Human Resource Challenges in Multinational Companies - Literature review Example

Human Resource challenges to individual and organizational performance in a multinational company and their solutions. Human Resource Managers in Multinationals are presented by a whole different set of challenges as compared to their counterparts in localized companies. Their organizations are large, more open to public scrutiny and characteristically multicultural (Darling & Fogliosso, 2004). Here are some of the challenges. Work place conflicts Work place conflict management is a common phenomenon especially in companies that have a multicultural workforce. The conflicts in the work place are major concerns for human resource managers in today’s work place. They lower the productivity of the employees who feel victimized in the conflicts and may result in unproductive counter-behaviors as a way of expressing dissatisfaction (Ayoko, charmine & Hartel, 2003). The employees in an organization and a multinational for that matter are supposed to work as a team in order to deliver the best results in their activities. When there is a conflict then this cannot be achieved since there lacks coherence and coordination. According to the research by Ayoko et al, (2003), Conflicts should be viewed as a communication barrier which reduces the efficiency that can be achieved when people coordinate their activities in the company (Darling & Fogliosso, 2004). In light of this understanding it is therefore important that the human resource manager in a multi national be concerned about workplace conflict. The management should go a step further to put measures in place to deal with the conflicts in a professional manner that will be for the ultimate benefit of the company and to the individuals involved as well. According to Darling & Fogliosso, (2004), conflicts in the workplace are fueled by among other things; poor description of roles in the company such that roles overlap and nobody knows exactly what is expected of him; lack of a code of conduct to guide the behavior of all the employees in the company including the top management; diversity in the work place in terms of cultures, age, income, gender and religious beliefs can also be a source of conflict. In his view Kim (2007), multi nationals operate in many diverse environments in the countries they have set shops and as such have a unique workplace scenario that comprise of a diversified workforce. This then calls for a skilled conflict resolution and prevention approach from the side of the Human Resource Management and the company. According to Kim (2007), the first step to solving a conflict amongst employees in a company is to acknowledge that there is a conflict and not assume it is just a small event common when people are together. After the human resource manager has acknowledged the existence of the conflict he should view it as an opportunity to improve the relationships of employees by successfully identifying the source of the conflict without having any preconceived notions or biasness. Darling & Fogliosso (2004) are also of the opinion that a critical examination will unearth what are the issues in the conflict. Showing a concern for the issues expressed by the parties is important as it assures the employees of fair treatment from the HRM. It is therefore important that impartial investigations into the issues are conducted. When the conflict sources are identified the first approach should be not to lay blame or victimize individuals but rather to look for a policy framework that will solve the problem and minimize chances of its occurrence in the future. This way the management will have adopted positive attitude that will improve the productivity of employees as individuals and also as a team. Recruitment of expatriates Multinational firms have their presence around multiple countries in the world or states within a large country like the US or Australia. They have to occasionally fill top management positions in some countries or stations as they expand their reach or if they want to effect some changes into the branches due to low performance of the current management. One might take it to be a very simple task considering that there are a lot of qualified management graduates in the world today that are not employed and are ready to take a challenge just to make an income. But it is entirely opposite for the multinationals as they are faced with a different set of challenges in relation to getting the right people for the job. A study by Anderson (2005) points out that one of the challenges is getting somebody with a mix of competency and interpersonal skills to consider for the assignment. While it is easy to get a competent person in terms of the technical skills that the management is looking for, it is difficult to find that the same competent person has the desired interpersonal skills that will enable him relate well with new people who might not necessarily subscribe to his culture and work ethic (Anderson, 2005). However as a human resource manager I can successfully overcome this by looking within the company to identify competent individuals for the position, those who understand our operations as a company and our way of doing things not forgetting the protocols. The individuals must also have the right technical skills. I can asses his/her profile in the company to review his/her interpersonal skills. Huo, Huang & Napier (2002) in their research suggest that the candidate should be a person who is proven to work along well with others in the company and has excellent organizational skills. In addition to this he should have a record of posting good results when on a similar mission in the past even if with the previous employers. Another challenge that is most common and probably the biggest concern for the expatriates are the family concerns. Anderson (2005) research indicates that 94% of failed expatriate missions could be attributed or related to dissatisfied spouse and children. As a matter of fact the missions have to disrupt the normal family life of the individual to be considered as he/she has to either relocate with the spouse or be left behind and cope with the new state of affairs. Both options have their own set of challenges. Study by Huo et al (2002) indicates that spouses who leave their partner behind are prone to having low motivation in their job if the other spouse is unable to cope with the separation. Some suffer culture shock and interruption in their social lives. The other options of the whole family relocating, means that they have to take their children with them if they have any. Therefore they have to introduce them to new cultures and schooling systems (Anderson, 2005). As a human resource manager this is a major concern which I can assess by informal or formal interview of the candidate to know how they can cope with that reality. I can have an informal session with the other spouse to understand their concerns since including them is not usually advisable due to the legal implications involved: it is viewed as discriminatory in nature (Anderson, 2005).according to Anderson, (2005), the practice is to generally involve the candidate and the spouse later to facilitate their preferred options and take care of the legal aspects of the exercise. While it is important to take care of competency first in the case of recruiting expatriates for multinationals it is as well vital to asses the emotional capability of the expatriate to know how well they can be able to handle it and post the best results for the company. It is as well important that the family issues in play be put into consideration. To know whether they have had such an experience and how is it likely to impact on their lives. Remuneration and benefits Remuneration and benefits to employees is not only a concern of the finance department of a company but as well a concern of the human resource management of a company. According to Flanagan, (2006), Human resource department has to balance between three things when hiring people for the company. First they have to stay within the stipulated wage limit as outlined in the company’s remuneration policy. They have also to look for the best skills and talents in the market for the company not necessarily being guided by their payment requirements. Then they have to consider the payment demands of the persons they want to hire or repatriate for a mission. Dowling, Festing & Engle, (2008), it is a more difficult scenario for multinationals as they operate in different territories that have different regulations as far as employee benefits and remuneration is concerned. To keep employees motivated and they need to feel that they are treated equally like anybody else in the company Dowling et al (2008). For employees who are working in environments with hardships they expect that the company has to remunerate them at least above their counterparts working in better environments such as big cities with better standards of life. The company might therefore be incurring higher expenses in human resource than it intended to. Further more it may serve as a source of division to have different salary policies within the same organization Dowling et al (2008). It is a challenge to balance between what the company is making in a certain region and how much the company should be paying the employees in different regions (Flanagan, 2006). This has led to migrations of multinationals to cheap labour markets like China and India where there is cheap labour and therefore getting the employees motivated is not difficult unlike in the western world where the labour costs are very high coupled with government restrictions (Flanagan, 2006). As a human resource expert I would put emphasis on how much the company is set to gain from its operations in a certain area. I would then research the average pay in the country or region. This way I will know just how much is enough to get the employees motivated and at the same time make a profit for the company. If we will have expatriates in these areas then also their remuneration should include just enough hardship allowance and compensation to motivate and encourage them to work for the company. Globalization and workforce A multinational most definitely operates in different areas where there are different sets of people with their own cultures and value systems.according to Flanagan, (2006) & Groschl, (2011), one of the biggest challenges is for a company to introduce its own kind of culture to a subsidiary of the company since it was successful in another area of its operation. The different subsidiaries are faced by quite different environments such as the skills and attitudes of the employees they have employed. An organizational culture that works in one area might not necessarily work in another area Kim, (2007). Human resource managers usually take a lot of time to understand the values and attitudes of the employees they have to manage. According to Groschl, (2011), it is inappropriate and extremely difficult for an overall Human resource manager of the multinational to impose an organizational culture into the subsidiary. In many countries there is usually a limit to just what percentage of the workforce in a multinational should be foreigners (Groschl, 2011). This in itself is a limitation to the company in terms of choosing the employees from their base countries who fit in perfectly to their preferred organizational culture. In light of this understanding it is therefore an appropriate approach for the overall human resource manager to understand the different sets of organizational challenges in the subsidiaries and modify them incrementally to conform to the overall organizational behavior of the mother company. The key consideration which is in line with Kim, (2007) views is that the core values of the company are maintained and that quality aspects are taken care of in as far as employee participation is concerned. the human resource manager should take time to understand the cultures and values of all the communities that the company operates in this way he/she will custom make policies for the company and have an idea of where to find difficulty in implementing organizational policies. Diversity challenge One common characteristic with multinationals is a diversified workforce in terms of race, gender, religious beliefs, age and other factors. According to Barak, (2007), the biggest challenge for human resource managers in multinationals is managing the diversity to bring out the best from the workforce even though major differences abound It is a complex affair that is capable of improving the image of the company or in the contrary ruins it (Barak, 2010). The Coca-Cola company in it diversity stewardship report (2011) recognized the fact that diversity to the company is not only a matter of policies but an integral part the company and its future. Diversity to the Coca-Cola Company was an opportunity to appeal to the diverse market that it serves and acquire a talented workforce to implement its strategies. It is therefore vital that a human resource manager in a multinational finds the best strategy of dealing with diversity as the world is more informed and more connected in the this 21st century. When employees are able to get over their differences and work together then they will be able to perform to the maximum individually and also as teams (Barak, 2010). A diversity program should be the first step for a human resource manager to take in order to take care of the diversity in a more comprehensive manner Dowling (2008). Among other things the program should outline the plan in terms of where the company is and where it intends to be in the near future and how it will get there. It should also have the implementation and evaluation tools to indicate the gains made or where the implementation is falling short of the expectations. The manager should also set out roles and responsibilities on the implementation of the programs. It is important as it will be taken seriously. In designing the program, the human resource management should put into consideration that the strategic input of the management is vital for the success of implementing a diversity policy. It is a competitive tool and should not be treated only as a social matter (Barak, 2010). In light of this understanding the management should create teams to spearhead the implementation of the diversity policy. It is important that the teams understand what is expected of them and communicate their progress with the management as and when they are required. Training employees on how to tolerate their cultural-diversity is important as they will be exposed to the different cultures and values of their colleagues (Flanagan, 2006). This way they will use their diversity as strength they can utilize in combining their diverse perspectives and backgrounds to complement their talents and contribute to the growth of the company. One should be considered wise when he understands the cultures of the world rather than limit himself in his own culture (Barak, 2010). The human resource management should also conduct regular emotional intelligence tests to understand how much ground the company has covered in promoting diversity and coherence in the workforce. Then the manager can deliberate on the options available basing on the results he gets. References Anderson A.B, (4 April 2005) “Expatriate selection: good management or good luck?”, International Journal of Human Resource Management, Routledge Ayoko.B.O, Callan.V.L, Hartel.C.J, (2003) “Workplace Conflict, Bullying, and Counterproductive Beahviors” International Journal of Organisational Analysis Barak. M, (2010) Managing Diversity: Toward a Globally Inclusive Workplace, SAGE Coca-Cola stewardship report (2011), “Cultural diversity in the workplace” accessed on [1-Nov-2012] from the Coca-Cola company official website http://www.thecoca-colacompany.com/citizenship/diversity.html Darling .J .R, Foglioso . C, (2004) “Conflict management across cultural boundaries: a case analysis from a multinational bank”, European Business Review Vol.99 Dowling. P, Festing .M, Engle .A.D, (2008) International Human Resource Management: Managing People in a Multinational Context, Cengage Learning EMEA Flanagan. J.R, (2006) Globalization and Labor Conditions: Working Conditions and Worker Rights in a Global Economy, Oxford University Press Groschl .S, (2011) Diversity in the Workplace: Multi-Disciplinary and International Perspectives, Gower Publishing Ltd Huo .Y.P, Huang .H.J, Napier .N.K, (2002) “Divergence or Convergence: a Cross-National Comparison of Personnel Selection Practices” Vol 41, spring Kim .H.Z, (2007) Managing Diversified workforce- Korean Multinationals, VDM Publishing Read More