International and Comparative Human Resource Management - Assignment Example

International and Comparative Human Resource Management Student’s Name Course Details Instructor’s Name Date Qn 1: The main reason why EBMC applies the polycentric approach is due to the assumption that there exists a difference in the countries it operates in. This implies then that every subsidiary in the countries it operates has to locally develop perfectly outlined practices under the supervision of local managers (Treven, 2001: 177-189). Though this approach has worked in favour of EBMC, there exist a number of benefits and drawbacks, which are discussed below. Advantages of Polycentric Staffing Approach Involvement of low labour costs: Running a subsidiary in a host company requires the presence of skilled and knowledgeable employees who are mostly recruited from a host country. EBMC are likely to benefit through this approach as this will decrease labour costs. Hiring expatriate managers proves to be very expensive for MNEs (Dutta, 2010: 397). Here, EBMC utilizes the functional flexibility mode, developed in the Artkinson’s labour flexibility model (1985). By hiring local employees who are multi-skilled to top managerial positions, EBMC will be able to remain functional, despite the changes in product market and technology. Such employees manage to facilitate quick and smooth deployment between activities and tasks, thereby, reducing costs of hiring an expatriate. Increases the acceptance of the company by the local community: A foreign company that is operated by a local manager has higher chances of being accepted by the local community than one operated by an expatriate. Maximizes available options in the local community: Local managers are able to understand their local environment more than an expatriate. This implies that local managers working for EBMC will work effectively, since they understand the political view points and cultural values of the local community. Companies are recognised as players in the development of the economy: For EBMC to succeed in foreign countries, it is important to have the company recognized. This can be achieved through taking part in development initiatives in the community. Using local managers, EBMC is likely to identify areas to offer support, which adds value, thus bringing recognition and praise. This is a good way to build trust from local citizens. Disadvantages of a Polycentric Staffing Approach Provides difficulty in balancing global and local priorities: When it comes to addressing issues of priority, a company could face major problems if it is detached from its subsidiaries. To maintain balance in such a scenario, EBMC should ensure that its managers both locally and internationally are able to transfer knowledge in an effective manner and resolve issues without getting into conflict. Inability to recruit Professionals: As a result of competition across the market divide, finding and recruiting skilled professionals has been a daunting task for most MNEs, including EBMC. This has been caused by the scarcity of a skilled workforce, which can run the subsidiary in its interest. Available literature reveals that there is high demand for talent, hence creating scarcity (Teargarden, 2008: 190-202). Cultural Differences: Cultural differences provide great challenges to human resource management. The attitude of workers; social values, beliefs, et cetera, are some of the factors that affect industrial relations, productivity, and loyalty towards the firm. Changing political environment: A firm such as EBMC operating from the context of a multinational perspective is bound to encounter confrontations from different environments in relation to government policies and regulations regarding labour laws. Recommendations of negative issues in a polycentric staffing approach To address the negative issues, EBMC needs to conduct an assessment focus on a communication strategy that works in its favour, in terms of diffusing knowledge. This will help in balancing issues of high priority both globally and locally. Additionally, it is important that EBMC assesses its staffing approaches, and review its HR policies, if it needs to compete globally. This move will ensure that there is employee retention. Thus, the firm will save time in trying to recruit and train new employees. Finally, during the process of recruiting potential managers for job positions, through retaining experienced employees, EBMC should focus on training and development in a cross-cultural context. This promotes awareness in issues related to the firm. Therefore, managers need to understand the political, economic, cultural and legal environments which they are assigned. Qn2: For EBMC to diffuse key knowledge across the board there is need for establishing a network. This is a key undertaking that has been adopted by many MNEs (Rugman & Verbeke, 2001: 237-250). An important implication of the network view is that the hierarchical relationship between the headquarters (parent firm) and the subsidiaries (Host Company) is de-emphasized. According to Kogut & Zandler (1993: 502-518), the network MNE, in this case EBMC, is viewed as a “social community” or a “heterarchy”. With respect to this, the EBMC can be described by Ghoshal & Bartlett (2000: 603) as “a group of geographically dispersed and goal disparate organization that includes its headquarters and the different national subsidiaries”. As the emphasis on authority relations within EBMC declines, attention to knowledge flows will increase. Knowledge is an integral part, if not the most important strategic resource of firms (McEvily & Chakravarthy 2002: 285-305), and the ability to share knowledge between units of EBMC is an important basis of competitive advantage of firms. The ability to share knowledge across national borders is the prime reason behind the formation of MNE such as EBMC (Gupta & Govindarajan 1994: 443-457). McCann & Mudambi (2005: ) state that within an MNE network, knowledge may be created in one location, and put to productive use in many other locations. Therefore, EBMC as an organizational form arises, according to this view, because it portrays “superior efficiency as an organizational vehicle by which to transfer meaningful knowledge across borders” (Kogut & Zander 1993: 625-646). It is the “synthesis” of knowledge originating in diverse locations that is seen to be the key source of MNEs innovation (Hakanson & Nobel 2001: 395-420). It has also been found that inter-unit trips and visits,International committees, teams and task forces, and training involving teams from multiple units, have been seen to positively influence knowledge outflows from a subsidiary (Bjorkman et al., 2006: 443-455).Subramaniam & Venkatraman (2001: 359-378) discovered that cross-national teams positively influence cross border knowledge flows. In all cases, the informal face-to-face nature of the social interactions promoted by the focal mechanisms stands out. Ideally, social interaction serves as an efficient conduit for knowledge transfer. Implications: Managerial Aspect The overriding recommendation can be made from the research literature is the advice to managers at EBMC to consider the network characteristics of the internal MNE environment when making decisions concerning knowledge development and sharing. In their direct relationships with subsidiaries, EBMC headquarters can influence knowledge streams by means of formal coordination mechanisms. However, for many contemporary MNEs, this is only part of the story, and lateral knowledge flows between subsidiaries are increasingly seen as equally important. With respect to EBMC, my analysis suggests that whereas vertical knowledge flows may be increased by giving a subsidiary less autonomy, this parameter does not influence knowledge sharing between subsidiaries. Lateral knowledge flows seem to be more strongly linked to the relative strength of subsidiary capabilities, and to follow workflows. This implies that knowledge is shared between subsidiaries when something valuable is offered that is connected to the main tasks of the focal subsidiaries; hence, EBMC should adopt this approach. Having a requisite level of informal social interaction between managers from these units is an important condition for this knowledge sharing. Hence, vertical knowledge sharing within the organisation can be organized in a top-down fashion, but lateral knowledge sharing can better be stimulated by headquarters by enabling social interaction between subsidiaries. In the event that EBMC wants to stimulate the sharing of knowledge, there is need to invest in coordination mechanisms. However, this may prove to be costly in terms of both management time and travel expenses. Nowadays, information technology enables MNEs to achieve a certain level of informal integration by working with “virtual teams”, avoiding the high costs of face-to-face contacts. However, virtual teams pose their own particular management challenges (Kirkman et al. 2004: 175-192), and it remains an open question to what extent virtual teams can substitute for face-to-face interaction (Kiesler & Cummings 2002: 37-80). Managers should thus be aware that to the extent that face-to-face interaction is important, intra-MNE knowledge transfer is far from costless. Hence, EBMC managers need to carefully select the nodes in the MNE network that they want to engage in intensive lateral knowledge sharing, and concentrate the use of intensive interaction mechanisms on these nodes. Importance of Diffusing Knowledge within EBMC The distinction between the different types of knowledge is important within EBMC not only because the internal transmission of know-how is one of its raisons d’être (Kogut & Zander 1993). It should also be taken into account because information flows within it (EBMC) also comprise routine orders. For example, from headquarters to subsidiaries and reports from subsidiaries to headquarters. These flows of “declarative knowledge” (Harvey & Anderson 1996: 69-96) are closely tied to the formal organization. Know-how, in contrast, is a form of “procedural knowledge” (Anderson 1983): the knowledge about how to do something, which may plausibly be assumed to be associated to other internal mechanisms than declarative knowledge. Qn3: In the quest to achieve global success, EBMC should make an effort of ensuring that any potential issues that can impact the firm negatively are avoided. Currently, going by the HR repatriation policy employed at EBMC, the MNE risks experiencing challenges such as failed assignments as a result of premature return of expatriate(s), and loss of dissatisfied expatriates as a result of poor repatriation. Moreover, since the process of repatriation is a costly process, EBMC could more likely have its performance capabilities as an international firm threatened; and incur negative returns with respect to human resource investments. In the case of EBMC, there should be proper planning strategies for the repatriation process, during an expatriate selection process. If such strategies are implemented by EBMC, employees are more likely to express their commitment and loyalty to the company. Failed Assignments (premature return of expatriates) This refers to the return of an expatriate before expiry of the contract period. In the case of EBMC, 90% of workers are in host countries. Therefore, once in a while, an employer will be forced to return home following dismal performance, cultural shock and dissatisfaction (Harvey, 1985: 84-92). Following the premature return of an expatriate, a replacement is necessary (Bird & Dunbar, 1991: 145-156). Thus, if such an issue arises within EBMC, losses will be incurred. This is not a crisis EBMC will avoid, considering its current approach towards repatriation. Failed Repatriation (turnover intention) As a matter of fact, EBMC does not guarantee any opportunities for expatriates once they return home from international assignments. This is a setback, since majority of the expatriates are likely to leave the firm due to reason such as lose of autonomy, inability to provide career development, et cetera. EBMC should come up with strategies for proper repatriation strategies, which will help in core employee retention. This can also be reflected in the case of EBMC, where the HR management failed to retain core American employees who were important for the overall firm’s performance. EBMC seeks to establish itself as a respectable MNE as it continues to grow globally. Notably, finding new talent is proving to be difficult for EBMC. Therefore, it is of utmost importance for the firm to develop favourable HR policies, which can help in the effective management of human resource on a global scale. This will motivate the employees, and they result is that more employees will appreciate taking up international jobs. This is a sure way to show that the firm supports expatriates, and is willingly focused towards the success of its employees. Therefore, the resulting diversity of repatriated employees can be considered to pose challenges to EBMC as a MNE. With proper HR policies, as mentioned above, having been developed, there is facilitation of equitable and efficient management of the policies (Harzing & Pinnington, 2011). Lastly, there is a need to champion for awareness of the need to have such effective HR policies. This move could oversee an increase in the retention numbers of experienced professional expatriates (Morley). References Anderson, J. 1983. The architecture of cognition. Cambridge, MA: Harvard University Press. Artkinson, J. 1985. ‘The Changing Corporation.’ In New Patterns of Work, ed. D. Clutterbuck, Aldershot, UK: Gower, pp. 13-34. Bird, A., & Dunbar, R. 1991. Getting the job done over there: Improving expatriate productivity. National Productivity Review, Spring, 145-156. Bjorkman, I., Barner-Rasmussen, W., & Li, L. 2004. Managing knowledge transfer in MNCs: The impact of headquarters control mechanisms. Journal of International Business Studies, 35(5): 443-455. 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McEvily, S.K., & Chakravarthy, B. 2002. The persistence of knowledge-based advantage: An empirical test for product performance and technological knowledge. Strategic Management Journal, 23(4): 285-305. Rugman, A., & Verbeke, A. 2001. Subsidiary-specific advantages in multinational enterprises. Strategic Management Journal, 22(3): 237-250. Subramanian, M., & Venkatraman, N. 2001. Determinants of transnational new product development capability: testing the influence of transferring and deploying tacit overseas knowledge, Strategic Management Journal, 22 (4): 359-378. Teagarden, M.B, Meyer, J and Jones, D. (2008) Knowledge – sharing among high-tech MNCs in China and India : Invisible barriers, best practices and next steps. Organizational Dynamics, 37 ( 2) : 190- 202. Read More