Comparative Human Resource Management - Case Study Example

Comparative HRM Name Institution Course Date Comparative HRM 1. Introduction Multinational companies operate branches as well as businesses units within a number of countries. Human resources are faced with challenges related to putting up uniform company policies as well as bringing together culturally diverse individuals so as to form one employee company (Purcell et al., 2003). Therefore, human resources must learn local laws impacting employment hence keeping the workplace safe from tourism, natural disaster as well as health epidemics. Furthermore, theories associated with managing people have been moving back and forth without any complete control over both the people and the other resources. From past experiences, companies have adequately responded to challenges with regard to control and coordination in various ways (Contractor, Kumar and Kundu, 2007). Some companies have implemented matrix structures whereas others have concentrated on developing core building coordination capabilities (Bender and Fish, 2000). During the past years, international management have shifted their attention to effects of globalization on the organization of human resource all over the world. As more markets worldwide internationalize, more countries integrate into the world economy and thus choose to expand to their processes over their boarders. Issues that accompany people management as well as career development of individuals in these companies have become very crucial in the strategic planning and processes in companies (Contractor, Kumar and Kundu, 2007). Therefore, this report will analyse the human resource management challenges faced by multinational companies and the ways those challenges are addressed. 2. HRM and Multinational Companies Global HRM has not given enough attention to the multinational companies from upcoming economies in spite of any management domain (Simons, 2011). Within developing countries, multinational companies often tend to be of a smaller scale with few resources as well as international experiences when compared to their competitors in developed countries. This bounds their capability to transfer management practices within their subsidiaries. Past researches on the topic of multinational companies has recognized dual pressures for the necessity to adapt to home country as well as host country organizational environments when implementing HRM strategies. Therefore, there is little influence in HRM strategies at a subsidiary level for multinational companies from developing economies (Bender and Fish, 2000). National origin of companies has been identified as a fundamental shapers of HRM practices. These studies fail to address how cultural and organizational differences impact the distribution of HRM strategies by multinational companies from developing economies functioning in a developed economy (Simons, 2011). Therefore, the fundamental research question relates to discovering the matters connected with transfer of HR practice across boarders within multinational companies. Therefore, diffusion has to consider both local cultural as well as institutional background and the capabilities and incentives of managers to device best practices. Therefore, the main challenges accompanying multinational companies is the necessity to balance between the requisite for both international integration and local adaptation (Purcell et al., 2003). In addition, the connection between HRM and strategic management in multinational companies in developing economies emphasize on coordination and congruence midst a number of HRM practices. Effectiveness and human organization has been a differentiator between winners and losers in the 21st century (Contractor, Kumar and Kundu, 2007). These two criteria are especially critical in developing countries. Therefore, the origin of a country influences the HRM practices in multinational companies. Some researches reveal that the reassignment of a HRM policies and practices “can go in all direction’ rather than only from home to host nations. Empirical studies related to diffusion of HRM practices among multinational companies indicate that primarily adopt hybrid methods, linking both push and pull factors for conformity. This makes them suit the market they are serving (Simons, 2011). 3. Challenges 3.1 Managing the Risks of International Operation Despite the advantages that are brought about by operating globally, managing remote and diverse teams can bring about management challenges that many multinational corporations are still trying to tackle (Pudelko and Harzing, 2007). According to a research done in Multinational Companies, it is reported that approximately one-third of teams are not well-managed (Future HR Trends, 2016). There are a number of hindrances in running a virtual team. The members of any team should feel comfortable when operating in any company. In addition, in a global setting, time difference can pose a challenge in regard to complication and complexity of organization and coordination (Pudelko and Harzing, 2007). Human interaction tends to be less effective when there is lack of face-to-face communication. Teams and social bonds can prove to be very difficult to establish when people meet virtually in a multinational corporation (Stahl, Björkman, and Morris, 2012). This makes it hard to develop an environment of trust and cooperation among employees thus results to regular misunderstandings. And in case of any misunderstandings, it may be very difficult to resolve them. Nevertheless, research suggests that cultural and linguistic differences tend to pose a far more difficult challenge for multinational corporations to manage (Machado, 2015). Cultural differences appear in a more wide range of values as well as attitudes that enhance the potential for failure in team cohesiveness in multinational enterprises. Cultural and linguistic misunderstanding tends to be very costly in terms of significant losses (Stahl, Björkman, and Morris, 2012). Cultural and linguistic challenges may bring about communication misunderstandings and breakdown. 3.2 Retaining and Engaging a Diverse Workforce As the demographic configuration of a given workforce changes, motivation as well as expectations also changes (Ferner, Almond and Colling, 2005). Human Resource understands fully what is valued by employees. Human Resource also is required to acclimatize their incentives and benefits policies among others since not all workers are motivated by financial compensation. Hiring able employees is just not enough. Organizations are expected to ensure that their employees are well motivated and are productive which tend to incur additional costs especially in multinational corporations. This is not an easy undertaking (Ferner, Almond and Colling, 2005). In a global setting, multinational companies are faced with the challenge of retaining and motivating a diverse workforce found in different areas of the world. A wide range of the workforce in multinational organizations is not fully engaged in their tasks due to the size and complexity of these companies (Machado, 2015). Lack of motivation of employees may lead to poor performance and productivity. Human Resource in any international corporations is expected to build a global employee community. In order to retain employees, Human Resource in any company is expected to unify their functions which include recruitment, hiring, retrenchment and compensation policies (Machado, 2015). Research suggests that multinational organizations with disconnected Human Resource functions can potentially fail as a result of lower retention rate and motivation of employees (Machado, 2015). Therefore, disconnection of Human Resource function in a multinational company can be the cause of retention and motivation challenge across a global employee community. 3.3 Winning the War for Talent People migration within nations as well as in cross-border may increase the complexity of given labor market in multinational corporations. Entities such as the government may be a huge determiner of such a flow of the labor market (Future HR Trends, 2016). Nevertheless, as firms endeavor to expand across the globe and come across skills and expertise shortage locally, these firms need to have a more mobile workforce. Consequently, corporations and governments often seek to get accustomed to the way migration patterns tend to affect labor market (Future HR Trends, 2016). Governments are in a dilemma of the importing the required skills for the betterment of the economy and the growing pressure to curbing immigration. In the regions where strict immigrant laws are in existence, Human Resources tend to have limited amount of the talent pool in which they can employee. This can make it hard to hire the right people with right skills and expertise. On the other hand in regions with freer immigration laws and regulations, Human Resources is required to define their hiring techniques and strategies in order to tap the right workforce in a larger workforce pool available (Future HR Trends, 2016). In addition to integrating different cultures in their workforce and attracting necessary pool of skills and expertise, multinational corporations should hold onto the complexities of migration laws in order to ensure that they hire employees who can legally work in a given country. Getting accustomed and conforming to migration legislation can prove to be a costly process which requires a multinational corporation to hire lawyers and extortionate visa charges (Future HR Trends, 2016). It can be more difficult for Human Resources especially where these policies and laws fluctuate constantly. 3.4 Culture Differences Culture plays a crucial role in Human Resource Management in a multinational business. It involves the understanding as well as the management of a new social system. Culture can be defined as the way people operate (Bolden-Barrett, 2015). Many elements in the culture affect international Human resource Management of multinational organizations. Managing the global workforce within a company has intensified the pressure in HRM since it is required to acclimatize to cultural differences. When this is ignored cross-cultural misunderstanding can result (Bolden-Barrett, 2015). Multinational Corporations are faced with the challenge of managing cross-cultural relationships. As mentioned earlier, Human Resource is expected to develop a global employee community aligned to the values and identity of an organization. For this alignment to be possible, multinational corporations often send their best employees overseas. Nevertheless, diverse cultures and language differences can be a hindrance (Bolden-Barrett, 2015). 4. Ways of Dealing with the Challenges 4.1 Dealing with Risks of International Operations Cross-border teamwork is very fundamental to international organizations since it can have an impact of their performance (Brewster, Sparrow and Harris, 2005). Therefore, it should not be left for managers alone to solve by themselves. Managers require assistance on the way they approach international operation challenges. Adequate financial resources should be allocated to information system and technology which acts as an essential element in the performance of virtual team within a multinational corporation (Brewster, Sparrow and Harris, 2005). In addition, leadership training concerning resolution of conflict and enhancing mutual trust and effective communication should be carried out in order to reduce the risks of international operations in terms of cultural and linguistic challenges. Human resource also should integrate global risk-management as well as the continuity planning which, would enable an organization prepare for any international challenge (Brewster, Sparrow and Harris, 2005). Human Resource furthermore should understand and anticipate global risks that may bring about negative results on Multinational Corporation’s brand and image. Human Resource Management should be well-prepared with effective corporate intelligence in order to tackle cultural and organizational difficulties (Brewster, Sparrow and Harris, 2005). 4.2 Dealing with Retention and Motivation Challenge In order to overcome the retention and motivation challenge, Multinational Corporations should utilize identical information technology system and processes and policies for handling employees in every business unit found around the world (Bolden-Barrett, 2015). In addition, motivational strategies among the employees should be put in place especially where there is intense competition. According to Maslow hierarchy of needs, employees cannot be motivated only by attractive compensations and salaries alone. There are a number of elements that can motivate employees such as engaging employees in decision making process, appreciations of employees frothier work and encouraging work-life balance to name a few (Bolden-Barrett, 2015). In addition, another way of motivating and retaining diverse workforce is to use the size of the multinational company as a motivational tool. This can be done through offering different assignments in different regions of the globe to employees performing well. This allows the organization uncover skill gaps and offering opportunities to employees with high potential (Bolden-Barrett, 2015). 4.3 Dealing with Difficulty of Winning War of Talent In order to be able to prepare and motivate employees to work overseas, Human Resource of any multinational corporation should redefine mobility strategies and programs and should also make sure it meets deployment demands such as access to medical care and substantial living standard (Ericksen and Dyer, 2005). As organizations expand to areas around the globe with unstable political factor, employees may be unwilling to work in such places. Therefore, appropriate security measures should be placed in order to ensure employees are secure and safe. Research suggests that the inability of an employee to get accustomed to a new work environment may be the cause of poor performance in the international level (Schuler, Budhwar and Florkowski, 2002). Consequently, multinational corporations should offer imaginative support to the employees in relation to global mobility. In addition, organizations should come up with ways in which they are able to attract larger workforce pool in the international market in order to stay on top of their competitors. 4.4 Dealing with Cultural Differences Multinational companies are advised to avoid overlooking culture differences when filling important positions (Bolden-Barrett, 2015). It can be very difficult for organizations to develop overseas employees when they just focus their attention on home employees. When it comes to hiring, multinational corporations should consider employees with new and different perspectives in terms of culture difference in the workplace (Bolden-Barrett, 2015). In addition, companies should train their employees in areas related to culture understanding in order to avoid miscommunications resulting from cultural differences. Companies should also develop a number of management programs in order to solve the cultural diversity issue in multinational corporations. 5. Implications and Recommendations The characteristic feature of HRM is the fact that it enhances the performance of an organization through its own people. Therefore, for an improvement of an organization to be noticed, both policies and processes that promotes HRM should be put to work hence significantly improving the business performance of an organization. (Guest et al., 2000a). HRM is very significant especially in multinational companies since it enables the management effectively consider the well-being of their staff members. It enables the management specifically look into the various issues within the organization with regard to the members. This helps the organization build on their acquisition and the development of their employee skills (Guest et al., 2000a). It also improves flexibility, responsibility and variety in terms of job design. It also brings in a great variation of profitability and productivity within a multinational organization. HRM areas within multinational organizations require great improvement and should be given much priority (Chang, Wilkinson, and Mellahi, 2007). This will help reduce the gap between strategic focus and operational focus. As mentioned before, HRM activities within multinational corporations ought to be prioritized since it enables improvement within an organization. Therefore, organizations should put in place policies that promote effective management of human resource. Companies that don’t have a human resource department should also come up with one. This will enable them take care of their employees needs in a very organized manner thus improving organizational performance (Bender and Fish, 2000). 6. Conclusion To sum up, the management of human resource in multinational companies haven’t been given enough attention, especially in developing countries. Despite the rising rates of globalization, of both trade and commerce, there exists a substantial difference in which multinational organizations in different nations organize and manage their business activities. This specifically applies to ho they manage their employees. The increasing investments in developing economies require management practitioners who will ensure that ways in which multinational companies strategically diffuse and coordinate management practices. For a long time, HRM literature as well as practices have been immersed in Western thinking and thoughts with minimal cross-pollination. This exposes them to quite a number of challenges. This bounds their capability to transfer management practices within their subsidiaries. These challenges includes: managing the risks of international operations; retaining and engaging a diverse workforce and winning the war for talent. On the other hand, there are various ways in which these multinational companies deal with these challenges. They employ procedures such as dealing with risks of international operations. In addition, these companies all deal with retention and motivation challenges. References Bender, S and Fish, A 2000, ‘The Transfer of Knowledge and the Retention of Expertise: The Continuing Need for Global Assignments’, Journal of Knowledge Management, 4(2), 125–35. 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Ferner, A., Almond, P & Colling, T 2005, Institutional theory and the cross-national transfer of employment policy: the case of ‘workforce diversity’ in US multinationals, Journal of International Business Studies, 36(3), 304-325. Future HR Trends 2016, Future HR Trends, Retrieved 30 March 2016, from http://futurehrtrends.eiu.com/report-2014/challenges-human-resource-management/ Guest, D E, Michie, J, Sheehan, M and Conway, N 2000a, Employee Relations, HRM and Business Performance: An analysis of the 1998 workplace employee relations survey, CIPD, London. Machado, C 2015, International human resources management: challenges and changes, Cham, Springer. Pudelko, M & Harzing, A 2007, Country-of-origin, localization, or dominance effect? An empirical investigation of HRM practices in foreign subsidiaries. Human Resource Management. 46(4): 535-559. Purcell, J, Kinnie, K, Hutchinson, S, Rayton, B and Swart, J 2003, People and Performance: How people management impacts on organisational performance, CIPD, London. Schuler, R. S., Budhwar, P & Florkowski, G 2002, International human resource management: Review and critique, International Journal of Management Reviews, 4(1), 41–70. Simons, R 2011, Human resource management: issues, challenges and opportunities, Oakville, Ont: Apple Academic Press. Stahl., Björkman, I. & Morris, S 2012, Handbook of research in international human resource management, Cheltenham, UK Northampton, MA: Edward Elgar Pub. Read More