International Human Resource Management - Essay Example

International HRM Globalisation has made the world much smaller than what it used to be and the managers of today are often placed in companies which have offices and distributed teams in different countries. With the emergence of China a manufacturing powerhouse and India as a technology centred countries, companies may find themselves with head offices in London while the production or development work is carried out in Beijing or Bangalore. This of course means that there are new challenges which must be addressed by the human resource mangers of an MNC. HR managers can now be called on to create company wide policies which affect the people working in London as much as they affect employees working in other parts of the globe. Introduction Implementing a global policy is never an easy task since the HR manager who is assigned to the job may have to balance several cultural, national and business systems related issues. Cultural differences are probably the widest set of problems since the phrase is used as a generic term for all the differences which people may have in their workplaces from country to country and region to region. In fact, I think that the elimination or at least the reduction of cultural differences could be the best course of action a HR manager could take. This is actually at the heart of the definition of globalisation where we are heading towards a mixture of cultures that represent us as human beings. The company wide HR policies can be a document which sets up the culture of the company even as an isolated bubble in a country where the outside culture is significantly different. However, this could also be asking for trouble as going with policies which are very much at odds with local cultures can create resentment and even a loss of human capital. MNC Origins The problems are compounded by the fact that MNC by their nature and definition may have origins in countries other than their main operations (Edwards & Kuruvilla, 2005). Wipro originated in India for example but has established offices in Sweden and London. Microsoft still calls the U.S. its home, yet the majority of their software is developed in India. An HR manager therefore, might consciously or unconsciously found the companies policies in the culture of its national origins thereby somewhat defeating the purpose of an international HR policy (Faulkner, et. al. 2002). To carry over the same style of HR management between countries with vastly different business cultures is very difficult. The situation which comes about in these cases is that important strategic HR related decisions are taken (often solely) by nationals of the home country and orders are passed to line managers in satellite offices (Edwards & Kuruvilla, 2005). The policy creation system from the home base of the firm, particularly the net cultural influence can be used as an explanation for the existence of global trends in International HR management. Factors that Influence Success Successfully creating and implementing an international human resource management policy is a complex operation which is dependent on many factors. We can consider interactions between HR policy creators, level of decision making centralisation nature of business, adaptability of employees, political relations between home and branch offices, diversity of the company and several other important aspects which all come together to make the policy a brilliant triumph or a spectacular failure. None of the factors can be given importance over the other since all are essential for any multinational company. Culture Culture is a word with many definitions and to use it in the context of this paper could create an implication that we are solely discussing the organizational culture of an MNC. However, that is not entirely true since other than the organizational culture, we must also examine the differences in national culture which have a definite impact on the operations of a company. While it is possible to say that the culture of the organization will be more powerful within the walls of the company, Laurent believes that the effect will be temporary and will be eventually detrimental to the enforcement of HR policies (Laurent, 1986). Even though Laurent wrote about culture affecting MNCs nearly twenty years ago, I believe that the ideas he gave are still true. Particularly those which concern the international management of human resources within multinational enterprises where he compares the culture of the office in the host nation as opposed to the culture of the host nation itself. He examines situations where there is a possibility of a significant culture clash in terms of various cultural relationships that exist between the employer and the employees in terms of work performance (Laurent, 1986). Employee Norms It is proposed that the employees in host countries may adjust their working cultures to head office specifications but the culture in which they had been born and raised could never be completely taken out of them. Deeper societal norms (which the employees are already used to) may be utilized to change the meaning they take from company values and mission statements and eventually give the company altered/unexpected outcomes from their strategic management and human resource policies (Laurent, 1986). Therefore, Laurent (1986) proposes that the national culture of the country should never be ignored and in fact should be made an essential part of any HR mandates used in the management of the MNC. According to him, the purpose of international human resource management is essentially to use all that they know and come up with solutions to a cultural equation between the national and organizational setups. Additionally, Kidger (1991) says that British managers have frequently been asked to learn from the management practices of other countries which are thought to be better in HR management than the U.K. They have been told about practices followed in the U.S. Sweden, Germany and Japan as comparisons to what can be done to handle international HR issues. However, they must realise that any manager considering a successful HR policy or idea from one country to another has to consider national culture differences. Since many management practices may be dependent on the culture (Kidger, 1991). As a counterpoint to the national culture arguments there are critics who say that giving national culture too much importance dulls the edge of HR policies and HR managers should look at other influences like the company’s embeddedness within the country and division of labour. Since culture is difficult to define and can often change very quickly as per external influences, Edwards & Kuruvilla, (2005) suggest that the internal politics and the workings of the organization will have a greater effect on the human resource policies than the cultures the MNC is connected with. Organizational Politics Edwards & Kuruvilla, (2005) made MNC politics on an international level a primary focus of their research and have stated that it is a fulcrum for creating human resource policies. Formal authority roles remain the main source of power in an international company but power can also be created by persons or departments who control the resources within an organisation. Since the majority of cases have the home office controlling resource allocation, power resides at the centre and the culture of that centre radiates outwards to branch offices. However, this also creates resentments towards the policies given by the home office and HR management may suffer due to the internal politics of the widely distributed company. In fact, the situation may get to the point that managers at local level may seek to negate corporate HR policies coming from the home office. They may create hurdles during policy creation or even block the policy from being enacted in the branch office without informing the base. Edwards & Kuruvilla (2005) say this tends to happen when local managers see their own influence erode or their culture come in clash with the company’s policies. Local Managers While this may seem like a bold step from the local managers, their strength comes from the fact that corporate level managers in the home office depend on workplace managers in branch offices. Further, the capacity of branch managers to challenge orders from the home office will be bigger where corporate-level managers have significant communication barriers between them (Edwards & Kuruvilla, 2005). The effect of communication and the help it gives in establishing company wide HR policies will be discussed at a later point but for the moment, it must be understood that local managers can and will defy HR policies which are not devised with care. Local managers in branch office positions become key players since the HR policy will be useless without their support. The can serve as the HR managers best friend in terms of crucial intermediaries between the firm and the local employees since they have knowledge about the local systems in ways a foreigner can never have (Edwards & Kuruvilla, 2005). However, if they choose to resist the HR manager, they can create a lot of headaches as described by Broad (1994), in the case of Japanese MNCs working in the UK where British managers showed extreme resistance to the company’s global policies. Home Office Managers While local managers take a lot of heat for resisting and stopping the implementation of HR policies coming from abroad, players at the headquarters of the company may also share a part of the blame. Edwards & Kuruvilla (2005) go as far to say that: “Actors at corporate HQ level may see global policies as a way of extending their influence and authority within the firm. In this way, global policies may not simply be a response to the competitive pressures or institutional influences on MNCs but may also be driven by the interests of a particular organizational group.” (Edwards & Kuruvilla, 2005, Pg. 12) Martin and Beaumont (2001) are in complete agreement with this assessment and say that home office managers may seek to create new policies and fix something which is not broken simply by wishing to see some sort of a change in the company. Suggestions for International HR Policy Makers Communication is the key issue for the majority of problems in business and I think that HR policy makers are in no way immune from this beast. A lack of communication and barriers in understandings between the home and the branch office will lead to many problems in creating/implementing a unified HR policy. Kamoche (1996) has suggested that management personnel should look into transfers across business units as well as creating effective communication systems across these units. Good communication will hold the company together and increase the likelihood of making HR policies that are acceptable to all concerned parties. Knowledge Sharing Additionally, local branch managers who have experienced the work environment in home offices gain an experience which they can share to build the culture of the home office in a positive way. While they may not completely agree with the HR policies being implemented by the home office they can appreciate why the policy is necessary. With some give and take, the final shape of the HR policy can be made that is broadly the same across all locations where the company operates (Kamoche, 1996). Multiple HR policies At the end of the day, given the number of issues which are faced when managers seek to create a global HR policy, researchers often suggest that a multilayered system for HT might be more appropriate. There are a number of reasons why this should be done the least of which is the ability to decentralize the decision making process. Local HR managers can then handle HR related issues in their own national context, freeing up resources at the home office in a significant way. Bartlett and Ghoshal (1998) as well as Kamoche (1996) strongly suggest following such practices since it improves the overall efficiency and local adaptability of the company. A secondary advantage which a company will gain from a different local HR policy would be total compliance with that countries regulations and laws which may be slightly different from regulations within the home country. Legal issues and employment law will differ between countries and even between states in the same country. For instance, in America, the employment law in the State of Texas is quite different from the employment laws in Indiana. The EU is another such example where employment law in Germany is different from the U.K. (Edwards & Kuruvilla, 2005). No matter where the MNC is located, it can not operate in a country without following the laws of the country and having multiple HR policies is very useful in such cases. A mixed Policy: The Final Answer? I believe that a mixed local and international policy is the ideal solution. In such a scenario, the overall directives could come from the home office which gives general values, missions and direction to the HR managers in local offices. The fine print of the policy would then depend on the country where the employee is working and this could be the bliss HR managers have been looking for. This idea is supported by the suggestions given by Edwards & Kuruvilla (2005) although at the same time, they state that handling such a policy can become troublesome over the long-term if the HR managers are not careful. Conclusion If forced to choose one of the methods for creating a unified HR policy for an MNC, I would have to go with the multilayered system since it gives an HR manager room to manoeuvre and plan HR policy systems for both the global outlook of the company as well as remain in compliance with the local laws and demands placed by local governments. Overall, it seems that the field of study in international Human Resource studies is still quite open and there is no single system or method which can be used as a miracle pill to create and implement HR policies for all MNCs. While researchers have given us hints at certain solutions and shown us what methods failed or succeeded, I think that it is up to the individual manager to study and analyze the MNC to come up with solutions which are unique to the company. We can continue to experiment with and discuss the various methods and practices but unless we actually apply them in real world situations we can not assess their value or understand the logic behind them. Works Cited Bartlett, C. & Ghoshal, S. 1998. Managing Across Borders: The Transnational Solution to Managing Across Borders, 2nd ed. Hutchinson, London. Kidger, P. 1991. ‘The emergence of international human resource management’, International Journal of Human Resource Management, vol. 2, no. 2, pp149-163. Edwards, T. and Kuruvilla, S. 2005. ‘International HRM: national business systems, organizational politics and the international division of labour in MNCs’, International Journal of Human Resource Management, vol. 16, no. 1, pp1-21. Faulkner, D. et. al. 2002. ‘International Mergers and acquisitions in the UK 1985–1994: A Comparison of National HRM Practices’, International Journal of Human Resource Management, vol. 13, no.1, pp106–22. Kamoche, K. 1996. ‘The Integration/Differentiation Puzzle: A Resource-Capability Perspective in International Human Resource Management’, International Journal of Human Resource Management, vol. 7, no. 1, pp 230–44. Laurent, A. 1986. The Cross-Cultural Puzzle of International Human Resource Management, Human Resource Management, vol. 25, no. 1, pp 91-102. Broad, G. 1994. ‘The Managerial Limits to Japanization: A Manufacturing Case Study’, Human Resource Management Journal, vol. 4, no. 3, pp 52–69. Read More