International Human Resource Management - Essay Example

International Business: International human resource management Globalization has made immense changes in the business world. Traditional business concepts were disappeared and new revolutionary business concepts entered to the business world in order to exploit the current opportunities as much as possible. Organizational culture, behavior and theories have changed a lot at present. Outsourcing and offshoring like new business concepts are the order of the day. Overseas assignments are part of the profession in most of the multinational companies at present. It is a familiar scene nowadays that many international companies targeting either India or China for the expansion of their businesses at present because of the immense growth potentials in these countries. India and China are two countries which escaped from the current financial crisis without much damage. It is not easy for a company to set up business in an overseas country because of the various challenges they may face in the target country. Human resource management is one of the core functional areas the offshoring organizations should consider in their business strategies. This paper assumes that Microsoft, the American operating system/ computer software manufacturer is looking to establish a subsidiary unit of Microsoft in India. The various aspects of human resource management issues Microsoft may face in India is briefly explained in this paper. Introduction Microsoft is one of the best examples of a monopolistic firm of the current century. No challenge at all for Microsoft in most of the countries in which they operate. In fact other companies like Intel forced to make microprocessor chips compatible for the smooth operation of Microsoft’s Windows based operating systems. In other worlds, Microsoft’s monopoly forces even other companies to dance with the tunes composed by Microsoft. Even though nobody has any doubt about Microsoft’s abilities in controlling the software industry all over the world, there is no guarantee that it may become successful in every country if it overlooks the customized needs of each country. For example, India and China are two different countries compared to America and business concepts, organizational culture, behavior, and environment in these countries are entirely different from that of America. Microsoft needs to formulate customized business strategies for both of these countries, if they want to excel in these countries. India is a secular democratic country and the second largest country in the world as far as population is concerned. Moreover India is recognized as one of the rapidly growing economies in the world. “India’s economy has been one of the stars of global economics in recent years, growing 9.2% in 2007 and 9.6% in 2006” (Indian Economy Overview, n. d). Even the current global financial crisis has not affected India much. Many political analysts believe that India will become one of the superpowers in the world in near future itself. In other worlds, Microsoft has lot of business opportunities in India considering the huge economic growth happening in India. In order to succeed in Indian conditions Microsoft needs to formulate well defined Human Resource Management (HRM) policies, suitable to the Indian conditions. Microsoft: HRM policies suitable to Indian conditions Human resource (HR) Management is one of the critical aspects of every business organization. In fact HR department is responsible for the effective utilization of the manpower resources in an organization. For example, HR department determines how a job should be performed; individually or as a team. The responsibilities of HR department begin with the recruitment or hiring of efficient people suitable for the Indian conditions. Moreover, HR department is responsible for the training of the hired people or customizing of the hired people to suit them for Indian conditions. The success of an organization lies in hiring right people at the right time and posting them at the right places. If the HRM strategies may not implemented properly, it is not possible for an organization to excel in their business endeavors even for bigger organizations. In order to formulate right HRM strategies for Indian conditions, it is necessary for Microsoft to identify the peculiarities of India as a country. India - Country evaluation India is one of the largest democratic countries in the world. Judiciary, Parliament and Executive, the three vital forces of a democracy is combined well in India which led to the economic progress of the country. Political stability, people’s living standards, unemployment problems, educational levels, infrastructure developments, overall domestic peace levels and the relationships with the neighboring countries etc are some of the indicators of economic development and India is blessed with all the above parameters at present. India has a stable government under the Prime Minister Dr. Man Mohan Singh who is supposed to be one of the greatest financial experts, India has ever produced. Moreover, was the former governor of Reserve Bank of India and recently American President Obama has addressed him as the leader of the world. Moreover, at the time of writing this paper Obama has requested Dr. Singh to attend a world meeting on weather changes which is going to take place in the coming week itself. In other worlds, India’s voices are more valuable on global issues at present because of the strong leadership and diplomacy India exhibited on global issues. India is one of the founding members of the non-alignment movement and it always respects global peace. Nobody can forget that even though the Indian parliament and the business hub Mumbai city was attacked by Pak terrorists, India never adopted any aggressive measures to take revenge on that. India adopted diplomatic measures to force Pakistan to take actions against the terrorists instead of aggression. Thus, India has all the ingredients for Microsoft to establish a business subsidiary in India. “Though economic liberalization in India can be traced back to the late 1970s, economic reforms began in earnest only in July 1991” (Panagariya, 2001, p.1). Actually the Indian economic reforms have started in the 90’s when Narasinha Rao was prime minister and Man Mohan Singh was the finance minister. The left parties even now opposing the reform policies adopted by Dr. Man Mohan Singh since Mr. Singh has open the doors widely for foreign investment and moreover Mr. Singh has privatized lot of public enterprises which was running in loss. In other words, the current Congress led Indian administration or government provides enough opportunities for foreign investments which Microsoft can utilize well. India’s financial institutions were able to support the financing of infrastructure development programs and other public utility services even when the world was undergoing severe financial crisis. India was able to sustain their economy growth even amidst negative business climate all over the world. Even though, most of the business climates in India are good for Microsoft, it doesn’t mean that everything is perfect condition in India. “Despite slowing from highs of 8% to 9% growth, India’s economy will grow close to 6% in 2009” (The Indian Economy Blog, 2009). “If India grows at 6 percent per annum on a sustained basis, it will take 14 years to reach the current level of per capita income of People’s Republic of China, 36 years to reach Thailand’s, and 104 years to reach that of the United States” (Panagariya, 2001, p.6). Industrial growth numbers for the months of May, June and July 2009 indicate that the Indian industry is coming out of the distressed state. The upswing in the industrial growth came as a result of upswing in the production of the manufacturing sector that accounts for 80% of industrial output. The average growth numbers of the overall industry calculated for first four months of 09-10 was 4.6%. This was marginally lower the average growth posted in the corresponding period of 2008-09. The core infrastructure industry sector largely remained insulated from the economic crisis. The recent growth numbers of the six core industries released for the period April- August 2009 were 4.8% in 2009 as against the growth of 3.3% in the corresponding period of the previous year. (Current state of Indian Economy, 2009, p.2) The above statistics clearly suggest that India is one of the best investment friendly countries in the world at present and Microsoft can invest in India without many concerns. Microsoft’s probable business strategies for India India and America have same democratic political regimes. At the same time the functioning of democratic systems in India and America are slightly different. America has only two parties mainly whereas in India lots of national and local parties are there which controls the government. Because of these political differences with America, most of the critical policies in India often create more criticisms than America. In other words, Microsoft’s business strategies which were successful in America may not be successful in India because of the political, cultural and social differences between these two countries. The above facts about India should encourage Microsoft to recruit more locals for their Indian operations because of their increased knowledge about Indian conditions. Only the locals will be aware of the Indian culture, social norms, political ideologies, legal and economical aspects of India which calls for a high caliber Indian professional at the top of Microsoft’s operations in India along with other local managers and executives. If Microsoft decides to recruit some Americans also for their Indian operations, these professionals should be thoroughly trained. The HRM issues which must be focused for the training of employees for Indian operations can be summarized in the section below. Microsoft: HRM issues for Indian operations The most important resource of an organization is manpower. Even though money, machines, materials etc are some of the essential resources for an organization, man is managing all these resources and hence the manager should be the perfect one. If an organization was able to identify the right talent, half of its headaches related to the business, is over. Culture is an important aspect in Human Resource Management. Gerard Hendrik Hofstede, one of the Dutch writers has identified five dimensions for cultural aspects in international business which are; “Power Distance Index (PDI), Individualism (IDV), Masculinity (MAS), Uncertainty Avoidance Index (UAI) and Long-Term Orientation (LTO)” (Geert Hofstede Cultural Dimensions, 2009). The probable Human Resource Management (HRM) issues for Microsoft in India can be analyzed through Hofstede’s Cultural Dimensions of international business. Hofstede’s Cultural Dimensions Hofested argued that when negotiating in Western countries, the objective is to work towards a target of mutual understanding and agreement and shake-hands when that agreement is reached - a cultural sign of the end of negotiations and the start of working together. But in Asian countries negotiations take place leading into the agreement, signified by shaking hands. In fact, it is a cultural sign that serious negotiations are just beginning (Geert Hofstede Cultural Dimensions, 2009). In India people use the word Namaste to greet others by holding their hands together in a particular shape instead of the westerner’s hand shaking. Moreover embracing is also another cultural sign in India when they have warm regards towards others. Lot of negotiation talks are usually needed in India before reaching a final settlement whereas in America, most of the negotiations may over by the first meeting itself. The power structure of organizations in India and America are entirely different. Moreover, the manager-employee relationships may also be different in these countries. In India, the managers are too professional even though they function like a democratic manger. Moreover trade unions are more prominent in India compared to America because of the more influence of left parties in India. The functioning of the employees in India and America can also be different. One of the major criticisms against the Indian employees is that they perform well when they work in foreign countries whereas in Indian conditions, they tempted to underperform. Conflicts can arise in Indian workplaces any time and the response to such conflicts by the employees and managers might be different in India compared to America. Moreover, some people may work for long term goals and they will work hard to achieve it whereas some others may not have such goals and they will usually adopt a passive attitude. The cultural variables mentioned by Hofestede can be understood more clearly if we analyze it through the perspectives of LESCANT model of cultural variables of international business formulated by former professor of Eastern Michigan University, David A. Victor. These variables are; Language, Environment, Social organization, Contexting, Authority, Nonverbal behaviour, and Temporal conception (Victor, 2009) LESCANT model of cultural variables The importance of language cannot be overlooked in the communication process. Communication is one of the vital segments of every business activities. Communication can be between the organization and the employees, organization and the customers, organization and the stakeholders etc. In any case the requirement of a common language is essential to express the opinions and suggestions needed for the successful execution of the business. Language is an important entity especially in international business. For domestic business, Microsoft needs only the English language whereas for Indian conditions, the awareness of Hindi along with other local languages are essential. Even though Hindi is the national language of India, most of the states have their own local languages in India. Malayalam, Manipuri, Marathi, Nepali, Oriya, Punjabi, Sanskrit, Sindhi, Tamil etc are some of the languages in India (Languages in India, n. d) For example, Keralites in India speak Malayalam whereas Tamil Nadu people speak Tamil language. Hindi is unknown to most of these people. The views and opinions of each party in involved in business negotiations can be conveyed properly if both the parties know a common language. So the Microsoft’s HR managers must train their employees in different Indian languages before sending them to India. “Whenever two parties negotiate, the entire process occurs under two umbrella contexts, environmental and immediate” (Phatak & Habib, 1996). Indian business environment and the American business environment are entirely different. India is a hot country whereas America is a cold country climatically. India is a heavily populated country and hence the hygienic standards might be poor in India compared to America. Infrastructure facilities like transportation, energy, water etc may also limited and underdeveloped in India compared to America. Recreational facilities in India also may have lot of differences. These parameters must also be addressed by Microsoft while providing the training to the employees for Indian assignment Social organizations in India are culturally oriented because of the increased influence of religion in India. India is a diverse country as far as religion is concerned. Apart from the majority Hindus; Muslims, Christians, Sikhs, Jains, Buddhists etc are also prominent in India. On the other hand in America, majority are Christians and hence Microsoft may have less cultural problems there. “Communication can be seen as being high or low in contexting” (Victor, 2009). It is not necessary that two parties in a communication process may have similar knowledge or level of information in the topic of negotiation, especially when they happen to be of two different cultures. In other words, one party always dominates a negotiation process because of the higher contexting abilities compared to the other. Americans and Indians have different levels of contexting and the knowledge of these differences is essential for the Microsoft’s HR professionals while training their employees for Indian assignment. Authority and power cannot be differentiated. Leaders need power to execute their functions. In the absence of power, the leaders are meaningless. Authority and leadership styles may be different for Indian and American peoples. Americans are more dominating types compared to Indians. The knowledge about differences in authority levels in India and America should be passed to the employees on deputation to India. “The view of authority in a given society affects communication in the business environment significantly as it shapes the view of how a message will be received based on the relative status or rank of the messages sender to its receiver” (Victor, 2009) Non verbal communication has a vital role in every communication process. Some people are of the view that the amount communicated through nonverbal means is always higher than the amount communicated through verbal means. “Much of nonverbal communication may be broken down into six areas: dress; kinesics, or body language; oculesics, or eye contact; haptics, or touching behaviour; proxemics, or the use of body space; and paralanguage” (Victor, 2009) Non-verbal communication methods will be different h in India and America. Gestures, facial expressions and body language of Indians and the Americans are entirely different which should be revealed to the employees on deputation. Temporal conception means the understanding of time. The concept of time can be classified into two categories; Monochronic time (M-time) and Polychronic time (P-time) (Victor, 2009). Americans are very much time conscious whereas the Indians attached less significance to time concepts. For example, deadlines are respected as much as possible in America whereas Indians are not much particular about the deadlines. M-time is characterized by one thing at a time while P-time means several things happening at the same time. P-time put more emphasize on human relationship rather than a task or job alone. Also P- time concentrate more on long term relationship. The Americans follow the M-time whereas the Indians follow P time in most of the cases. The awareness about these differences in temporal concepts of Indian and American people will be helpful for the Microsoft mangers to formulate suitable Human Resource Management strategies for India Conclusions International business is not an easy task even for big organizations like Microsoft because of the differences in social, cultural, political, economical and environmental differences between America and other countries. It is not necessary that even the same product move well different countries if same business strategies are adopted because of the differences in market structure in different countries. India is one of the growing economies in the world and many overseas countries are targeting India at present for their business prospects. The huge market size and population size are some of the other attractive elements for international business groups in India. A well defined HR strategy is essential for any organization which has business interest in India. These HR strategies must address the differences in language, environment, social organizations, contexting, authority, nonverbal communications and temporal concepts between different countries. References 1. Current state of Indian Economy, (2009), Retrieved on 06 December 2009 from http://www.indiainbusiness.nic.in/indian-economy.pdf 2. Geert Hofstede, Cultural Dimensions, (2009) Retrieved on 06 December 2009 from http://www.geert-hofstede.com/ 3. Indian Economy Overview (n.d), Retrieved on 06 December 2009 from http://www.economywatch.com/indianeconomy/indian-economy-overview.html 4. Languages in India , (n. d), Retrieved on 06 December 2009 from http://adaniel.tripod.com/languagelist.htm 5. Phatak Arvind V. , Habib Mohammed M. (1996), The Dynamics of Iinternational Business Negotiations, Retrieved on 06 December 2009 from http://findarticles.com/p/articles/mi_m1038/is_n3_v39/ai_18348264 6. Panagariya Arvind, (2001), India’s Economic Reforms What Has Been Accomplished? What Remains to Be Done? Retrieved on 06 December 2009 from http://www.adb.org/Documents/EDRC/Policy_Briefs/PB002.pdf 7. The Indian Economy Blog, (2009), Retrieved on 06 December 2009 from http://indianeconomy.org/ 8. Victor David A. (2009) Cross-Cultural/International Communication Retrieved on 06 December 2009 from http://www.enotes.com/biz-encyclopedia/cross-cultural- international-communication Read More