Human Resources Policies and Management - Research Paper Example

Introduction International business researchers have investigated how regulation of human resources practices can be replicated across different geographical and cultural settings to support multinationals’ objectives. In general, findings show that multinational corporations (MNCs) that can replicate HR practices across their subsidiary divisions more effectively than their rivals will generally gain a competitive advantage. However, the most important question is: to what extent is this possible? Although MNCs would like to regulate their human resource policies and practices uniformly across national boundaries, the scope and scale of this is still debatable (Drori, 2013:21). The extent to which MNCs can achieve regulation is still limited; research shows that they are still struggling to cope with the demands of implementing HR systems in different cultural and geographical divisions. An MNC that can connect wages to performance across regional units on a consistent basis is likely to outperform rivals who are not able to coordinate such an effort, all factors being constant. Even though researches show that regulation and replication can bring competitive advantage, MNCs are still lagging behind – vis-à-vis applicable standards – in the replication of HR policies. Findings show that factors like poor coordination and national culture impede the transfer and replication of HR practices in regional offices. Glocalisation, which symbolises the “think globally, act locally” slogan, is still a major challenge for MNCs. As result, they can expect to implement it moderately; very few MNCs have managed to execute glocalisation brilliantly. In addition, very little is known about how MNCs can streamline internal policies across their regional divisions more effectively to glocalise HR practices (Badie, 2011:28). Recent discussions in the glocalisation literature have turned this into a huge HR issue. Most scholars centre their arguments on internal policies of templates versus guidelines to help regional divisions replicate HR practices from headquarters or other parts of MNCs. On one hand, the use of templates focuses on formal processes and systems that MNCs can manage to show customers and the public precisely how to glocalise their HR practices (Dickmann, Müller-Camen, and Kelliher, 2009:17). On the other hand, guidelines focus on people to inspire, motivate and explain why HR policies should be glocalised in the first place. While often portrayed as rival models, theory and practice reveal a conceptual connection and causal relation between an official focus on systems and processes and an unofficial focus on people, resulting in subsidiaries’ ability to glocalise. The problem, however, is that most MNCs still view the two factors as competing and therefore end up sacrificing one for the other instead of using one to enhance the other. Investigations into the HR policies of American MNCs like GE have shown that most of them are still caught up between using systems and going with people (Brewster, Wood, and Brookes, 2008:329). As a result, they suppress one – most often people – and create systems that end up failing due to poor staff development in regional units. Based on past and current research, it is safe to infer that MNCs should approach glocalisation with seriousness because it is a major challenge. The process is time and labour intensive, and a majority of MNCs are still not ready to plunge in the uncertain area of replication. More studies show that MNCs should take their time to plan the whole process discretely because the concept tends to be different from the practical aspect of it. HR experts argue that while some HR policies are not fit across different regions, some are (Kaynak and Fulmer, 2013:23). If successfully replicated, they can help exploit economies of scope and scale – providing uniform platforms, increased knowledge sharing among staff, informal beliefs and lower redundancies. An example of such practices is official job orientation for new workers or salary surveys employed in determining external equity. Although they may need to be adapted to suit each culture, such policies are a replication of a particular practice if the central principles are still applied. According to studies, these types of glocalisation where the universal principles of HR are maintained facilitate internal integrity and consistency in MNCs. As a matter of fact, many HR policies today focus on creating internal mechanisms to facilitate regulation of practices across MNCs to acquire competitive advantages. Many HR subdivisions adapt well to their local settings but find it challenging to adapt valuable human resource management (HRM) practices to other sections of their organisations. Individual HHR subdivisions often meet competing tensions in local legal demands and culture. Not only these legal and cultural demands trigger challenges, but they also make glocalisation of HR practices even more challenging because HR policies are usually context-specific and complex (Kaynak and Fulmer, 2013:26). While being capable does not necessarily insinuate that a subdivision will actually replicate policies common in the global setting, considering the trend toward international convergence among international HR policies and past discussion of HR alignment, scholars argue that subsidiaries that are better at glocalisation are more likely to adopt and employ these universal practices. Many MNCs like McDonald’s and General Electric employ internal mechanisms for standardising and sharing knowledge in HR policies using external consulting firms that conduct internal standardisation on their behalf. General Electric’s interconnected system of HR units at the national, regional and global levels also enables it to monitor which policies are globally suitable and useful (Kaynak and Fulmer, 2013:26). In the same breadth, PandG make excellent use of different HR policy fields to determine which practices are viewed as globally useful. While MNCs often commonly determine these practices as useful, they usually do not set them aside for glocalisation. To get the subdivisions to replicate them, they concentrate, instead, on enhancing capabilities that will enable them to replicate. By determining globally suitable policies and streamlining the people, systems and processes in subdivisions to create a strong glocalisation ability, MNCs will therefore more likely ensure more application of common policies and receive reduced pushback from both the policy provider and policy recipient (Kaynak and Fulmer, 2013:28). Formal process streamlining leads to increased informal people streamlining in MNCs. This is crucial because interdivisional streamlining is a vital factor in MNC’s glocalisation ability. In summary, formal process policies might very well result in informal processes based on people (Pudelko and Harzing, 2008:399). Consequently, MNCs that do not know where to start in designing their subsidiaries’ replication abilities can first streamline their processes to facilitate the streamlining of their workers. On other note, investing in official systems streamlining may not result in people alignment but it will magnify MNCs’ replication abilities. This is probably due to the fact the successful application of information systems can actually reduce the time MNCs spend discussing and streamlining their objectives and vision. One of MNCs’ perennial worries is how to get their internationally-disperse HR divisions up to speed. For instance, the global HR manager for a large electronic firm based in China expressed his frustration that local HR policies were much ahead of the HR in the various geographical units. Part of his frustration was in regard to how he could get his HR managers across the world to adopt HR policies more efficiently to realise more economies of scale and scope. Most of his challenges lay in not knowing where to start. MNCs often attempt to streamline people without streamlining their formal systems and processes first (Faulconbridge, 2008:189). To streamline people, MNCs must first streamline their processes. This requires developing uniform templates, guidelines, principles and platforms about how regulation should be done. This creates precedence in the minds of HR managers’ minds that this uniformity is there to stay and not another fad of the year. Once MNCs have streamlined their people, systems and processes, they should consider cultural, geographical differences and distances (Kaynak and Fulmer, 2013:37). Such aspects can impede effective glocalisation, even when the HR division has brilliant glocalisation capabilities. Case Study In 1988, a partnership between Swiss firm Brown Boveri and Sweden’s ASEA created one of the biggest engineering firms in the world, ABB. Both firms already had numerous global operations, and the new company recorded sales of over $16 billion and had over 150,000 employees. Under the stewardship of its Swedish CEO, ABB underwent rapid changes. The CEO, Percy Barnevik, wanted to create a global conglomerate that could manage, effectively, three internal dilemmas, being global and local, being big and small, and being radically decentralised but with centralised control and reporting (Kaynak and Fulmer, 2013:34). The biggest dilemma, however, was being both global and local. The company introduced measures that were meant to streamline its HR policies across its regional and global divisions. It hired an external firm to conduct internal audits so that it could align its human resources with its systems and processes. However, it soon became apparent that the company was biting more than it could chew. By the time it was convinced it had done enough to streamline and regulate its HR policies across the world, it had almost 170,000 employees. The mechanisms introduced five years ago were already undermined by its expanding workforce and poor coordination in foreign divisions. ABB’s biggest mistake, in this case, was failing to match its HR policies and needs with its workforce across the world (Kaynak and Fulmer, 2013:36). In simple terms, there was a large chasm between the two. ABB faced numerous challenges in regulating its HR policies in Sweden in the same manner as its HR policies in China and Switzerland. Most of its decision-making was done at the lowest possible rank. Ten years after becoming one of the most respected companies in the world, the company faced major problems in its second decade of operation. It was affected by the economic slowdown in Europe while in America it became a target for many costly asbestos-related lawsuits linked to a company it had purchased in 1989. Worse still, limitations in the regulation of its HR policies and management started emerging. Most of its smaller purchases – often driven by aggressive and almost autonomous local executives and HR managers – suffered from poor integration with the rest of ABB’s HR policies (Stahl, 2012:39). This led to different benchmarks and systems as well as HR policy overlap. Although the company was flexible and sensitive to the settings in which it was operating, it had failed to realise enough global efficiency and synergies of its HR policies. Its model did not function as intended, and conflicts between national divisions and business areas meant that many of its HR managers felt that HR policies and decision-making were ambiguous (Kaynak and Fulmer, 2013:34). The local offices continued operating their own HRM systems, which were at best streamlined at national levels, but not at global and regional levels. This is a perfect example of the extent to which it is reasonable for multinational enterprises to expect to regulate their human resource policies and practices uniformly across national boundaries. Conclusion MNCs must be realistic in their quest to regulate HR policies and practices uniformly across national boundaries (Truss and Mankin, 2012:24). In this regard, MNCs must match their HR policies and practices with their workforce and determine whether the two aspects can function effectively together. The synergy must be to an almost impeccable extent. In addition, MNCs must use their capabilities to determine what is it that they want to achieve with their HR policies and practices? What are their HR objectives? MNCs must also create HR policies and practices that get the best out of their employees; mismatches and over-ambition are often causes of failure, as in ABB’s case. References Drori, G. (2013) Global themes and local variations in organisation and management perspectives on glocalisation, New York, Routledge. Badie, B. (2011) International encyclopedia of political science, Thousand Oaks, Calif., SAGE. Brewster, C., Wood, G. & Brookes, M. (2008) Similarity, Isomorphism or Duality? Recent Survey Evidence on the Human Resource Management Policies of Multinational Corporations, British Journal of Management, vol. 19, no. 4, pp. 320-342. Briscoe, D. & Schuler, R. (2012) International human resource management: Policies and practices for multinational enterprises, New York, NY: Routledge. Dickmann, M., Müller-Camen, M. & Kelliher, C. (2009) Exploring standardisation and knowledge networking processes in transnational human resource management, Personnel Review, vol. 38, no. 1, pp. 5-25. Faulconbridge, J. (2008) Managing the Transnational Law Firm: A Relational Analysis of Professional Systems, Embedded Actors, and Time-Space-Sensitive Governance, Economic Geography, vol. 84, no. 2, pp. 185-210. Kaynak, E. & Fulmer, R. (2013) Executive Development and Organisational Learning for Global Business, Hoboken, Taylor and Francis. Pudelko, M. & Harzing, A. (2008) The Golden Triangle for MNCs, Organisational Dynamics, vol. 37, no. 4, pp. 394-404. Stahl, G. (2012) Handbook of research in international human resource management, Cheltenham, UK, Edward Elgar Publications. Truss, C. & Mankin, D. (2012) Strategic human resource management, Oxford, Oxford, University Press. Read More