Impact of Globalization on HRM in Multinational Organizations - Assignment Example

The Impact of Globalization on HRM in Multinational Organizations Executive Summary The paper attempts to analyse the effects of globalisation on theHRM of a company. In order to provide valid examples of the theoretical underpinnings, Apple Inc has been chosen as it is a company that operates in various countries of the world thereby coming in contact with the diverse cultural backgrounds of each. The company’s HR policies have to be suited so as to help the company in the long run and maintain the well being of the employees. Table of Contents Table of Contents 3 Introduction 4 Effect of Globalisation on MNCs 4 HRM Practices 5 Resourcing 5 Partner with Frontline and Middle Managers 6 Employee Advocate and Champion of Globalization 6 Development of the organisation 7 Hiring new employees 8 Cultural Diversity 9 Compensation and benefits for the employees 9 Recognition and appreciation of the employees 9 Career opportunity 9 Employability security: 10 Recommendations and Conclusion 10 Reference List 11 Introduction Globalisation has gained impetus in the last few decades and has majorly affected the multinational corporations (MNCs). It has brought about an integration of the companies all over the world and has facilitated trade by way of reducing transportation costs and doing away with the barriers to trade. Globalisation has also facilitated a free flow of goods and service, knowledge, skills, capital and labour. During a strong economic growth period world exports shot up in various countries thereby contributing heavily to the Gross Domestic Product (GDP). Previously, human resource management (HRM) was typically concerned with the cost cutting activities and the administrative activities, focusing on bringing about efficiency in the system and the minimised the cost. However in the present world the role of HRM has changed and focuses on an organization’s long-term objective. Effect of Globalisation on MNCs The companies’ business strategies were affected by globalisation in a large manner. The companies had access to a large variety of markets and could market their products in global markets. The emerging markets of the developing countries are of lucrative content to such MNCs who are looking to diversify. Due to the emergence of new markets the external financing sources of the companies also increase. A very important source of financing is Foreign Direct Investment (FDI) that has opened avenues for the MNCs to invest in the developing countries. FDI has a dual benefit to both the country and the company. There is a global market for the products of the MNCs. Moreover due to abundance of labour resources in the developing countries the MNCs often shift their production processes to such countries such that they can carry out production at low costs. Also the political stabilisations across the globe and the favourable relations between the countries have made positive impacts on the strategic positions of the companies. The socio-political globalisation has given rise to regulatory bodies that govern the different policies that mark the path of trade between various companies. The most important factor that has influenced the management decisions of the MNCs is cultural diversity. Due to globalisation MNCs now have to deal with people from various cultural backgrounds. Hence the Human Resource Management of the companies needs to be really strong such that the cultural diversity and also the expansion into new markets can be handled successfully. Globalisation requires the organisations to focus not just on internal human resource issues, rather take a broader look and a balanced approach to emphasis on future-oriented plans and objectives that would help add value to the firm. HRM focuses on managing issues related to the strategic business partnerships and becomes the vehicle of change. Human resource professionals at MNCs have to understand the demands of emerging markets of countries like India, China, Hungary and Malaysia. They have often found that there are wide variations in suitability for the candidates in field like engineering and general-management positions (Guthridge, Komm, and Lawson, 2008). According to few studies of the McKinsey Global Institute, it has been found that in developing countries hardly 13 to 19 per cent of 33 million university graduates are eligible to work in a multinational company owing to their lack of communication skills, language barriers, lack of cultural fit and low quality of educational system. A very small fraction of such candidates are willing to relocate to a foreign location the biggest challenge for the HR personnel is to find the right talent for the MNCs and train them such that they are able to take the company forward (Collings, Scullion and Dowling, 2009; Bratton and Gold, 2012; Beardwell and Claydon, 2010). They also have to bridge the gaps that arise out of diversity in culture and language. Such barriers need to broken down by the HR departments of the MNCs in various countries such that a diverse workforce can work together. The business has to familiarise itself with the local ways and cultures and also at the same time understand the needs and demand of the customers in such countries. Such adjustments on the company’s part will also help foster a friendly atmosphere at work and help develop a global mindset of the local employees. Therefore integration of diverse value systems and espousal of shared global work culture is pivotal to create an environment, where the employees are able to communicate their issues and coordinate their activities to achieve common goals (Rosenblatt, 2011; Delbridge, Hauptmeier and Sengupta, 2011; Colling and Terry, 2010). HRM Practices Resourcing HRM helps the organisation formulate the overall business strategies and to align the human resource initiatives and activities with the organization‘s mission and vision. Strategic business partner and Change agent functions require the HR managers to be able to skilfully implement the various business strategies. The organisation’s success depends largely on such strategic moves by the HR department of the same. Talent planning is also an intricate part of the HRM since each organisation requires leaders who would be able to drive the growth and effectively manage a multicultural workforce (Smith and Meiksins, 1995; Schuler, Jackson and Tarique, 2011). Partner with Frontline and Middle Managers Another pivotal role of the HRM is to maintain good relations with the managers and train them to be the bearer of a variety of employment policies that are supposed to heighten the performance of the employees. Studies have revealed that there is a direct correlation between employees having a positive relationship with their frontline managers and them having higher levels of job satisfaction, loyalty and commitment towards their post and responsibilities they are entrusted with. Therefore they deliver higher levels of performance thereby maximising the financial returns of the company. The human resource effectively partners with the frontline and middle managers to help acquire, develop, train and retain human capital for all the business units in the company. In the present world when technological developments have taken over the business world human resource personnel and line managers have to manage virtual team as well and that is facilitated by way of conducting video conferences with the employees (Schuler, 1993). Employee Advocate and Champion of Globalization The HR managers play an important role in the organisations via their knowledge of the business strategies and their advocacy of the employees. The personnel help create a work environment where people will be able to choose to be motivated, contributing, and happy. When employees are motivated they want to put in their best efforts not because of any of obligation but because they start caring for their job both on a professional and personal ground. Apart from creating an amicable environment at work HRM is also about upholding discipline that comprises of policies, systems and practices that raise accountability. When employees are both motivated and disciplined they are excited about their work and are accountable for their performance. The human resource personnel are also in charge of overseeing that every employee’s performance is evaluated in a fair manner such that they are rewarded ably. Rewards motivate an employee towards bettering their future performances. Hence it is an important task to incentivise the performances. Development of the organisation The human resource personnel have to undertake occasional and periodic evaluation of the effectiveness of the firm at the business level. The human resource personnel can anticipate trends and understand the need to implement strategies that would be favourable to those changes. Therefore the human resource professional has to skilled in acquiring business insight such that he or she can predict changes in order to make informed decisions both at operational and strategic levels. The human resource professional assesses current requirements and predicts future skills shortages by way of undertaking strategic skills planning. In the present world when the there is a high level of volatility and uncertainty in the business world, there is thus an increased need for companies to rely on scenario simulations, advanced analytics and other sophisticated workforce-planning levers (Redman and Wilkinson, 2013). In order to carry out the analysis of the human resource management in a multinational corporation, Apple Inc. is chosen. It is an MNC that operates in several countries of the world and has to develop its strategies according to the cultural and market conditions of the country. In developing countries the company is still targeting the niche markets because of the high price of the phones and the other gadgets that it has to offer. However the company’s reputation was at stake few months earlier due to the problems that arose in its supplier’s factories in China. Ever since that incident in China, Apple has made stricter rules that apply to all its suppliers, such that the misdoings and the exploitation of the employees can be checked (Kramar and Syed, 2012; Gilmore and Williams, 2013). As explained earlier, people or in organisational term employees have significant impact towards the success or failure of an organisation. The employees of a firm are as important a resource to an organisation as any of its other resources. Hence an organisation should know how to exploit the employees that are working therein. The employees in Apple Inc. have made a huge impact and acts as the key to the company’s success. Steve Jobs, the company’s CEO is the person who has remained the figurehead for the company. Apple is one the most innovative and profitable organisation in the business world because the employees of the company have worked hard towards making it a success. The managers have successfully created a respectful environment at work and are good at executing orders. The Apple employees have a high passion for the job and truly believe in the corporate mission. Apple exploits it employees in various roles starting from engineering and other technical departments to marketing to operations and sales. Making the employees feel a part of the organisation such that its loss and profits are directly felt by them, is an important task of the Human Resource management and the personnel at Apple have achieved this end. Thus this has acted as a competitive advantage for the company; one that has enabled the company to get over its troubled past to be one of the most successful names in the gadget industry. Also during economic boom, it is but natural for skilled individuals to command a premium salary and it would be in the best interests of a company to maximise the human resources by way of investing in attaining higher skills as part of its workforce since human capital acts as the crucial component of any organisation’s overall competitiveness. In companies like Apple, human resources are an integral part of its success and are the driving force in the development of its corporate strategies. Apple had put in an overriding emphasis on developing the skills and capitalised on their core competencies (Harvey and Turnbull, 2010; Ferner, et al., 2011; Farndale, 2010). Apple’s human resource team has successfully predicted the trends that have taken place over the years and have steered the company in the right direction thereby maximising the company’s gains in the last few years. Apple has successfully adopted the right balance between the best fit and best practice approaches to manage its human resources and has been able to maximize the return on investment derived from the organizations human capital and along with that minimize the financial risk. Such responsibilities have been conducted by the human resource managers of Apple in an effective, consistent, fair and legal manner. The jobs done by the Human resource management in Apple are selection and recruitment, work analysis to predict the trends, training, job rotating, development of leadership, performance appraisal of the employees from time to time, incentive compensation, benefit and profit sharing, employee security, employee development and their health concerns and also maintain favourable relations with the employees. Hiring new employees The company recruits people with advanced computer skills and the recruitment process have been designed such that only the best in the industry are hired who would fit in well with the organisation’s cultures. Studies have shown that the candidate’s interpersonal skills and compatibility with the organisation is determined y way of a personal interview. Cultural Diversity Apple hires its employees from all over the world and maintains a cultural diversity in its organisation. A diversified workforce is one of the positive aspects of the firm as it helps the company function in different countries and adapt to the cultural behaviours therein. Compensation and benefits for the employees The various benefits offered by Apple to its employees and the compensation packages are very competitive. The benefit package of each employee varies depending on location of the job and the employment status. However the common benefits given are flexible spending accounts, insurance coverage, flexible employee stock purchase programmes and also a lumpsum saving and investment plan. Employees are also provided with product discounts, on site fitness centres, and opportunities to work on prestigious projects alongside some of the experienced and well known players in the industry. Salary and compensation reviews comprise of year-end bonuses, vacation time with family and several other perks and reimbursements. Apple also offered its employees the FlexBenefits programme whereby they can choose benefits that would best fit their needs and demands. Recognition and appreciation of the employees Apple had created in 1955; the Apple fellows program so that there is ease in recognising the best of its employees who have made extraordinary contributions towards the company’s success and personal computing. The Apple employees are allowed to be the leaders in their particular areas of expertise and be visionaries that help guiding the company. Therefore Apple is considered as a great place to work for people who are passionate about innovation. Career opportunity Within the organisation opportunities are given to employees so that the skills within the organisation. Apple has a positive recruitment policy that emphasises on the candidates’ suitability to befit the organisation’s culture rather than focus on their skills to fit in a specific job responsibility. The opportunities for the training and development purpose include internship, on-the-job training etc. Students have also informed that the internship programmes with Apple have offered real learning experiences that led to prospective career opportunities in various fields. Apple has attracted some of the most talented people to work as its interns. The on-the-job training is considered one of the best in Apple since the employees learn a lot by way of working with the famous names in the industry. Employability security: Apple does not force its employees to sign any bonds that would obligate them to stay with the company for a fixed number of years. The employees are free to opt for better opportunities if it comes along. However one disadvantage with the company that there can be unjustified layoffs and Apple is unapologetic about it. The employability security requires the training programme to be such that an employee after working with the company would learn enough such that he gets better opportunities elsewhere (Tan and Kumar, 2006; Shmueli, Patel and Bruce, 2010). Recommendations and Conclusion In spite of the fact that Apple has much strength working in its favour such as a strong management, good leaders, skilled and dedicated employees, and technological resources, yet it is evident that the company’s overall corporate culture is out dated. It is characterised by the absence of morale and a lack of alignment of the employees with organisational strategy. The employees are overworked and often exploited beyond humanitarian limits. Hence a change in organisational culture is crucial to its further development and should be imminent for a sustainable and long term success. . Future leaders and managers have to set a standard HRM policy that is properly aligned with organisational strategy and addresses all emerging issues of HRM. Apple’s employee strength is expected to increase in the future and therefore the company needs to formulate its HR policies suitably. Reference List Beardwell J. and Claydon, T., 2010. Human Resource Management a Contemporary Approach (6th edition). Harlow: FT Prentice Hall. Bratton, J., and Gold, J., 2012. Human Resource Management: Theory and Practice (5th edition). Hampshire: Palgrave Macmillan. Colling, T. and Terry M., 2010 Industrial Relations Theory and Practice (3rd edition). Chichester: John Wiley & Sons. Collings, D., Scullion, H. and Dowling, P., 2009. Global staffing, International Journal of Human Resource Management, 20(6), pp. 1253-72. Delbridge, R., Hauptmeier, M. and Sengupta, S., 2011. Beyond the enterprise: broadening the horizons of international HRM’, Human Relations, 64(4), pp. 483-505. Farndale, 2010. 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