Human Resource Management Practices in International Context - Essay Example

Human Resource Management Practices in International Context Human Resource Management Practices in International Context Introduction Human resource management is an integral part of any organization, and for multinational companies, the role of human resource cannot be overemphasized. Ideally, any organization has a set of best practices that it uses to manage its employees. However, there is a challenge for organizations with an international presence since there is no universal practice that can be employed in all the international branches. The manner in which multinational organizations recruit employees, pay, train, and give promotions varies significantly with the culture of the countries that they operate (Peppas, Jin, 2001, p. 101). An organization with an international presence should endeavor to treat its workers in an impartially but in a culturally ideal way. This paper seeks to examine why it is important for an organization to adapt human resource practices that suit local practices (Aycan, 2005). The IBM Human Resource Management Practice The moment that an organization opens a branch in another part of the country, it adopts responsibilities that go beyond the primary functions of human resource management. An example of an organization that takes human resource management in the international context seriously is IBM. The company has over 400,000 thousand employees in various parts of the world, and it places a big emphasis on the functions of staffing, training, and employee’s development. IBM does not just deal merely with selecting the best employees to work in their various organizations internationally but they also factor in the needs of the entire family that will accompany the employee in the completely new cultural environment. In the past, IBM has had to reject numerous successful candidates simply because their families could not fit into their new environment (Gooderham & Ringdal, 2006). Over the years, IBM has been organizing training for its employees before they begin their international assignments just a few months before they depart. The company is also deeply involved in organizing for visas for the employee and anyone else accompanying him. IBM also goes ahead to prepare the residence in the new environment as well as to guarantee health services and placement into schools for employee’s children. This deep involvement ensures that the employee settles in their new job quickly and hence productivity is guaranteed (Kiessling & Harvey, 2005, p. 40). Transnational HR Practices The world has become more aggressive, unsure, and unstable than in any time in history. In order to succeed, many organizations have to fight for a position on the international playing field since the expenses associated with the development and marketing of novel products are too great to be absorbed by just one market even if such market is as big as the US or Europe. Despite this, there are some products and services that call for the acclimatization to local standards, tastes, habits, and policies. For this reason, for majority of the multinationals organizations, the likelihood of operating in varied locations has never been greater. While these set-ups are suggest paths that multinationals have indeed adopted to gain global competitiveness, they are being surpassed by the desire both to manage internationally, as though the world was one huge market, and at the same time to manage locally, as though the world were a huge number of separate and loosely interlinked markets (Kiessling & Harvey, 2005). Understanding the prevailing conditions is a range of nations and comprehension of how to operate both within and across then is the focus of international human resource management. The intricacies of operating in varied nations and bringing varied national categories of employees is a critical variable that sets apart domestic and global human resource management instead of any major variations between the human resources activities carried out (Gooderham & Ringdal, 2006). Ideally, there are three human resource management practices that are used in international markets, and these processes are ethnocentric, polycentric and geocentric. In the ethnocentric practice, the cultural values as well as the business practices of the country of origin are given preeminence. The organizations headquarters creates a managing and staffing approach, which is then consistently applied throughout the world. In essence, most organizations using this kind of approach assume that the local/home environment is the best and all workers from other countries should adopt such a model. To ensure consistency between the headquarters and the subsidiaries, managers from headquarters are posted to key positions in the subsidiary and they are also responsible for setting up the practices to be used in the organization (Harzing & Sorge, 2003, p. 189). The polycentric approach on its apart is in stark contrast. In the organization that uses this kind of approach, the presumption is that each nation is diverse from all the others and that the subsidiaries in each nation should come up with locally suitable practices under the watch of local managers. Under the geocentric approach, organizations try to amalgamate the best practices from the headquarters and the local scene to come up with consistent international practices. Today, majority of the organizations use employees from headquarters only for critical positions such as senior executives or technicians. In reality, expatriates are extremely expensive to maintain and therefore, there is no economic value to place them in positions that can be filled by local staff. This is also due to some country directives, which demand that a certain percentage of the organizational workforce be filled with local labor. The exception to this rule is only made for the senior management or for other important positions (Harzing & Sorge, 2003). International HR Recruitment and Selection Practice Human resource recruitment denotes any process or activity that is carried by an organization with the main focusing of discovering and attracting potential workforce. The objective of recruitment is to draw the ideal candidates in a number that will make it possible for the organization to select the most qualified to fill the vacant spots. In the international context, the culture has a great effect on the recruitment process. What this means is that only the recruitment methods and processes that fit the culture where the business is based are likely to be effective. Over the years, there have been various studies that have looked at various facets of recruitment, including the necessary methods of recruitment as well as recruitment sources. On its part, selection is the process through which the management selects the most qualified person from this pool of shortlisted individuals (Harzing & Sorge, 2003, p. 188). For companies that have their operations in the international market, it is critical to approach recruitment differently from the manner in which recruitment at the national level is conducted. Analysts point out that for recruitment to be successful, it is critical to group the potential employees according to their country of origin. These groups consist of the host country, the parent country as well citizens from third party nations. A parent country national is used to refer to an employee from the country where the organization has its roots while a host nation citizen is used to denote an employee from the country where the organization’s subsidiary is located. The last group is used to denote an employee whose country of origin has no relation with the parent organization or the subsidiary in a foreign nation (Papalexandris & Panayotopoulou, 2004). In the international context, recruitment is an intricate function since these groupings do not necessarily incorporate all employees. A clear example of this is the European Union region where people coming from these regions do not necessarily require a work permit to be eligible to work in a nation that is a member of the union. Due to this intricate nature, some organizations might find it unnecessary to classify employees as per their nations of origin. However, any human resource manager reasoning is this manner is definitely short sighted since this employee categorization is necessary in defining other aspects such as remuneration, benefits, and opportunities for advancement. In an organization that has international presence, the manner in which they approach managing and staffing has a great impact on type of employees that the organization looks for. If an organization has decided to pursue an ethnocentric approach, citizens from the parent country take up key positions within the organization both in the headquarters and at the subsidiaries. In the polycentric approach, individuals from within the nation where the subsidiary is situated take up key positions in the organization while those from the parent nation are employed at the headquarters. On the other hand, a geocentric approach adopts techniques of hiring anyone who is qualified for the position from anywhere in the world (Inglehart & Baker, 2000). In its approach to staffing and selection of staff, a multinational enterprise is always keen to factor in the practices at its head office as well as those in the locations where the subsidiaries operate. Human resource managers should realize that the local culture has a great impact on both the staffing and selection processes and even in some nations there are legislations that force the organization to pursue specific approaches. A clear example of this is Hungary where any foreign business in the country that is in the process of recruiting must get clearance from the ministry of labor before they can bring in expatriates to work in the organization. In Mexico, there is also a similar legislation that calls for all international companies opening their doors in the country to place a big sign in their doors advertising for positions within the organization. In choosing the ideal candidate, human resource managers are always torn between striking a balance between internal business constancy and factoring in the domestic labor practices. In the national level, organizations can hire staff based on recommendation but in the international context, the varied culture calls for the selection of candidate’s bases on accomplishment standards. When making staffing decisions, practitioners in organizations that is focused on achievement only considers the skills, knowledge and talents that an applicant has. Although referrals might sometimes be used, most organizations in the international level only hire people with the right qualifications. In the national level, the hiring condition is different and managers might choose gender, age, or family origin over accomplishments (Inglehart & Baker, 2000). HRD and Training Human resource development is meant to see to it that the employees in an organization is to make sure that the employees are adequately trained to fulfill their assignment as well as to enhance the performance and growth of the organization. Human resource employee development can be conducted as a unique field of human resource management that brings together planned individual learning, organization development, as well as career enablement and training. Human resource development and training is an important element at the international level since human resource development personnel are given the responsibility of training and developing employees in all the subsidiaries around the globe. These professionals are also mandated to offer training to expatriates that are being sent to take up positions in foreign countries. Apart from this, the professionals also have a responsibility of training a team of managers of various nationalities for assignments wherever there might be demand (Zupan & Kaše, 2005). Unlike in an organization that is only operating at the national level, the development and transfer of international human resource development strategies is usually influenced in both a centralized and a centralized way. In the centralized process, the trained is formulated at the headquarters and company trainers are sent to the subsidiaries to conduct the training. Ideally, these trainers are supposed to acclimatize with the prevailing culture in the nation that they are conducting the training. This model is ideal for the ethnocentric process. On its part, a geocentric approach is also unified but the trainers efforts are realized due to collaboration between the place that the organization is headquartered and the managers at the subsidiaries. Those conducting the training can be pooled from various positions at either the headquarters or branches and deployed to any area that the organization has operations. In a decentralized form, training is engineered on a local basis based on a polycentric form and in the event that the training is devolved, the ethnic backgrounds of the mentors and the apprentices are typically alike. Thus, native people are tasked with coming up with the materials required for training as well as the techniques that are suitable for use in their specific area (Schwartz, 2006). In order to make sure that training efficiency is capitalized on, there is need for human resource managers to put into perspective the most effective way for the trainers to learn. Cultural factors play a significant role in training practices in different parts of the globe, for example, in North America, the distance in actual power is minimal and as such the relationship between the trainer and he trainees is propelled towards equality. In this environment, the relationship between the trainer and the trainees is cordial and the two parties often refer to each other using their first names. The trainees are also at liberty to critique whatever it that the trainer is putting across. In Malaysia, the situation is completely different because of the wider power distance that is involved. In this training environment, the trainer is accorded much respect and the message he puts across is all taken in without any criticism. As the global competitiveness goes up, it is highly recommended that companies look for human resource managers with an international perspective. Organizations must spot managers with international capability and invest in them by offering them training and development opportunities (Inglehart & Baker, 2000). Compensation and Benefits Employee compensation plays a central place in the acquisition of new employees and has great significance for both employees and employers. Compensation is seen by experts as the primary source of livelihood for employees, while the offered benefits take care of issues such as healthcare cover or holidays. The ideas that employees have on remuneration has a great effect on the running costs of an organization as well as on the ability to market the company’s products. The decision concerning remuneration also betters the chances of an employer to compete for employees in the labor pool. The benefits that an organization offers dictate whether an employee is motivated to stay or leave a certain organization (Peppas & Jin, 2001, p. 105). In developing an international system of remuneration and benefits, an organization is usually faced with two factors that he has to take into consideration, and one these factors is comparability. An ideal compensation system shares salaries to juniors and presents responsibilities to employees who are internally competitive as well as comparable. An ideal example of this is the case where managers are offered remuneration that is above that of his juniors. However, these salaries must be within the range of what other managers in that particular nations are offered. A multinational enterprise must also take into perspective people that originate from different localities. The second main concern among managers is cost and each organization endeavors to maintain their operations costs at a minimum. Salaries contribute to the highest organizational expense (Gerhart & Fang, 2005). Remuneration and benefits are closely interlinked to the prevailing conditions in the local labor markets irrespective of whether an organization follows the ethnocentric or polycentric approach. The availability of competent local people to fill positions, current wage bill, the demand for expatriates and local rules all amalgamate to direct the level of remuneration and presented benefits. For example, if there are only a few people applying for positions in a certain position, the compensation offered for that position would go up. In order to ensure that low costs are maintained, international human resource managers often go for expatriates in order to ensure success. An organization usually puts in place a policy, which could be adopted globally to offer remunerations and benefits based on a certain market level. A good example of this is Smiths Kline Beecham, which pays higher salaries in areas where it has the research and development plants and average salaries in areas where its production is based (Schaubroeck, & Lam, 2002). Conclusion Human resource management is an important element for any organization to successfully empower its people. Due to variations in culture, human resource management practices in the international context takes a completely different approach from the one taken in the national context. For organizations operating subsidiaries in foreign markets, it is critical to take an approach that is consistent with the operating climate especially in the area of recruitment and selection, development and training and remuneration and benefits. Having the right approaches in these three areas is critical since it determines the success or failure of an organization in these three critical areas. 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