International Human Resource Management - Essay Example

?International Human Resource Management Executive Summary In the present era, globalisation is considered to be the key word owing to which enterprises are constantly striving to expand operations of their businesses which is facilitating the development of such enterprises. In this context, it is becoming an essential part for the enterprises to abide by the international regulations. The international regulations entail the rules of the various countries along with certain overall specifications for particular industries. Human resources are considered to be an integral resource related to production. The way of dealing with the human resources differs in various countries. The Multinational Enterprises (MNEs) need to consider this aspect and handle the human resources or their workforce in other countries in accordance with the relevant rules of that particular country. This is where International Human Resource Management (IHRM) is needed in the enterprises. The IHRM helps in handling the human resources in the different countries with dexterity. The different ways of handling the human resources creates an influence on the usual practices of Human Resource Management (HRM) of the enterprise. In spite of the influences, it is extremely important for the MNEs to carry its operations in keeping with the international regulations to avoid any legal hassles in the country it is operating in, which might earn a bad name for the enterprise. Table of Contents 1 Executive Summary 2 3 Introduction 4 Outline of the Context and Structure of Royal Philips Electronics 5 Review of Theoretical Background 6 The Impact of International Regulation in Controlling the Labour Practices of Multinational Companies 10 Impact of International Regulation of the Labour Practices on MNEs’ and Their Evaluation with Special Reference to Royal Philips Electronics 13 Conclusion 15 References 16 Bibliography 21 Introduction Businesses are no more restricted by boundaries. Most of the large companies of the world have been witnessed to carry out an important part of their business functions presently outside the boundaries of their respective countries of origin. There are numerous organisations attempting to make their presence powerful and prominent in other countries especially overseas. The success or the failure of such organisations largely depends on their human resources and their management. Human resources are considered to be an integral and crucial part of an organisation. The success of an organisation depends on the management of its resources related to production but it is greatly reliant on the way it manages its workforce or human resources. Proper management of the human resources would facilitate in triggering and delivering the actions desired by the organisation. These desired actions contribute significantly towards the success of the organisations (Ashamalla 1998). Therefore, it can be well understood that for such international firms or multinational enterprises an appropriate human resource management is quite essential and crucial for the reason of their success. It can be stated that International Human Resource Management is related to the understanding and functions of the entire behaviours associated with the human resource management as these behaviours or performances as they have been observed to create an influence on the way of controlling and handling human resources in organisations in the international environment (Briscoe et al. 2008). In the paper, the impact of international regulation in terms of Human Resource on a Multinational Enterprise (MNE) called Royal Philips Electronics would be investigated and explored. Outline of the Context and Structure of Royal Philips Electronics Royal Philips Electronics is a Multinational Enterprise and is considered to be amongst the largest global companies and is stated to be the leading electronics company in Europe. The company is believed to be an international leader in lighting, picture tubes for colour television along with monitors, colour televisions, electric shavers and products of one-chip television. The company has its strong presence in over 60 countries and engages 233, 700 people as its employees. The company is proactive in the fields of consumer electronics, components, medical systems, IT services, lighting, domestic appliances, semiconductors and business electronics. The company is listed on the London, Amsterdam, and New York Stock Exchanges (NYSE) and in different other stock exchanges as well. The company ranks eighth amongst the leading 30 international electronics corporations. Royal Philips Electronics is considered to be the global leader in the field of digital technologies that forms a part of wireless communications, video compression, optical products, displays, speech recognition, and storage products along with fundamental technology related to semiconductor which facilitates the achievement of these infiltrations possible (Wang 1999; Philips 2011). Royal Philips Electronics was initially founded by Gerard Philips in Netherlands for the purpose of developing various electrical products and incandescent lamps. The company during its early years focused on manufacturing lamps with carbon-filament and it had been included among the biggest manufacturers of Europe in the early parts of the twentieth century. The decade of 1990 witnessed a noteworthy alteration for the company as it had performed a significant restructuring plan so as to gain a strong footing in all the other countries it has been operating (Wang 1999). Review of Theoretical Background The environment of business has been undergoing the change of globalisation. Many enterprises and organisations have been spreading out their businesses in other countries for the reason of expansion. Since the precedent decade, the character of competition is being basically changed at a constant rate owing to the rising technological developments and business globalisation. There has been a requirement identified to stabilise the active nervousness among the competing powers such as product, technology, geographic locations and the market. The prerequisite to balance these mentioned forces made the enterprises or organisations to broaden and expand their existence across the globe. The global expansions were being planned out for the attainment of numerous objectives with the help of copious structures or ways. With regard to this process of expansion, the guiding principles and the rules relevant to the ways of treating the multinational enterprises by the governments of the respective foreign countries have become quite crucial. These factors of guidelines and regulations are considered to be quite vital as they are found to directly have an effect on entering the market by the multinational enterprises (MNEs), their taxation burden, their industrial involvement and most essentially their investment plans (Luo 2002). It has been observed that the global business enterprises that are the MNEs in this present century are progressively more interested in spreading out their business functions and making investments in budding foreign markets like Russia, Eastern Europe, China, Mexico, India and Brazil. The regulatory guidelines or the guiding principles involving Foreign Direct Investment (FDI) have been stated to pose an increasingly significant influence on the market growth and even on the monetary proceeds of the MNEs in comparison to the already developed countries. It is also important to be mentioned in this regard that the regulatory guidelines and the rules central to monitoring the business operations of the MNEs in these mentioned budding markets vary significantly from the ones that apply on the domestic business operations. The regulatory factor is considered to be quite vital for the MNEs as it ascertains the functioning circumstances which would facilitate the MNEs to earn maximum returns after risk adjustment. Particularly, the regulatory guidelines would have an influence on the outsourcing plans, marketing efficiency, production practices, management competence and most importantly the financial situations (Luo 2002). The regulatory guidelines facilitate in promoting the positive involvements that are made by the MNEs for the reason of economic as well as social growth. It also helps in bringing down and provides solution to those problems that are created owing to their different functions. The international regulatory guidelines help the MNEs to function in an appropriate manner which proves to be beneficial for those enterprises. Implementation of the regulatory guiding principles and the need to abide by them prevents the MNEs from getting into any legal complications because of unfair trade practices (Wallace 1982). The regulatory guidelines are applied so as to protect the interests of the country the MNE is operating in as well as the interests of the MNE (Wallace 2002). The carrying out businesses is progressively turning out to be more global by expanding in various countries and so it has become an essential part to manage the human resources in this global context. It becomes quite necessary to manage and to control the human resources of the other countries and this is where International Human Resource Management comes into play (Edwards 2007; Briscoe et al. 2008). Human Resource Management (HRM) and International Human Resource Management (IHRM) differ in two vital areas. HRM does not need to deal with the complications of functioning in various countries involving different cultures like IHRM. Secondly, HRM in the domestic context is engaged with workforce that falls under the national boundary whereas IHRM requires to handle and to manage the workforces of three national groups, that is firstly, the home country where the headquarter is situated, secondly the country where any subsidiary would be situated and thirdly the other countries which cater to the finance, labour or research as well development (Scullion and Collings 2006). It was stated by Taylor et al. (1996) that IHRM was treated as a structure of the MNEs which comprises of certain diverse behaviours, procedures and operations that are carried out with the intention of drawing, sustaining and building up of a workforce or rather human resources in the MNEs. Schuler and Tarique (2007) & Dowling, Festing and Engle (2008) stated IHRM to be the effectual way of controlling and handling the human resources in the international markets. This is done for the MNEs so as to obtain a chief basis of competitive advantage along with attaining international success. It was suggested by Milliman et al. (1991) that IHRM needs to be put into practice with a professional approach of ‘flexible and fit’ in order to make certain of the suitable harmonisation and management among the enterprise and its international subsidiaries with regard to the cross-cultural as well as cross-national environment. The notion of ‘flexible and fit’ was regarded to be functional for the purpose of building a global business strategy. The strategy was required for the reason of balancing and rebalancing the external as well as internal settings and also for dealing with different interests in between the elements present in the subsidiaries and also in the headquarters of the MNEs (Zheng 2011). The Impact of International Regulation in Controlling the Labour Practices of Multinational Companies International regulations are considered to be of immense importance for the successful functioning of the MNEs. MNEs operate in various countries whose legal policies and guidelines differ to a great extent. The MNEs need to abide by the respective international regulations of the countries it is operating in. The working hours, the labour act, the influence of labour union, the minimum wage structure and other such relevant matters vary according to countries. The MNEs need to take these into concern while executing their business operations. This would mean that the way of carrying out the business functions would differ widely in countries. This is where the need of an effective IHRM arises as it helps in taking care of the different issues related to the human resources arising in different countries. The international as well as domestic regulations ascertain the responsibilities and functions of a manager of the MNEs to a large degree (Murray 2011; Tapiola 1999). The domestic regulations would entail matters like employment, taxation and transactions involving foreign exchange in the home and the host country. For instance, a theme park was constructed by Disney in Hong Kong. The regulation of law of Hong Kong ascertains the way Disney’s returns or profits earned in Hong Kong would be subject to tax, the way those proceeds or profits could be swapped over to US from Hong Kong Dollars along with the sum paid to the human resources as well as nationality of the human resources engaged in that park. Similarly, the law of US ascertains that at what point of time and in what way the losses or profits earned by Disney from their theme park in Hong Kong would be considered for taxation in the US. The international regulation by way of legal conformities among the home and the host countries presides over on the way profits or proceeds would be taxed with regard to both the countries. It also determines as to how and in what ways the business operations of the MNEs would be performed (Daniels 2007; Hurst 2004). The International regulation might at times even ascertain the ways and the possibilities of the MNEs in carrying out their business functions in specific locales (Daniels 2007). The international regulations entail a variety of guidelines in accordance with which the business operations need to be performed. These guidelines or specifications include the management specifications, reporting guidelines, usual behavioural standards, eco-labels, certification methods and other codes of conduct as well (Pattberg 2006). There are certain regulations applicable for the MNEs operating in the electronics sector. The regulations would entail different issues in different countries. The common regulations that would be applicable for the electronics industry would be the export regulations, tariffs as well as duties relating to imports of electronics, import regulations with regard to the particular industry, and regulations associated with the environmental as well as safety measures. These regulations would include certain laws under them according to which the electronics industry needs to function. The laws and the regulations might differ in various countries but the MNEs operating in this sector needs to comply with those guidelines and standards (Bennett 2009; Tamer 2008; Rothstein and Fox 1992). The code of conduct related to the electronics industry entails matters like making certain that the working environment in the supply chain of the industry are safe for the employed human resources. It also ascertains and states the specifications that the workforce or the human resources are handled and controlled with respect and dignity and also states the environmental specifications according to which the manufacturing functions need to be carried out. The industry also entails the codes of Original Equipment Manufacturers (OEMs), Original Design Manufacturers (ODMs) and Electronic Manufacturing Services (EMS) along with the contracted labourers or human resources who would be involved with the marketing, offering goods as well as services which would be required for the manufacturing of the electronic goods, designing and producing those goods. Prior to adopting or incorporating these codes of conduct, the MNEs need to primarily ensure that their business operations are conducted in complete accordance with the laws, regulations and rules of those countries where the functions are being carried out. However, the code of conduct relevant to the overall electronics industry promotes and supports the participating MNEs to think and perform beyond the level of legal compliance and adopt specifications that are globally recognised so as to move ahead of the social as well as environmental liabilities. The Electronic Industry Code Participants are dedicated towards attaining contribution and participation from their respective stakeholders on a regular basis for the reason of constant progress and execution of the Electronic Industry Code of Conduct (EICC) (Horn 2011; LITEON 2005; Stopford 1998). The code of this electronics industry is developed in five different sections that is A, B, C, D and E. The first three sections states the specifications related to Labour, Environment and Health and Safety. The other section that is the section D states down the components of a satisfactory structure in order to control and deal with the agreement to this particular code. The final section E states the specifications associated with the business ethics. Impact of International Regulation of the Labour Practices on MNEs’ and Their Evaluation with Special Reference to Royal Philips Electronics As already mentioned above that the company Royal Philips Electronics operates in over 60 countries. It makes it an obvious fact for the company that it performs its business functions in all these countries in accordance with the internal regulations prevailing in the particular countries. The different regulations in the various countries would certainly have an influence on the HRM practices of Royal Philips Electronics. The company would need to deal with the various issues and regulations related to the human resources in the different countries. The human resources of the various countries would be required to manage differently. The multinational company or Royal Philips Electronics needs to abide by the labour or human resource specifications of the different countries it is operating in. The company needs to follow the rules pertaining to the freely chosen employment, the stipulated working hours of the human resources employed, the child labour, the wage structure and the benefits packages provided to the human resources, the proper treatment of the workforce, the non-discrimination and the liberty of association. The MNE or the company also needs to ensure the occupational safety of the workforce, emergency preparedness, occupational illness and injury, industrial hygiene and the overall working conditions of the human resources (Kinley and Joseph 2002; OECD 2008; Sparrow 2009). The company would need to deal with the working hours of the different countries and make certain that the human resources or the work force is not being made to work more than the stipulated time according to the regulation of the particular country (Pattanayak 2005). It is quite essential for the MNEs to adhere or abide by the international regulations as it would ensure the proper and smooth functioning of the company in the countries it is operating in. This would help the MNEs to stay away from any legal hassles which might earn a bad reputation for the company in that particular country. Violation of the international regulations by the MNEs would call for legal actions against them which would hamper the goodwill of the company along with gravely hampering the business of the company. This might make the company or the MNE’s incur huge losses thus threatening their existence in the country. Expanding business in different countries and operating there calls for huge expenses therefore the company needs to be cautious of not incurring any unnecessary and huge losses. On the other hand, abiding by the international regulations by the MNEs would facilitate the companies to earn a good reputation for them which would even prove profitable for their business. This goodwill or strong reputation along with proper functioning of the MNEs in accordance with the international regulations would help the MNEs’ in attaining competitive advantage as well. This aspect of attaining competitive advantage in different countries would ensure the successful existence of the MNEs along with earning enough profits. Conclusion The above discussion focuses on the importance of abiding by the international regulation by the MNEs. The MNEs should be cautious of not violating the regulations in order to ensure its sustainable existence in the country it is operating in. Therefore, the MNEs need to deal with the various issues or laws of the different operating countries along with special focus on the human resources properly. The multinationals should be careful to take into concern the working conditions of the human resources, the minimum wage structure, the stipulated working hours, the structure of compensation and the benefits packages offered to them and the other such relevant issues. Human resources are considered to be an integral part of an organisation and are stated to be the most essential resource related to production. Therefore, it is vital for the MNEs to manage their human resources properly and in accordance with the laws relevant to them. Abiding by the international regulations would help the MNEs to earn a good reputation as well as attain competitive advantage which is considered to be vital aspect for multinationals. This competitive advantage would provide them an additional advantage while competing with the domestic organisations. Violation of the international regulations might get the MNEs into legal trouble which is likely to hamper the overall reputation of the organisation. 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