International Human Resource Management - Standardization of Pay and Conditions of Work - Literature review Example

Issues relevant to IHRM Place Introduction While the international business environment may be associated with the complicated situations where different decision making processes are involved and it is not always possible to plan the unexpected outcome, there is a great role of international manager to do one’s best in managing changes and control the contingencies in order to comply the external conditions of business (Sengupta & Bhattacharya, 2007). These contingencies bring in complications with respect to managing organizations, especially in the international context. The reason for that is explained by the specific environment as cultural as geographical that can create certain limits to the foreign business and guide at the same time parameters needed for effective functioning of the organization. To the large extent, cultural adaptation is vital as human interaction predisposes the effective business performance. Hence, international human resource management is relevant in learning how to manage people within the organization and also in establishing that meaningful relationship with other stakeholders that enable organization to gain acceptability as the ethical and value-sensitive organization in the country is operates (Aswathappa, 2007). However, there are many issues connected with the managing human resources in overseas locations, hence, organizations should examine such issues and what creates them. The intentions of this paper is to present the review of the relevant literature and its implications for the IHRM aspect and to critically portray various issues regarding International Human Resource Management, in particular standardization of pay and conditions of work, pay and reward in relation to different types of employees and to approaches and practices, country and firm level differences in employment regulations as well as differences in cultural values. Literature review Numerous literature researches are linking the notion of globalization with the fact that it has an enormous impact on the way businesses manage their workforces. Schuler, Budhwar and Florkowsk (2002) argue tighter international connections on the global scale have provided most companies with the opportunities to compete with each other on an international market and that also changes the way human resources are managed. Kidger (1999) states that practices of human resource management became recognizable due to the increasing option of achieving sustained competitiveness among firms in the challenging and rapidly changing international business environment. Moreover, it became also important for multinational companies to live effective human resource management practices since quality of employees is considered as the only sustainable source for that competitive advantage globally. However, in terms of international human resource management, the task for HR experts is more complicated regarding human resource, since many issues are associate with the different stages of internationalization and comparative analysis of different countries’ systems in terms of how they manage human resources. Thus, internationalization of an organization is considered much more than manufacturing of products and services through effective management of workforce (Briscoe & Schuler, 2004). The researchers argue that internationalization enhances the complexity of the international company to deal with unstructured and often paradoxical circumstances within certain country and business environment. Such external factors as the type of government, economy and impact of trade union in the host country are essential factors that make international HRM to deal with. Jackson (2002) states about the connection of Iinternational HRM with the concrete business strategy of an organization, its human resource strategy and practices of human resource that influence the diverse environments and come under the impact of these environments as well. The modern diverse environments are culture, legislation, patterns of ownership, employee involvement, bargaining arrangements, labor markets and education, accordignt to Jackson (2002). One of the main themes in the literature of International HRM reflects the notin of an adjustment (Edwards & Rees, 2006). It is the prerequisite to the social and psychological well-being of human resources that are managed in the international level. While being managed by effective international managers, these adjustments concern the abilities of employees to be adaptable, flexible and with an open mind; they are required to speak any or specific foreign language and be able to make friends with other nationalities despite the skin colour, nationality and ethnic belonging. At the same time Harris, Brewster and Sparrow (2003) consider that for an international company’s representative to go overseas, it means that a lot of challenges can be met in exploring a new region and new adjustment occur in terms of a new lifestyle, language, employment conditions and operations of human resource activities. Schuler (2000) states that along with the culture peculiarities that influence and shape business structures and human resource management practices, business in the international level should be performed scrupulous in staffing and to take into account different cultures and backgrounds when managing the international human resources. This is exaplained by the globalization to impose a great movement in the direction of standardisation of certain elements of management systems within multinational corporations where some elements of human resource management will make an impact on the local culture, institutional arrangements and labour market conditions and practices, which at the same time, will add certain pressure for divergence with the practices brought (Schuler, 2000). Issues relevant to IHRM It is considered (Schuler, Budhwar & Florkowsk, 2002) that International HRM issues are best conceptualized in terms of needs and challenges where multinational specialists should consider how to be sensitive about the special requirements of the indigenous human business environment without interfering their coordination within the internal operations of local units that are set goals to pursu global strategies. Since these issues of integration are usually facilitated by numerous HRM activities, they constitute a critical component in International HRM (Collins, Wood & Caliguiri, 2014) consider that International HRM issues are successful replication of IHRM practices and that human resource managers should be aware about what employees need and want in different countries and how they should be treated, including wotking conditions and standardization of their processes (Plessis & Beaver, 2008). One of the main challenges in managing international human resources is the employee reward that arise when support corporate activity across international boundaries is organized. When businesses operations are commercially governed outside the multinational country of origin, there appears an essential need in balancing commercial purpose and domestic activities and conditions of economic globalisation (Perkins & White, 2008). International HRM interest has two different areas of managing pay and reward of international assignees. This is because there are different pay and reward conditions in the international level as well as different reward practices in the specific countries. Gilmore and Williams (2012) are focusing on the IRHM of international assignees by multinational companies with debates about pay and reward. This is called by the incentivizing and managing the performance of assignees in the intenational organization and managing their reintegration into the home country when the overseas assighment is finished. However, due to the lack of research about pay and reward practices in different countries; it is quite complicated to make single outcomes in this area of International HRM. Thus, in China employees are accommodated by the company, they are fed by means of company resraurants and are cared by the medical serices provided by the company, hence, the reward management is influenced by the legacy of government in connection to the organization practices that together ensure the welfare package of an employment system. In France much is done by the organization incentives in system of pay and reward. Many Asian countries understand that in the age of globalization, their success and well-being depends mostly oon the high technology and productivity of people who are able to manage that technologies. For that reason, pay increase and reward and motivation of employees stand on the first place for company’s ability to be achievement-oriented. In such countries as Japan, Singapore and Korea human resources initiatives are directed toward incesting into skills development and recognition og higher earnings to be essential in the company’s striving to build successful business and be more known in the knowledge based industry (Gilmore & Williams, 2012). As it was stated earlier, motivation increases employees’ performance as well as organizational performance. While such psychological force directs employees’ behavior in achieving organizational goals and provision of better customer services and thus improved productivity, Taylor (n.d.) considers that organization should provide monetary and non-monetary rewards to its employee to motivate them for the common organizational success. Paauwe and Boselie (2008) consider that motivated employees are the main factor in organizatio’ willingness to reach the desired level of performance, since motivated workforce will make all possible  to perform the best results. The other challenge for the International HRM refers to the work with top management, the practices of which are directed on setting of a particular mind set. Such international mindset requires IHRM to establish formulations and implemention of HR policies that would help to develop internationally oriented staff (Bartlett & Ghoshal, 1992). It is also a channelge to prepare specialists that would develop such practices in the international level and would be able to implement them. These specialists should be high potential managers, whose incentive would increase the international perspective, would be able to control subsidiaries of international operation, transfer technology and set up new operations (Rugman, Collinson & Hodgetts, 2006). It is also the predisposition for any successful multicultural organization if its International HRM would enable managers to differentiate success and failure in the international business. There is a strategic position of any multicational company that all human resources will be managed well. This concerns the process of recruitment, selecting, training and development of employee strategies that are directly connected with these strategic positions. While global business strategy is planned ahead, IHRM is able to control and manage practices that would enable HR specialists to assign the best candidate to overseas operations. In the context of Internationam HRM, practices of compensation that facilitate in company’s striving to motivate and retain employees in different countries change as these countries have their cultural differences and local situations as to the compensation policies (Cieri, Fenwick & Hutchings, 2005). The global business growth creates certain challenge to IHRM and HR managers in running international operations with the diverse political systems and customs of every particular country. HR managers run into different economic climates and tax policies that have different views on the compensation practices. However, according to Cieri, Fenwick and Hutchings (2005) these differences create both as problems and opportunities for IHRM. There is a more traditional approach in functioning of pay and compensation policies that are aimed on attraction, retaining and motivation of employees. It has not changed through decades. However, the emphasis on the attraction and retention of skilled employees has shofted the functions of internationsl HR managers. Modern international companies should provide their skilled employees with numerous compensations in order to achieve companies’ goals and make the international business operations successful (Cieri, Fenwick & Hutchings, 2005). In times when countries differ in their norms for employee compensation, IHRM should carefully consider the motivational approaches of incentives and rewards among the international community. Thus, for people of U.S. money is the driving force and the best reward and compensation for the work performed. However, such financial incentives as prestige, independence and ability to influence others are also among the strong motivators. Having business in other cultures, international companies should pay more attention on such notions as respect, family, job security and a satisfying personal life as well as social acceptance or power to motivate employees. Tiwari (2013) considers that alternatives to money have also the power to rule the values of culture and keep employees within the international organization to be motivated and meet IHRM goals. Multinational companies and their HR managers should build a pay package based on the meeting of corporate goals at home and abroad, keeping employees within the international company motivated and complying with the company budgets at the same time. Such strategic perspective on the connection with IHRM and strategy of the organization is so critical for many multinational companies’ success. The well-being of IHRM would depend on the companies’ abilities to develop a highly trained, flexible and motivated international workforce. It will also create an advantage relative to companies’ competitors if that workforce will be managedstrategically to facilitate corporate goals. It is considered that cross-cultural capabilities to adjustment, different organizational and workforce values as well as differences in management style and employees turnover crease serious obstacles for IHRM. However, managing human resources in different cultures, economies and legal systems is also a challenge that makes a lot of HR professionals to think of new strategies and ways out for better functioning and performnig of workforce (Briscoe, Schuler & Tarique, 2012). When well managed, employees are paid dividends in forms of benefits and compensations. To make cultural adjustments to comply with the global business requirements, HR managers should be knowledgable about the nature and stability of political systems that vary from one country another. Thus, according to Briscoe, Randall and Tarique (2012), U.S. companies and organizationa in other developed countries are trained to a relatively stable political system and despite the possibilities of presidents, prime ministers and governors to change the legal systems, global corporations are easy to adjust to the consistency of that or new system. However, in many other nations, the turbulence of legal and political systems makes it difficult to international firms to decide strategically when to comply with certain laws and regulations and when to ignore them. Due to this, IHRM in the developing countries and where the legal system undergoes changes comes under the unstable position (Brewster 1999). However, as the governments try to move to a more mixed model of rulling the organizations, it usually uses unemployment for decreasing enterprises from overmanning with too many employees. In such a case, motivational and reward policies differ from those countries where employees are valued for their skills and capabilities. Lesser-developed nations create jobs by means of foreign investments, hence, they obtain essentially cheaper labor rates than in Western Europe, Japan or the U.S. (Lillie, Çaro, Berntsen & Wagner, 2013). At the same time, international companies became more aware about the profits in developing nations to be determined by currency fluctuations and restrictions on transfer of earning. In the developed countries of Europe, especially in the period of crisis, employment restrictions and wage levels remain high. Therefore, many European companies move their businesses and jobs to countries with lower wage and tax rates (Wright, 2007). Conclusion and recommendations There are many aspects of IHRM that differ it from domestic human resource management. While it is a more complex unit, there are wider issues to be aware of, and the international human resource manager should consider all multi-national situations, differences in culture of people, numerous laws, as well as expectations of pay and conditions of work from local staff and be able to integrate best IHRM practices and procedures throughout the performance of the global enterprise. It is also important to ensure that HRM initiatives will have the best possible working relationship with the employees of the international company. The standard set of favourable working conditions such as pay and compensation throughout multi-national companies are important for employees. It is however, an uneasy task for HR managers to handle the pay packages of staff in the large companies where earnings are at different rates and employees types is different which require every concrete situation to be well-managed. Friedman (2007) considers that with the pressures of globalization to continue to increase, it creates the need for capable IHRM specialists and company leaders to deploy across borders and implement different IHRM practices toward the local host country, and comply them towatd laws, customs and values. There is a need for empirical research into actual situations at international locations in order to build theoretical background and practice the new initiatives of IHRM. Such research in terms of IHRM is recommended by the literature, however, in practice, every particular situation where HRM is involved and every nations’ peculiarities should be taken into account when HR managers will think of the new strategies for better employees’ performance. So far, the International Human Resource Management faces a lot of challenges that are mostly connected with the lask of perfect benchmark that would enable them with the necessary information about how to manage people in this or that nation. References Aswathappa, K. 2007. International Hrm, Tata McGraw-Hill Education Bartlett, C., and Ghoshal, S. 1992. Transnational management: Text, cases and readings in cross border management, Boston: Irwin. Briscoe, D., Schuler, R. and Tarique, I. 2012. International Human Resource Management Policies and Practices for Multinational Enterprises, 4th ed., Routledge, [pdf] Available at: http://samples.sainsburysebooks.co.uk/9781136720314_sample_826513.pdf [Accessed on March 9, 2015]. Briscoe, D. and Schuler, R. 2004. International Human Resource Management: Policy and Practice for the Global Enterprise, Psychology Press Cieri, H., Fenwick, M. and Hutchings, K. 2005. 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