International and Comparative Human Resource Management - Essay Example

?International and Comparative Human Resource Management Human beings are turned into human capital when they become an active participant of economy. Once human capital is formed it needs proper management to produce desired results and this need of proper management produce an integral area of management sciences called human resource management. Human resource management involves the process of preparing job descriptions, specifications, recruitment, advertisement, selection, managing employee affairs and so on. Traditional practices of human resource management were challenged by the miracle of globalization to an extent that involves change of medium for communication, work and employee monitoring. In addition diversity in workforce presented itself both as a blessing and a trouble to be handled carefully. Multinational enterprises (MNE) are the bodies that are directly affected by the results of globalization as their major portion of revenues are generated from the countries other than their home country. MNE need to manage a diverse workforce in order to maintain their competitive advantage. Globalization itself is the outcome of tremendous improvements in information technology. Information technology has made it possible to communicate throughout the world effectively and speedily. Therefore human resource management practices are also affected by the implications of latest technologies. Globalization has presented many challenges to almost every arena of life in its own way and human resource management is not an exception. These challenges can be named as advance recruitment practices, cultural issues, employee commitment and loyalty, corporate environment, legal issues and political situations. ‘Global trends should be acknowledged as triggers of change in employment relationships. Firms irrespective of national borders are compelled to adjust the employment relationship to fit in with current global realities’. (Paauwe 2004, p.177) Human resource management is responsible for recruitment of employees which is critical for corporation success. MNE`s have to develop job descriptions and job specifications in a way that considers the local cultural implications in addition to the requirements of organization e.g. In a Muslim cultured country job specification should not include any restriction on beard. Then advertisement to attract useful workmen from the global employee market requires special tactics. An organizational quality can be taken as opportunity by some people and it can be considered as a negative point for some others when we are talking about global employee market. Like if an organization is thought to be hierarchical in nature following a strict chain of command then it will be taken as an opportunity for introvert culture but it will be given less importance by the people who are extroverts and want to express their individuality. ‘the recruitment task becomes more akin towards brand management-monitoring and promoting the reputation of the firm(what it offers as company, in terms of job and competitive compensation), dealing intimately with the problems that leads to excessive turnovers, knowing well the different segments of employment market. Firms with a fine recruitment image often use referral systems (a majority of Cisco employees are hired on the basis of such internal referrals)’ (Evans, p.70) Furthermore during the initial screening process the human resource management has to develop specific standards which are generalized enough to compare people from different backgrounds equally and using same parameters. Conduction of interviews is also an area of concern in terms of communication differences. There are obvious differences in verbal communication, gestures, postures and body language. Like in modern societies the individuals are not reluctant to be asked about their age, marital status and personal life but in some countries the same questions are taken as a blow over ones privacy. Online interviews are a frequently used phenomenon nowadays. Online interviews require special attention in terms of proper formulation of questions and enhanced focus to judge the confidence and skill of interviewee. Thus human resource management (HRM) in MNE requires these additional considerations while going global or to remain effective in global environment. Productivity is also related to competent and motivated employees. Productivity is enhanced by reducing labor costs. ‘managers recognize the importance of HRM in dealing with productivity and customer satisfaction…corporate downsizing can be linked to technological improvements and estimates of productivity improvements with both HR and the interacting technological changes. Bank of America, American express, Coca-Cola, and General Electric have successfully followed a formula of cutting personnel costs while investing in automated equipment and more efficient facilities. The recent plant closures by Ford and GM are examples. ( Bernardin , p.10) Culture is another area of concern. MNE when operating in a country other than the home country it has to study the local culture thoroughly otherwise lack of compatibility in this regard can put the whole organization in trouble. If the MNE is going to work in a new environment with their local people even then this task force requires special training and awareness to live and work effectively in a new environment. If MNE is going to hire local people or if an organization has a workforce which is a combination of people with diverse cultural backgrounds then the importance of cultural awareness and compatibility training becomes more important. Some cultures are bold and expressive so people from such cultures need encouragement and mutual discussions as a source of motivation. Some cultures nurture individuality so employees from such cultures get satisfied from individual achievement while some cultures like Asian cultures celebrates the group achievements. Thus study of such cultural values is helpful in leading, motivating and controlling of employees in a global environment. MNE has to face a major issue of employee commitment and loyalty. The organization has to deliver a very positive message that it is serving the host country and its people in best possible way. Then the MNE has to provide an atmosphere of justice, honesty and genuine reward system. Due to easy access to information employees are now well aware of their worth and they can get inclined to a better opportunity readily. Thus in order to retain competent workers and to win over their confidence and loyalty the organization need to provide a proper and active platform to raise employee concerns and respond to those concerns. The organization should provide career development opportunities and succession planning in addition to financial compensation. Employees are more willing to work for the organization where they can participate in organizational activity with their true potential. Legal considerations should not be ignored while operating globally. Laws, rules and regulations differ from country to country so MNE should have thorough and detailed information about the laws of the countries in which it is working. Like in Pakistan women are not allowed to work in mines and in late hours so if a MNE involved in mining, is going to recruit women in Pakistan then it should be aware of the law otherwise it will create problems afterwards. There are some country specific rules other than international labor laws so if the HRM department of MNE ignores such facts; the whole organization has to pay for it. ‘Changes in socio-economic and political conditions are bound to bring about changes in the environment within the organization. The personnel managers of today may find themselves obsolete because of the rapidly changing business environments, and therefore they should constantly update their knowledge and skill by looking at the organization’s needs and objectives’. ( Pattanayak 2005, p.10). Skinner, B. (1971) argued, that people are simply a product of stimuli they get from external world. Interestingly negative reinforcement causes behavioral change in undesirable ways, whereas positive reinforcement causes rather intended change. General management is therefore not only accountable for defining such stimuli according the corporate strategy, but also its degree of involvement is a prerequisite for successful HRM. (Baron, J.&Kreps, D., 1999). (Mishalski, A.2011, p.5). Thus while tackling a diverse workforce the strategies of reinforcement are to consider from a different point of view from those used in local environment. According to Mcllelland theory factors of motivation for individuals are power, status, money and benefits. These factors are not equally suitable for all the individuals. Every individual has his own specific need pyramid and to motivate any individual the HR mangers need to identify the employee priority list. When HRM has to work in global environment then this identification of individual needs become more challenging because they now have to consider different cultures, their core values and ethnicities to choose correct channels of motivation. Like employees from individualistic societies will be motivated by salary increments, rewards in the form of luxury items and power while individuals from pluralistic societies are moved by providing benefits which are useful for their family. The benefits like scholarships for children, medical coverage for family and parents and recreational trips with family becomes attractions for individuals belonging from group oriented societies. International HRM has to sort out whether a positive stimulus is affective for most of the workforce or if there are individuals from groups who can take that stimulus as something negative. Like if a supervisor openly pass some frank and encouraging remarks to a female employee in the western society it will be taken as a positive stimulus but the similar gesture for a female worker in eastern society is considered as intimidating. Therefore HRM executives need to be more aware of their behavior and their employee background to make their genuine efforts fruitful. Any negligence in this context not only creates problems for that employee but will have adverse effects on the overall organizational environment. MNE structure refers to both the structure of international operations, intra-organizational networks and mechanisms of coordination. The life cycle stage of the firm and the industry in which it operates are important influences on HRM strategy and practices in multinationals, as ae the various international modes of operation and levels of firm strategy. (Dowling, J., Festing,M. &Engle, A. 2008, p.18). A firm at its start up stage has to focus more on modifying its values to make them compatible with the diverse workforce while the firm which is taken as being established as a strong body for a long time need to make such amendments in its core values less often. Most of the companies go global for one of many reasons like business expansion, cost reductions in material, labor and plant setups. Cost benefits are also obtained from less labor rates in some parts of the world as compared to some others. Like labor is cheap in Asian countries as compared to American countries. But this cost reduction can only be obtained if this labor is managed effectively. Otherwise the organization will be in a position to lose its portion of investment rather than taking benefit from cost reductions. Sometimes HR managers overstate the profits from reduced labor cost over the cost of training, controlling and monitoring of added workforce. Thus it is important for HR managers to make realistic assumptions about the expenditures. Cost breakage for the training programs including cost of material, equipment, consultants and trainers should be prepared. Similarly revenue projections especially the increments due to cost savings should be highlighted. One reward policy imperative to support that ambition may be ‘to secure skills cost effectively’ (Hendry 2003: 1433). If expatriates are viewed as economic self-maximizing agent (Roberts 2001), managerial interventions may be focused on containing the transactional costs (Williamsons 1996) of acquiring skills for international assignments. While having the merit of being very theory driven, an economist bias has the drawback, at least in context of HRM analysis, of being ‘very narrow and simplistic’ (Guest 2001: 1093) (Dickmann, M. 2008 ,p.157). International HRM is also given the challenge of incorporating advance technology with traditional HRM practices. The special attention should be given to software supporting the HRM activities. Software systems should be comprehensive and yet flexible to varying needs of organization in various countries and different situations. International HRM can now perform their traditional tasks of staffing, planning, monitoring and evaluating online for mobile workers and technology has interconnected the inter organizational members more effectively. Employees are threatened by the use of excessive technology as technology replaces them and can make them jobless. Therefore employees in today’s world need motivation and encouragement from managers to make them feel secure. Otherwise this lack of sense of security can affect employee productivity and performance. Labor market consideration may favor different HRM solutions in different countries. Third, a blind standardization of practices across MNC units may lead to a lack of fit between the characteristics of the focal subsidiary’s operations and its HRM system. Fourth there may be a backlash against ‘headquarters imperialism’ if subsidiaries are forced to fully adopt the standardized MNC practices rather than contribute to the development of unit’s own policies and practices (Martin& Beaumont, 1998). Finally if there are strong pressures to standardize HRM throughout the MNC this may stifle local experimentation and development of HRM system, thereby reducing the capacity of the MNC as a whole to develop new innovative HRM practices. Fifth researchers need to be careful in terms of level of analysis. A distinction can be made between HRM system architecture (level one), HRM policies (level two) and HRM practices (level three) (Becker & Gerhart, 1996) (Stahl, G. & Bjorkman,I. 2006, p.468). There is a set of solutions to make HRM more effective and useful in international environment which will be discussed one by one. These strategies are not specific but generalized to increase their scope of application. If fixed strategies are prepared and the organization vision is to follow rigid strategies then the probability of clash between organization objectives and employee motives increases. Therefore HR mangers are required to develop strategies that are highly generalized and are subject to change. A case study on establishment of Disneyland Tokyo stated that the employees in Japan were agitated rather than being reluctant in adopting the organizational culture. They found it to be against their value and nationalism and the management was initially reluctant to make changes in their business plan and human resource strategies but when this agitation from the employees extended in the form of bad word of mouth then the organization realized that employee dissatisfaction is not restricted to themselves but it can go beyond the expected levels. HRM need to develop certain concepts and techniques while working in international environment. Communication is one of the major issues when organization works in global employee market to attract and retain skilled workers. Managers require special classes of different languages to improve their communication skill in addition to language courses offered to employees. Furthermore audio visual aided seminars on gestures and body language of different cultures should be conducted. This will create awareness in organizational members to respect each others values and norms. Behavior modifications can be attained by offering special rewards for employees who have shown excellent behavior or who prove to be more active in mutual discussions and activities. In addition to that special activities or trips should be arranged for the organizational members so that they can spend time with each other in an environment other than their work environment. It will provide an opportunity to reduce reluctance to communicate and participate in mutual discussions. Like some organizations arrange treasure hunts, camping trips and sports for their members to make them comfortable with each other. The teams formed in such activities become compatible to solve problems effectively when they are allowed to work in similar conditions in actual work hours. Special policies should be structured for performance evaluation and reward philosophy should be developed by considering individual needs, cultural background and last but not the least the mutual discussions. Finally, no strict rules or policies should be structured and reinforcement techniques should be developed on generally accepted values. This will create a healthy work environment for employees enabling them to shoe their true potential. Thus HRM has to face several challenges while entering into international business arena but it can reap the fruits of its effort in the form of improved revenues, utilization of available opportunities and excellent available talent all around the world. Therefore organizations HRM departments are major contributors of ideas and possibilities when a firm is involved in the process of making decision to globalize its operations or to improve its operations in the global market. References Bernardin, ‘Human Resource Management’, 4E, Tata McGraw-Hill Education, pp.10 Dickmann, M. 2008, ‘International Human Resource Management: A European Perspective’, Taylor & Francis, pp.157 Dowling, J., Festing,M. &Engle, A. 2008, ‘ International human resource management: managing people in a multinational context’, 5E, Cengage Learning EMEA, p.18 Evans, ‘The Global Challenge’, Tata McGraw-Hill Education, pp.70 Mishalski, A 2011, ‘Strategic International Human Resource Management: Compare and Contrast Different Approaches to Strategic International Human Resource Management’, GRIN Verlag, pp.5 Pattanayak, B 2005, ‘Human Resource Management’, 3rd Ed, PHI learning Pvt. Ltd., pp.10 Paauwe, J 2004, ‘HRM and performance: achieving long term viability’, Oxford University Press, pp.177 Stahl, G. & Bjorkman, I. 2006, ‘Handbook of research in international human resource management’, Edward Elgar Publishing, pp.468 Read More