Human Resource Policies and Practices in Multinational Corporations - Coursework Example

Human Resource Policies and Practices in Multinational Corporations Introduction The multinational enterprisescommonly known as the MNCs are a significant constituent of the world economy in terms of trade and employment. The activities and overall performance of an MNC depends on the capability of its human resource. The wealth of knowledge and experience brought in by the employees is pivotal as it serves as a competitive advantage (Stahl & Morris, 2012). As such, the corporations depend heavily on the right human resource policies. Due to the increased globalization of the markets, multinationals are moving towards adopting a more global perspective where there is a cross-national integration of operations and related activities such as the coordination of management practices and developing an international oriented management. Human resource Management in Multinationals People are the greatest resource to the overall growth of any company. International Human Resource management is the management of people in organizations and in particular the issues that relate to international activities. Human resource management is therefore a potentially critical strategic issue in the management of an MNC. One way people become a valuable asset to the MNCs is by developing their unique abilities as well as shared firm specific knowledge (Harzing & Pinnington, 2011). Intra-organizational learning across national boundaries is as such a crucial policy that should be adopted worldwide for the success of these organizations. It is therefore in order to posit that it is significant to try and regulate policies and practices across the bounders, in terms of human resource, to achieve uniformity of human activities in the Multinationals. Human resource management focuses directly at the level of the corporation seeking to put in line the interests of managers, workers in their individuality and groups of workers towards mutually agreed organizational objectives in an effort to achieve competitive advantage in the global market. The underlying values of human resource management policies and practices are essential and concerned with maximising integration of the organisation, commitment of workers, workplace flexibility, quality and innovation. As such, emphasis is placed on selection of staff and induction, leadership and motivation, continuous training and development as well as intrinsic and extrinsic rewards meant to increase individual and group performance. Internationalization and globalization of firms Internationalization of firms came about due to increased technology especially after the industrial revolution. The newly manufactured and packaged goods needed new steady and expanding markets (Harzing & Pinnington, 2011). This was to exploit economies of scale and maximise on profits. Therefore, success in foreign markets led to establishment of the firms’ subsidiaries in various countries by way of acquiring already existing companies or building new manufacturing plants. The evolutionary process of firms operating in foreign territories rather than exclusively on domestic markets is what defines internationalisation. This touches directly on human resources and the policies that require development for the subsidiaries to match the standards set by the home countries. Thus it is important for resource managers to standardize the human resources policies for MNCs to operate in the same way. Globalization is the process in which firms integrate their functions across national boundaries therefore seen as bringing parts together in to a whole. As the world transforms into a global village following increase in technology, distance and time that things took to be accomplished has reduced significantly. It is easier for people to communicate easily and quickly despite the geographical boundaries. This makes it of greatly important for human resource practices to be standardised globally (Cyr, 1995). If the firms are going to match the criteria of other firms worldwide, human resource cannot be left behind. It is part and parcel of the Firm, perhaps the most important. Sharing knowledge and experience is of paramount importance to the growth of the MNCs. Future success of Multinationals depend on developing global efficiency, local responsiveness and the world learning simultaneously. All units operating through set rules and standards in an integrated network. The different approaches to achieving internationalisation of firms from different countries have long been in existence. As such, it is inevitable for different structures and practices to converge as they seek to solve what is now a common problem of achieving efficiency, responsiveness and acquiring knowledge in a similar context of international competition (Cyr, 1995).As more operations of Multinationals become cross-border, there is the possibility of a more global oriented firm whose home country if of little significant. The firms have no national identity or certain allegiances. This idea is supported by globalization and the increase in cross border mergers and allegiances. This further cements the need to have uniform human resource practices and operations across the borders. Context of management and HR policies Management decisions are commonly based on the constraints and influences of the international, national, political, economic, social and technological contexts. Differences in the national context such as laws related to employment and attitude towards the organisational hierarchy may mean that organisations in a particular country might be similar and at the same time different with those based in another country (Dowling et al, 2008). Similar technology of a sector of the industry could mean that countries could be organized in a similar way, for example oil refineries in different countries. Even if the external environment and technology are similar, the management in different organisations will not necessarily act in the same way due to disparity in organisational strategies, cultures and difference in perceived meaning of external activities. These are among the challenges that face human resource departments in an effort to be uniform across the borders. Both the industry and individuals operate in a multifaceted social surrounding. The social context influences people’s decisions in a pivotal way. These include the climate, culture, as well as norms (Rao, 2008). These especially affect the human resource decisions since such social environment shape the local people’s behaviour. This may lead to rejection of some ideas due to religious factors. For example, there are some countries that will not allow their women to work under certain conditions or dress in a certain manner. This becomes a major challenge in trying to regulate human resource policies and practices uniformly across the board. The political environment also influences the company’s decisions as they seek competitive advantage in a foreign land. Therefore the multinationals tend to rely heavily on the needs of the political system. Some may bring on board demands that are contrary to the international standards set for human resources practices. This challenges the uniformity in performance of multinationals across borders. On the onset of the 1990’s, international competition demands and advances in technology, the pillars of globalisation, have changed significantly the nature and operation of market place and the organisation of production in many industries (Durai, 2010). As such, individual companies are forced to innovate to produce the right product and at the right price. These factors have placed demands on enterprises to develop and implement new strategies processes and structures. There is an increasing need to change the old traditional practices in human resource management. This recent approach is based on a variety of industrial relations and human resource practices aimed at improving the flexibility of the workforce in an environment that gives precedence to communication, cooperation and trust between managers, employees and those who represent them. Industrial relations changing nature affects the way MNCs operate. However, adoption of this approach has not been universal or uniform. It is possible to harmonize the practices of industrial relations with those of human resource into achieving better growth of the organisation (Durai, 2010). In East and southern Asia, the increased decentralisation of human resource practices and policies has led to an emphasis on education and training in MNCs which has raised skills levels of the employees, leading to more productive companies in the region. Societal-based institutional factors present significantly influence the kinds of practices and policies that organizations adopt as well as the postures and practices they implement. Such arrangements and traditions are founded on national business systems and show the impact of factors for example the national industrial relations systems, the political system, and pattern of industrialization, labour and capital markets (Crawley et al, 2013).The European Union presents a good example to show the differences in the human resources practices and policies and especially labour regulation in a highly regulated country such as Germany and the UK or Ireland which are less regulated. HRM and IR in the UK are unregulated as compared to Germany which offers more competition in qualifications and tough regulations in employing young people and physically challenged. Germany also has well organized trade unions, collective agreements covering the largest percentage of workers, worker participation is institutionalized and the employer supported vocational education system (Crawley et al, 2013). It is therefore reasonable to have expectations that American MNC subsidiary with its operations in the UK or Ireland will experience lesser institutional pressures to modify their Human resource practices to be in tandem with subsidiaries operating in Germany or the Scandinavian countries where norms and values substantially differ from the favoured American practices. This contrast comes in as a result of differences in the extent of regulation in sectors such as work councils, participation of the employee employment rights which are less developed in the UK and Ireland as compared to Scandinavian countries and Germany. However, less is known about the tendency of European MNCs to localize their Human resource practices and models within their foreign subsidiaries. Evidence suggests that Corporations in Germany pursue more distinctive and completely different Human resource practices than the UK corporations (Sparrow, 2009). It is therefore reasonable to assume that German Multinational subsidiaries will employ distinctly Human resource practices and policies in their foreign subsidiaries. Due to the extensive differences between European Union member states in Human resource practices, norms and regulations, scholars argue postulate that European organizations will be more attuned to such disparities with less attraction to the idea of pursuing a standardized set of principles and operations despite the countries they operate in. Conclusion It is in order to posit that subsidiaries of American MNCs operating in the European Union Countries will tend to look for less localized and more standardized human resource practices than their counterparts in Europe. The present differences in approaches of subsidiaries from America and Europe to adopting the practices and policies of Human resource management are likely to go down as HRM regulations in the host countries go up (Sparrow, 2009). European subsidiaries have a higher possibility of conforming to local HRM practices than subsidiaries of American multinationals. American MNCs are generally seen as ethnocentric in that they want to instil their values and practices everywhere they go. Reference list Stahl, G. K., Björkman, I. & Morris, S. (2012). Handbook of research in international human resource management. Cheltenham, UK, Edward Elgar Pub. Harzing, A.-W., & Pinnington, A. (2011). International human resource management. London, SAGE. Cyr, D. J. (1995). The human resource challenge of international joint ventures. Westport, Quorum. Dowling, P., Festing, M., & Engle, A. D. (2008). International human resource management: managing people in a multinational context. London, Thomson Learning. Rao, P. L. (2008). International human resource management: text and cases. New Delhi, Excel Books. Durai, P. (2010). Human resource management. Chennai, Pearson. Crawley, E., Swailes, S., & Walsh, D. (2013). Introduction to international human resource management. Oxford, Oxford University Press. Sparrow, P. (2009). Handbook of International Human Resource Management Integrating People, Process, and Context. Chichester, John Wiley & Sons. Read More