Joint Ventures: Negotiating, Forming, and Operating the International Joint Venture, Petaluma, CA: World Trade Press. Kist, R., 2004. Human resource management for international joint ventures: expatriation and selective control, International Journal of Human Resource Management, 15(1), pp. 1-16. Lung-Tan, L., 2006, The Influence of Cultural Factors on International Human Resource Issues and International Joint Venture Performance, Journal of American Academy of Business, Cambridge, 10(1), pp. 192-196. Reuer, J., Klijn, E., & Lioukas, C., 2014, Board involvement in international joint ventures, Strategic Management Journal, 35(11), pp. 1626-1644. Schuler, R.S., 2001, Human resource issues and activities in international joint ventures, International Journal of Human Resource Management, 12(1), pp. 1-52. Yan, Y., 2003. A comparative study of human resource management practices in international joint ventures: the impact of national origin, International Journal of Human Resource Management, 14(4), pp. 487-510. Read More