The Growing Revolution in Managing Employees Internationally - Essay Example

TOPIC: INTERNATIONAL HUMAN RESOURCE MANAGENT (IHRM) By student’s Name: Code+ Course: Instructor’s Name: University Name: City, State: Date of submission: INTRODUCTION An imperative advance in the area of international business for the last few decades has shown an increase in the development of multinational enterprises (MNEs), which are currently acknowledged as one of the key drivers of globalization. The rise of these enterprises has led to the another distinguished field of international human resource management (IHRM), that focuses on training, rewards, recruitment and a range of related areas of human resource management(HRM) in a global scenery (Pfeiffer 1994). Recent research conducted on MNEs sought to establish how these enterprises use expatriates in host nations, how they select them, train and manage such employees which find it difficult to adopt cultural traits of host countries (Mohamed et al 2013). The expatriates may find it cumbersome to fit in the societal context absorbed in the economic as well as social institutions of the host country which might have an implication on processes and practices that such companies may wish to adopt. INTERNATIONAL HUMAN RESOURCE MANAGENT (IHRM) IHRM is the issues related to management of human resource coupled with some of the problems that come along with globalization of business organizations as well as the policies, strategies and practices that businesses have to respond to in the face of internationalization process (Harzing,A W and Pinnington,A H 2011). A multinational enterprise’s (MNE) IHRM system can be defined as number of different activities, processes as well as functions that are channeled at attracting, maintaining as well as developing an MNEs human resources and that is considered as an assortment of several HRM systems that are used to management of people in multinational corporations (MNC) at home country and overseas (Boyer 2006). MNEs have played a great role in Australia like it has done in many other economies like China. Australia has a ratio of approximately 35% of Foreign Direct Investment (FDI) in relation to its Gross Domestic Product (GDP) that is significantly higher than that of developing countries estimated to be 27%. Most of the internal source of FDI is attributed to United States of America which is estimated to contribute to a quarter of inward FDI. Other important sources of FDI are attributed to Japan, New Zealand, the UK as well other countries in the European Union in regard to internal and external investments. In the recent past, India and China have become one of the major trading partners with their interest in Australian natural resources which has also become a major attraction of FDI in Australia (Levy & Williams 2004). IHRM VERSUS DHRM Domestic Human Resource Management is the procedures and processes involved in allocation, procuring and efficiently utilizing human resource in home country. On the other hand, International Human Resource Management is the process and the procedures that are involved in allocating, procuring as well utilizing human in a multinational enterprise. IHRM is more complex than DHRM as it is comprised of an array of activities. These activities comprise coordination of foreign currencies as well as exchange rates, orientation of employees in a global perspective, international taxation, etc (Rugman 2003). Human Resource Managers encounter difficulties in relation to the management of human resource issues while working in a global environment. This means that they manage employees from different nationalities and therefore the need to come up with HRM systems for dissimilar locations. While in a domestic setting, human resource manager address issues to employees who are from the same nationality. Similarly IHRM needs more involvement in employees’ personal life. This implies that HRM o a multinational corporation need to ensure that the employees working in foreign country is knows all matters related to package compensation provided overseas like the cost of living as well as taxation. Further, the HR needs to organize for certain issues like family relocation, give the necessary assistance to the family in adoption of foreign culture through offering of cross-cultural training and making sure the children are admitted into preferred schools. In case of domestic setting the HR manager’s issues related to relocation of family is limited to just providing insurance covers or offering transport facilities if there is domestic transfer. On the other hand foreign employees are exposed to risks which may include safety as well as health risks as compared to domestic workers. One of this major risks associated with IHRM is terrorism. Several multinational enterprises need to take into consideration this risk while assigning duties to employees in a global setting (Gooderham & Brewster 2003). ACTIVITIES OF IHRM Performance Appraisal These are tools used in the management of workforce in rational, purposive and organized manner. Performance appraisal incorporates some of the natures of HR norms that includes; equity, fairness, rewards, social context, employee reactions and some of the attitudes towards conflict management (Dore 2000). A valid system of PA is thereby required in order to create a distinction between productive and unproductive employees to enable to facilitate equal allocation of rewards, dissemination of information and provision of desired outcomes. PA is used as an instrument for monitoring the performance of employees and can be used in making decisions related to promotions as well as employee compensation (Chiang & Birtch 2007). Incentives and rewards A reward is a toke given to an employee in order to recommend his/ her exemplary performance in work. It can therefore take different forms such as benefits as well as salaries. Giving rewards and incentives to the employees helps them to be more committed in their places of work and also it helps in shaping their behaviours. This is meant to improve the employees performance at all levels within a given organization (Dore 2000). GLOBALISATION Globalization can be defined as process where the world is changing in which the world is transforming into an inter-reliant global economy which is seen as the best achievement that has been achieved by the economy of the contemporary world. Globalization has various drivers that include communication drivers, transportation drivers as well as drivers associated with international trade. It refers to the process of unifying that is widely used in distinct markets with sophisticated customer needs, tastes and preferences which requires constant advancement in the level of technology used to satisfy these needs (Sparrow and Brewster2006). It comes as a result of rising numbers of enterprises in an international setting and the decisions to be taken by the HRM for such businesses to remain competitive as well as ability to employ necessary technical knowhow in production and distribution of goods and services to serve customers’ interest better. This growing trend in business has had an effect on the DHRM as the parent country is forced to abandon it practices and adopt those that best suit the global market demands. This involves a range of a range of developments in the level of technological advancement and employee development (Chen, Lawler & Bae 2005). SCHOOLS OF THOUGHT ABOUT IHRM To start with there are theories that advocates that MNCs have the tendency to pursue common practices First, there are theories that suggest that MNCs will tend to follow common practices in whichever country they might be operating in due to ethnocentricity or due to global homogeneity. However, in any case the effect of home country is minimal. Secondly, there exist theories on local isomorphism which maintains that firms will constantly change their policies to accommodate existing cultural perspectives in the country in which they operate. Thirdly, there exist duality theories that argue that firms encounter disagreeing pressure either towards or away from home practices, which may be driven by an assortment of issues which may be regulatory or those that relates to size, conditions of market or strategic decisions made by the manager (Brown & Heywood 2005). CULTURE IN IHRM National culture can be defined as assumptions, beliefs as well as values learnt by individual at early stages of his/her life and that differentiate him/her from one group of individuals to another. National culture is fixed in day to day life and unreceptive to change. However, national culture has great influence on the HR manager decision making process as well as the leadership style adopted in various multinational enterprises (MNEs). National culture may also have some influence on performance appraisal where loyalty, obedience and positive attitude towards work is required for employees to work together with human resource managers to realize the organizational goals and objectives. The management of MNEs often use performance appraisal using behavioral criteria instead of results criteria. Members of staff and subordinate workers have minimal exposure to risk while following already established procedures instead of having to adopt other new procedures which may result into a failure (Boyer 2006). The way an organization is managed is solely determined the culture of the organization in question and the underlying environmental factors. The connection between organization culture and the human resource management can be clarified as follows. For instance, when a staff from a certain organization appreciates and is conversant with the organization culture which is the trend followed in that particular organization, it will enhance his/her ability to decide on the best strategy as well as behaviors that may be in line with their personality together with the main activities of the organization. CONCLUSION So as to develop, build as well as maintain business entity, multinational enterprises require adopting practices that are reliable in global management of work force. On the other hand for them to be able to operate smoothly in a domestic setting they need to be in line with specific cultural practices in the localities in which they operate. Yet, and in order to be effective locally, they also need to adapt those ways to specific cultural requirements of different societies. Whilst international setting of an organization may target uniformity, on the other hand different cultural environments might require differentiation (Boxall, Purcell, and Wright 2007). REFERENCES Harzing,A W and Pinnington,A H 2011, International Human Resource Management. London: Sage Boxall, P., Purcell, J., and Wright, P 2007, The Oxford Handbook of Human Resource Management. Oxford: Oxford University Press. Boyer, R 2006. ‘How do institutions cohere and change?’. In P. James and G. Wood (eds), Institutions and Working Life. Oxford: Oxford University Press Brown, M., and Heywood, J.S 2005, ‘Performance Appraisal Systems: Determinants and Change,’ British Journal of Industrial Relations, 43, 657–679. Chen, S.J., Lawler, J.J., and Bae, J 2005, ‘Convergence in Human Resource Systems: A Comparison of Locally Owned and MNC Subsidiaries in Taiwan,’ Human Resource Management, 44, 237–256. 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Rugman, A 2003, ‘Regional Strategy and the Demise of Globalization,’ Journal of International Management, 9, 409–417. Sparrow, P.R., and Brewster, C 2006, ‘Globalizing HRM: The Growing Revolution in Managing Employees Internationally,’ in The Human Resources Revolution: Research and Practice, eds. C. Cooper and R. Burke, London: Elsevier. Read More