Global Market - Essay Example

?Running Head: International HRM International HRM [Institute’s Table of Contents Table of Contents 2 Introduction 3 What is Human Resource Management? 3 What is International Human Resource Management? 4 Functional Difference between HRM and IHRM 6 Benefits and Drawbacks of IHRM 7 IHRM in a Global Context 8 Impacts of IHRM on Relationships 9 Social Impact 10 Economic and Political Impact 11 Institutional Impact 12 Cultural Impact 12 Conclusion 14 References 15 Introduction The world and the entire human race today are experiencing a technological boom with a rapid increase in globalisation as well. The mode of communication and interactions nationally as well as internationally has decreased the cultural, social, and political differences amongst the populations. With the raise in globalisation, many companies and organisations are initiating their business operations that do not come under the restriction to national level only but also on global basis as the primary objective of any business is to generate more profits and revenues. Therefore, in order to expand and grow, corporations are now emerging themselves into the global market. Within the organisations, the most importantly considered assets are its people. Where the organisation requires managing its operational activities, likewise the people within the organisation needs to come under supervision. The administration of the people is the sole responsibility of Human Resource Management department, thus, it has become significantly important for any organisation to have HRM in their organisation. What is Human Resource Management? Human Resource Management (HRM) is one of the departments that exclusively deals with and take care of the company’s assets known as ‘people’. The rising drifts in the international market and its situations have given a boost to Human Resource Management and raised its importance for the organisation and its owners. The history of HRM states that Personal Management was the term that came under use before the terminology Human Resource Management emerged. The emergence of HRM reveals the fact of the success of the organisations that was due to the behavioral change of employees for their contributions through their hard work (Jackson & Mathis, pp. 2-20, 2007). The principal functions of any Human Resource Management in a broad perspective focus on the recruitment of the people, administer them, and endow with guidance for the right path or track to them. Supporting and handling all the matters of concern of employees, such as “performance management and appraisals, compensation and benefits, training and development, hiring and firing of management level and junior level people, organisational development, employee motivation, and overall administration” (Jackson & Mathis, pp. 2-20, 2007) are the primary job functions of any HRM. HRM is not only administering the company’s employees, rather it also controls the culture of the enterprise and its internal atmosphere. HRM is a leading and motivational aspect that facilitates the employee to give their maximum output in an efficient and fruitful way so that the company can accomplish its mission and visions that helps growing its prosperity. With the passage of time, the role of HRM has extensively modified and increased and now it has shifted from the conventional role of administration of the employees to the added-value strategic approach and method that affects the business revenues in a reckonable way (Jackson & Mathis, pp. 2-20, 2007). What is International Human Resource Management? The globalisation and increasing global market trends and environment has given rise to the concept of Human Resource Management in an international context, which is International Human Resource Management (IHRM). IHRM focuses on the administration of the employees on a global basis in order to accomplish the goals, objectives mission and visions of the enterprise, in order to get an edge over the competitors present not only on local level but also in the worldwide market. According to some schools of thought, the international human resource management observed escalation in its popularity in the decade of 1990. It has also come under surveillance that the emergence of IHRM was to bring out the diverse cultures of the world and the organisational culture under one roof (Phatak, pp.475-485, 2006). The foremost duty of IHRM remains the same as HRM and performs activities like hiring and firing, compensation and benefits, performance management and appraisals, cross-cultural training and development. In addition, the IHRM also performs the functions such as international skills management, expatriate management, and international taxations. The HR personnel in IHRM also have further job functions that include the repositioning of the employees and assisting them to make themselves adjust to the new environment and culture. Furthermore, the perceptions of the expatriates needs to come under alteration as the external factors play a major role in shaping and altering one’s point of view, therefore HR personnel needs to get them involved in the employee’s lives in detail. The persuasion of external features and surroundings such as culture, social, political, and environmental makes international human resource management very complex and multifaceted (Phatak, pp.475-485, 2006). One of the concerns of IHRM is to have an alliance and association of employees so that the team work lead to improved and enhanced outputs for the corporation. Employees at Multinational Corporations (MNC) are the prime focus of IHRM, where they administer three types of human resource. The first category of the employees are located at home country preferably called parent country nationals (PCNs), where headquarter of the enterprise comes under location. The workforce that comes under setting in the host country or the place where the subsidiary of the enterprise is present comes under the subject of host country nationals (HCNs). The allocation of third type of employee is at the subsidiary or headquarter level but do not belong to any of those places, rather that employee is from some third country comes under the heading of third-country nationals (TCNs) (Dowling, Festing, & Engle, pp.1-6, 2008). The IHRM also leads to many challenges that the HR personnel faces, one of the key challenges is that complexities in the functions and activities widely increase as the foreign market may have fluctuations in currencies, the broad range in HR policies, and diverse laws subjected to labors. At the time of recruitments, selection and administration of an outsourced person, HR personnel have greater involvement of people with various and diverse cultures, backgrounds and ethnic groups. The risk factor is also present with the expatriates as their security in cases that involve serious sickness or bad heath conditions and terrorism is of utmost concern for the enterprise (Dowling, Festing, & Engle, pp.1-6, 2008). Functional Difference between HRM and IHRM The domestic HRM and the international HRM performs nearly the same functions, yet they have some functional differences as their name clearly defines it. The fundamental difference between HRM and IHRM is that the latter has an additional duty to administer the expatriates along with the other employees. In addition, their skills and abilities in relation to IHRM that gives them an edge over others are also of major concern (Stolt, pp. 3-4, 2010). The other key difference that an HR personnel encounter is that they need to have a vast deal of knowledge about the host country that includes its political structures, economic developments, social environment and technological advancements, along with embedded HR system, employment functions, and HR rules and regulations. The domestic HR personnel do not have to face these challenges as they have the entire company operations and employees located at national level only (Stolt, pp. 3-4, 2010). Benefits and Drawbacks of IHRM As an expatriate employed by the organisation possess high level of skills than that of the national employee of the host country that is an essential requirement for the host country, therefore, they are one of the advantages of IHRM. Another advantage of an expatriate also performs the role of the knowledge transfer, business culture, and personal development. As the expatriate is the outsourced employee, thus, it brings the culture of the home to host country or to the subsidiary enterprise. Moreover, the knowledge that an expatriate would transfer will lead to elimination of the cross-cultural barriers amongst the employees of the organisation, resulting in improved employee relationships. The special skills that he possesses also come under sharing with the other employees of the host country (Sparrow, pp. 134, 2009). With the package of advantages, there come adversities that the organisation and its employees do not welcome. The process of hiring an expatriate can be costly and time taking as an expatriate requires proper security that is of growing concern especially in case of his deployment in an underdeveloped country or where terrorism is a prime issue (Sparrow, pp. 134, 2009). Another disadvantage of IHRM is that the procedure of recruitment and selection of an expatriate is very arduous and burdensome, it may even provide an unconstructive impact on the enterprise as the expatriate’s skills, and abilities may not be availed in an efficient manner (Sparrow, pp. 134, 2009). Studies highlight the fact that managing the transnational viewpoints in comparison to the national perspectives is rather multifaceted and difficult, therefore, in some circumstances and situations the expatriates are under-valued or they are not acquainted for their specialised skills and expertise. In addition, the enterprise and the IHRM do not deal the expatriates with proper administration, hence, it lead to company loss (Sparrow, pp. 134, 2009). IHRM in a Global Context International Human Resource Management explicitly and exclusively focuses on the subject of business operations and administration of its human resource on the international platform. The IHRM of the business conduct the survey analysis of design that represents the discrepancies and common relationships in job analysis methods and job requirements, executions of all the assessed programs related to the training techniques provided to the expatriates and evaluation through assessment centers (AC). The assessment centers come under the utilisation by both SMEs and big corporations, where the SMEs make use of them for their selection procedures, and giant corporations use them for development reason. The fundamental and conventional role of AC is to determine the prophecy that can come under usage for enhanced and improved future achievements (Albrecht, pp. 151-159, 2001). The IHRM has materialized the concept of internationalisation as well with the increase in globalisation. The countrywide economies have entered the international market through business of goods and services and the money investments; this has given rise to the globalisation that is the amalgamation of economies on a global podium. Conversely, the concept of internationalisation emphasizes on the relations and associations with the nations, as they remain the chief role. As the global economy is experiencing a boom, all around the world, therefore, in order to sustain in the global market organisations confront internationalisation. The outcome of the practice of internationalisation has raised the employment opportunities outside the home country for people as enterprises are launching their subsidiaries on international basis, strategic integration and joint ventures come under observation (Briscoe & Schuler & Claus, pp. 20-28, 2008). Globalisation provides the enterprise grow and expand their business operations as the cost of the produced or manufactured goods and services decline and comes under facilitation through cost-effective production techniques and ways. In addition, it provides the organisation to generate increased profit and revenues (Albrecht, pp. 151-159, 2001). The concept of IHRM mostly comes under the application by the Multinational Corporations (MNC), as they are the key leaders who practice the international human resource management. However, the country of origin or the position of the headquarter remains the primary office, and the subsidiaries uphold and continue to have a healthy connection and relationship with them (Albrecht, pp. 151-159, 2001). The evolution of internationalisation and globalisation has broadened the role of IHRM and it now plays a major role in the contribution for the establishment and expansion of the enterprise (Briscoe, Schuler, & Claus, pp. 20-22, 2008). Impacts of IHRM on Relationships The recent trends of global market have cleared the fact that the world of commerce has transformed itself into a competitive marketplace, where the organisations tends to develop, spread out from the local market and get an edge over the competitors from all around the world. With the aim of widening the business operations, enterprises with their new and modern techniques and ways of taking hold on to the customers have re-engineered themselves and their business operations. However, in doing so, the IHRM also personalised themselves and their processes that include the culture, language, and moral and social ethics to the principles of the host country at the universal market. International Human Resources management has been of vital importance in business running its operations on international basis as when the employees are hired from different parts of the world and come under one roof, each bring its own diverse and different set of norms, values, cultures, and ethics. In addition, the language, social, political, and economical background, and environment also differ from each other. This becomes the prime challenge and objective of IHRM to integrate and incorporate all the employees under one roof so that they can prove to be productive for the growth of the company. The cross-cultural human resources of the organisation has a great affect on the essential function of IHRM that includes “recruitment and selection, training and development, performance management and appraisal, and to recognise its impacts is the chief emphasis of IHRM” (Briscoe, Schuler, & Claus, pp. 20-22, 2008). The Western part of the world is more powerful, predominant, developed and enhanced with the technological advancements when compared to the rest of the world, therefore, their economy is also playing a dominant role over others. The Western world or the developed nations have different working pattern than that of the developing nations. The management and the enterprise of the developed countries believe in working in groups, sharing the power between management and the employees, and in participation from all the employees regardless of their managerial level. In contrast, the organisations in developing nations have a more centralized approach where the upper management controls the decision powers, have bureaucratic environment, and the authority only lies with the upper management and employees do not have the freedom of speech. Social Impact The social factor such as terrorism has become one of the biggest enormities of today’s era. The impact of terrorism has touched every aspect of the world with its drastic effects. IHRM is also one of the potential prospects of prevailing terrorism. The most conspicuousness and distinguished occurring that includes the incident of the 7/7 London bombings and many others all around the world have left an indelible imprint and have possibly affected the functions of IHRM. The clear evidence of global terrorism is the Shell Petroleum business operation in European region, had to depart many of the dependents of the expatriates after the terrorism episodes. This not only affected the outputs of the expatriates but the future recruitments for these places also are affected and employees become hesitant in deployment and working in such countries. Even if the employee is ready to work in such remote areas, their protection, safety and security becomes one of the leading challenges for the IHRM professionals (Stahl & Bjorkman, pp. 475-485, 2006). According to studies, the fact has been revealed that the employees get unwilling, averse and hesitant in acknowledging the employment offers and/or the assignments to the states that are under constant threats of terrorism and comes under the linkage with ‘war on terror’. In addition, according to statistics of the studies the bombing of 7/7 decreased travel to the state in a large proportion that includes cancellation or restriction of business trips and meetings (Stahl & Bjorkman, pp. 475-485, 2006). Economic and Political Impact International Human Resource Management is highly affected by economic activities of the corporations on a universal arena. The worldwide economy has experienced a boom with the globalisation and internationalisation. Multinational Corporations plays a vital part in making a connection and association between the developed and underdeveloped countries along with the economies through the investments of capital, sharing of ideas and knowledge, and the ethical and moral value structures on the global stage (Sims, pp. 76-77, 2007). IHRM policies may differ and would be diverse due to differences in economies of many parts of the world. It also leads to different labour cost in different fraction of the countries as the economy and monetary value is not the same for all countries. The underdeveloped countries have the tendencies to have more cheap labour as their currency values are low as compared to the developed nations. Moreover, the countries with huge population would also tend to provide with cheap labors (Sims, pp. 76-77, 2007). The political and legal system of countries varies from each other and the labour laws may have deviations. The laws and regulations of the legal system of a country may heavily affect the IHRM and it may govern many of the processes of IHRM. In some cases, the European countries like UK have it obligatory for enterprises to have Equal Employee Opportunity (EEO) as both the genders are equally competent to apply for a position (Sims, pp. 77-78, 2007). Institutional Impact Every organisation has its own set of rules, regulations, norms, values, and code of ethics and conduct that collectively comes under the heading of organisational culture and every employee is obligatory to abide by the culture in order for the company to flourish. The globalisation and IHRM provide all employees to come under one umbrella and follow the same norms and practices of the organisational culture. MNC creates more crossvergence, which results in the development of fusion value systems from the inter-cultural interactions (Edwards, pp. 52-56, 2007). Cultural Impact The most significant and imperative matter of subject in IHRM is the culture and cultural diversity. The cultural aspect assists the IHRM in understanding the performance, actions, activities, manners, and conduct of the expatriates that comes under recruitment from various regions of the world. The cultural concerns and problems are the most important aspect that an International Human Resource Management considers when establishing and developing the HRM practices for their subsidiaries in the host country and plays a vital and crucial role in it (Aswathappa & Dash, pp. 23-33, 2007). The IHRM would face a cultural challenge amongst the employees as they belong to different nations where they have their own set of culture that reflects their religion, belief systems, traditions, values, and language. These cultural differences may lead to issues when dealing and administering the expatriates in the host country where the subsidiary office comes under location. In addition, IHRM and the executive level people of the parent enterprise may also face a number of issues when establishing the policies, as they may not be completely aware of the local and regional cultural values of the expatriates (Aswathappa & Dash, pp. 33-42, 2007). The IHRM also need to have comprehensive knowledge about the diverse cultures and the divergent value systems of their human resource so that they can more appropriately integrate the employees with each other in order to remove the cultural differences and improve employee relationships. Furthermore, the improved employee relationships will result in better and productive output from the workforce that will eventually benefit the corporation (Aswathappa & Dash, pp. 42-59, 2007). The success of the organisation lies in the fact that they are able to understand the cultural diversities and forms the policies according to the local culture rather than emboss the culture of the parent company, therefore the phrase “thick globally and act locally” is best suited and crucial for any multinational to follow (Krafft & Mantrala, pp. 261, 2009). Conclusion In the past few decades the business community and market has observed a revolutionary changeover. This change has resulted in many opportunities for companies to grow and expand their business operations into the worldwide market as well. This gave the emergence to the concept of International Human Resource Management. International Human Resource Management has become one of the growing concepts in the recent time. The growth and popularity has risen at an unprecedented rate due to concepts of globalisation and internationalisation. However, the primary job functions of IHRM have remained the same as HRM. The IHRM has experienced a swift in its development, profession and has infiltrated at the institutional level, national boundaries, and global perspectives. The cross-cultural diversity is the biggest challenge that Multinational Corporations and Organisations operating on international basis experience in today’s time. However, these issues and challenges make the process of IHRM complex and multifaceted. IHRM has provided opportunities for people from different parts of the world to come together and work in correlation. This has left many advantages for the organisations, but has brought many drawbacks as well. The international enterprises and the multinationals have a great impact due many facets that includes the cultural diversities, economic factors, internal and external institutional environments, and social backgrounds of the expatriates. References Albrecht, Maryann H. 2001. International HRM: managing diversity in the workplace. Wiley-Blackwell. Aswathappa & Dash 2007. International Human Resource Management. Tata McGraw-Hill Education. Briscoe, Dennis R., Schuler, Randall S., Claus, Lisbeth M. 2008. International Human Resource Management. Taylor & Francis Dowling, Peter J., Festing, Marion, Engle, Allen D. 2008. International human resource management: managing people in a multinational context. Cengage Learning EMEA. Edwards, M. 2007. International Human Resource Management. Pearson Education India. Jackson, J. H., Mathis, Robert L. 2007. Human Resource Management. Cengage Learning. Krafft, Manfred, Mantrala, Murali K. 2009. Retailing in the 21st Century: Current and Future Trends. Springer. Phatak, J. 2006. International Management. Tata McGraw-Hill Education Sparrow, Paul. 2009. Handbook of international human resource management: integrating people, process, and context. John Wiley and Sons. Sims, Ronald R. 2007. Human resource management: contemporary issues, challenges, and opportunities. IAP. Stolt, Robert. 2010. Differences and Similarities between Domestic and International HRM. GRIN Verlag. Stahl, Gunter K., Bjorkman, Ingmar. 2006. Handbook of research in international human resource management. Edward Elgar Publishing. Read More