Critical Evaluation of the Three Approaches to International Human Resource Management - Essay Example

?Contemporary Issues in International HR Table of Contents Contemporary Issues in International HR Table of Contents 2 Critical Evaluation of the Three Approaches to International Human Resource Management 3 Introduction 3 Cross-Cultural Approach 4 Comparative Approach 5 Functional Approach 7 Conclusion 9 References 10 Understanding Culture in International Human Resource Management 13 Introduction 13 Importance of Culture in International HR 13 Conclusion 16 References 17 International HR and Emerging Countries 20 Introduction 20 The Role of International HR in the Emerging Countries 20 Conclusion 22 References 24 Critical Evaluation of the Three Approaches to International Human Resource Management Introduction Businesses are no more restricted by boundaries. Most of the large companies of the world have been witnessed to carry out an important part of their business functions presently outside the boundaries of their respective countries of source. There are various organisations attempting to make their presence powerful and prominent in other countries, especially overseas. The success or the failure of such organisations largely depends on their human resources and their management. Human resources are considered to be an integral and crucial part of an organisation. The success of an organisation depends on the management of its resources related to production but it is greatly reliant on the way it manages its workforce or human resources. Proper management of the human resources would facilitate in triggering and delivering the actions desired by the organisation. These desired actions contribute significantly towards the success of the organisations (Ashamalla, 1998). The paper will intend to provide an insight towards the three approaches to International Human Resource Management (IHRM) that is the cross cultural approach, comparative approach and functional approach (University of Tasmania, Australia, 2012). Cross-Cultural Approach Cross-cultural approach refers to the assessment or rather the evaluation of the behaviour related to the human resources in a particular organisation (Jackson, 2002). The carrying out of businesses is progressively growing to be further global by expanding in various countries and so it has become an indispensable part to manage the human resources in this global perspective. It becomes quite necessary to manage and to control the human resources of the other countries and this is where International Human Resource Management comes into play (Schuler & et. al., 2002). Human Resource Management (HRM) and International Human Resource Management (IHRM) differ in two vital areas. HRM does not need to deal with the complications of functioning in various countries involving different cultures like IHRM. Secondly, HRM in the domestic context is engaged with workforce that falls under the national boundary whereas IHRM requires to handle and to manage the workforces of three national groups, that is firstly, the home country where the headquarter is situated, secondly the country where any subsidiary would be situated and thirdly the other countries which cater to the finance, labour or research as well development (Pattberg, 2006). It was stated by Taylor & et. al. (1996) that IHRM was treated as a structure of the Multinational Enterprises (MNEs) which comprises certain diverse behaviours, procedures and operations that are carried out with the intention of drawing, sustaining and building up of a workforce or rather human resources in the MNEs. Schuler and Tarique (2007) stated IHRM to be the effectual way of controlling and handling the human resources in the international markets. This is done for the MNEs in order to obtain a chief basis of competitive advantage along with attaining international success. It was suggested by Milliman & et. al. (1991) that IHRM needs to be put into practice with a professional approach of ‘flexible and fit’ in order to make certain of the suitable harmonisation and management among the companies and its respective international subsidiaries with regard to the cross-cultural as well as cross-national environment. The notion of ‘flexible and fit’ was regarded to be function for the purpose of building a global business strategy. The strategy was required for the reason of balancing and rebalancing the external as well as internal settings and also for dealing with different interests in between the elements present in the subsidiaries and also in the headquarters of the MNEs. Therefore, this particular cross-cultural management of IHRM needs to concentrate on the efficient management of individuals coming from varied cultures and backgrounds so that the goals of the companies are attained collectively and the productivity and functions of the MNEs are not adversely affected owing to the difference in the cultural backgrounds (Zheng, 2011). Comparative Approach The comparative approach related to IHRM refers to the way Human Resource Management (HRM) is perceived in various countries. This particular approach aims at explaining as well as contrasting the different components related to HRM with regard to the national, regional and cultural variations. The comparative approach looks for contrasting and assessing the methods or rather practices related to HRM as well as Industrial Relations in various countries. It has already been mentioned that owing to the rapid increase in globalisation, companies are spreading their business operations in different countries. It makes it an obvious fact for the company that it performs its business functions in all these countries in accordance with the internal regulations prevailing in the particular countries. The different regulations in the various countries would certainly have a degree of manipulation on the HRM practices of the particular company. The company would need to deal with the various issues and regulations related to the human resources in the different countries. The human resources of the various countries would be required to manage differently. A multinational company needs to abide by the labour or human resource specifications of the different countries it is operating in. The company needs to follow the rules pertaining to the freely chosen employment, the stipulated working hours of the human resources employed, the child labour, the wage structure and the benefits packages provided to the human resources, the proper treatment of the workforce, the non-discrimination and the liberty of association. The MNE or the company also needs to ensure the occupational safety of the workforce, emergency preparedness, occupational illness and injury, industrial hygiene and the overall working conditions of the human resources (Kinley & Joseph, 2002). The company would need to deal with the working hours of the different countries and make certain that the human resources or the workforce are not being made to work more than the stipulated time according to the regulation of the particular country. It is quite essential for the international or global companies to adhere to or abide by the international regulations as it would ensure the proper and smooth functioning of the company in the countries it is operating in. This would help the global companies to stay away from any legal hassles which might earn a bad reputation for the company in that particular country. Violation of the international regulations by the global companies would call for legal actions against them which would hamper the goodwill of the company along with gravely hampering the business of the company. This might make the company or the global companies incur huge losses thus threatening their existence in the country (Kinley & Joseph, 2002). Expanding business in different countries and operating there call for huge expenses therefore the company needs to be cautious of not incurring any unnecessary and huge losses. On the other hand, abiding by the international regulations by the global companies would facilitate the companies to earn a superior reputation for them which would even prove profitable for their business. This goodwill or strong reputation along with proper functioning of the global companies in accordance with the international regulations would help the MNEs in attaining competitive advantage as well. This aspect of attaining competitive advantage in different countries would ensure the successful existence of the global companies along with earning enough profits. The comparative approach of IHRM deals with the above mentioned subject that is the adherence of the HRM practices with the Industrial Relations in the respective countries (Kinley & Joseph, 2002). It also deals with the convergence as well as divergence of the HRM performances and the corporate social responsibility along with the evaluation of the influences of the legislative, developmental, political and cultural elements related to the particular subsidiary countries on the policies as well as on the performances in association with the international companies (Cieri & et. al., 2005). Functional Approach The functional approach related to IHRM aims at exploring and comprehending the functional aspects related to HRM with regard to the multinational companies concerning the insinuations regarding the procedure of internationalisation associated with the policies as well as activities in relation to HRM. This particular approach takes into deliberation the significance that IHRM might entail for the internationalising and small companies which are also believed to witness noteworthy issues related to international management. This definite approach is learnt to integrate the mounting strategic stress of the companies that look for subcontracting several of their respective HRM operations in order to liberate the IHRM managers for the reason of evaluating the problems holding strategic significance, for instance formation of international teams, managing diversity and building global consciousness. These alterations are further believed to facilitate the HRM managers towards placing themselves next to the different superior business functions like finance as well as marketing, research and development along with taking the responsibility of making decisions during the initial stages related to the commencement of the global functions of a particular company. This approach implies that the divisions relating to HRM would not stay limited to the engagement with regard to the international i.e. the informal dealing with the employees as well as the expatriates in different cultures. On the contrary, the divisions of HRM will rather remain increasingly engaged with the entire procedure related to the internationalisation. This approach is learnt to identify the role of HRM in terms of aiding the progress of adaptive and flexible companies along with concentrating on the function that HRM is competent of playing at the time of widening its role as a change agent which helps in building international outlooks in a world that is free of borders (Cieri & et. al., 2005). Conclusion The above discussion helps in gaining a vivid comprehension regarding the three different approaches related to IHRM. The discussion regarding the perspective of the approaches related to IHRM helps in identifying the different aspects related to the notion of globalisation and the call for managing them competently. Therefore, it can be well understood that for such international firms or multinational enterprises an appropriate human resource management is quite essential and crucial for the reason of their success. It can be stated that International Human Resource Management (IHRM) is related to the understanding and functions of the entire behaviours associated with the human resource management as these behaviours or performances have been observed to create an influence on the way of controlling and handling human resources in organisations in the international environment (Cieri & et. al., 2003). Thus, IHRM ensures the competent management of the human resources in the multinational corporations with implementation of its mentioned approaches which in turn facilitates the companies in attaining success. References Ashamalla, M. H., 1998. International Human Resource Management Practices: The Challenge of Expatriation. CR Vol. 8, Iss. 2, pp. 54-65. Cieri, H. D. & et. al., 2003. International Human Resource Management: Challenges For Teaching And Practice. Faculty of Business and Economics, pp. 1-15. Cieri, H. D. & et. al., 2005. The Challenge of International Human Resource Management; Balancing the Duality of Strategy and Practice. International Journal of Human Resource Management, Vol. 16, Iss.4, pp. 584-598. Jackson, T., 2002. The Management of People Across Cultures: Valuing People Differently. Human Resources Management, Vol. 4, Iss. 4, pp. 455-475. Kinley, D. and Joseph, S. 2002. Multinational corporations and human rights. Alternative Law Journal 27 Iss.1, pp. 7-11. Milliman, J. & et. al., 1991. Organisational Life Cycles and Strategic International Human Resource Management in Multinational Companies: Implications for Congruence Theory. The Academy of Management Review 16, Iss.2, pp. 318-339. Pattberg, P. 2006. The influence of global business regulation: beyond good corporate conduct. Business and Society Review 111, Iss.3, pp. 241-268. Schuler, R. S. & Tarique, I., 2007. International Human Resource Management: A North American Perspective, A Thematic Update and Suggestions for Future Research. The International Journal of Human Resource Management pp. 171-744. Schuler, R. S. & et. al., 2002. International Human Resource Management: Review & Critique. International Journal of Management Reviews, Vol. 19, Iss.1, pp. 41-70. Taylor, S. & et. al., 1996. Toward an Integrative Model of Strategic International Human Resource Management. The Academy of Management Review 21, Iss.4, pp. 959-985. University of Tasmania, Australia, 2012. Approaches to International HRM. Management, pp. 1-19. Zheng, C., 2011. Towards an Extended International HRM Model for Emerging Multinational Enterprises. World Academy of Science, pp. 92-100. Understanding Culture in International Human Resource Management Introduction There is witnessed a noteworthy rise in the amount of employees engaged by the multinational companies owing to the growing business functions with regard to the foreign affiliates across the world as a result of globalisation (University of Nice Sophia Antipolis, 2012). Globalisation also entails the engagement of a diverse workforce in terms of employees ranging from different cultures. The International Human Resource Management (IHRM) makes certain of the efficient management of the diverse workforce irrespective of the culture. The management of the diverse workforce needs to be done effectually and competently in order to reduce the chances of any adverse influence of the varied cultures posed on the business operations and productivity of the multinational companies (Ulrich & et. al., 1995). Importance of Culture in International HR Globalisation is believed to manipulate organisations which contend for the reason of catering to the customers with soaring prospects related to quality, performance and cost. It has been mentioned in this respect that the related economics associated with globalisation has facilitated companies to contend on a global level. Apart from the advantages of unrestricted trade zones, the other factors that help in triggering globalisation entail decreased expenses related to labour as well as production with respect to the underdeveloped countries, the escalating demand related to products that are considered alike across cultures, decreased expenses related to global transportation, advancements in technology and globally accepted standards. As a consequence, an extraordinary number of companies have been observed to expand their business operations in order to augment the global focal point related to their respective business (Fey & Bjorkman, 2000). The companies conducting their business functions on a national level is endowed with the advantage of managing a comparatively restricted collection of cultural, legal and economic components. However, a company that is conducting its business operations in several countries or in an international level is considered not be blessed with the benefit of relative homogeneity as in the case of national companies (Ralston & et. al., 1997). The functions of management related to the human resources of the multinational companies are believed to be quite complex owing to the requirement of acclimatising the policies as well as procedures related to Human Resource (HR). The management of the employees belonging to various cultural backgrounds is considered to be one of the most important functions of IHRM along with formulating the policies as well as procedures associated with HR in accordance with the existing differences between the countries that act as a base for each subsidiary. It needs to be mentioned in this regard that the aspect of culture is given adequate consideration while formulating the policies and ascertaining the HR procedures (Becker & Gerhart, 1996). Culture is believed to play an imperative role in the way of working of individuals in a company. An eminent study conducted by Professor Geert Hofstede evidently revealed due attention to the various cultural differences. Countries or rather the societies were believed to differ in terms of few basic factors (Hofstede, 1983). Such cultural difference that exists between the countries tends to have numerous HR insinuations. In the first place, the differences in culture recommend the requirement of acclimatising the HR practices like pay structures and selection procedures in accordance with the local cultural standards. This particular aspect of cultural difference even recommends that the employees associated with the HR department in case of an overseas subsidiary need to be appointed from the host country to ensure the efficient functioning of the HR department and attaining competitive advantage for the company (Fiol, 1991). It is believed owing to the fact that an HR employee who is learnt to share the similar cultural background as the employees is expected to be increasingly responsive towards the requirements of the employees along with the prospects from their respective working environment. This increased responsiveness with regard to the HR employees ensures the successful management of the company (Harvey & et. al., 1999). The practices related to HRM could not be carried out in a uniform way throughout various nations owing to the varying laws, cultures as well as policies. In the similar way, the cultural differences would tend to manipulate the way of implementation of the roles of HR across the borders (Zhang, 2003). The cultural factor with regard to IHRM would even call for the alteration of the ways of dealing with the employees, recruitment process and also the way and extent of providing training (Ferner, 1997). In this regard it is considered essential to comprehend the basic underlying dimensions related to culture like masculinity-femininity, power distance, uncertainty avoidance, and individualism-collectivism and short-long tenure of orientation. For instance, the factor of uncertainty avoidance relates to the extent to which individuals feel at ease with ambiguity. Individuals preferring increased uncertainty avoidance depict the fact that stability as well as certainty is favoured by them. Consequently, individuals displaying lower amount of preference in this particular dimension depict increased ease with the risk factor. This dimension is believed to differ according to the societies of different countries, which implies that the IHRM needs to alter their practices in the respective countries in accordance with the mentioned dimensions (Friedman, 2007). Conclusion From the above discussion, it can be well comprehended that the rapid globalisation of the companies are making it necessary and vital to realise the cultural sensitivity of the different countries for the reason of adding worth to the functions of the IHRM. Globalisation is believed to escalate the combination of languages, perspectives and cultures along with the amount of expatriates. Efficient functioning as well as the operations of IHRM would depend on the way the cultures of the different countries are managed and responded to with the necessary alterations made in the functions and operations. It becomes necessary for IHRM personnel to understand the various local business practices as well as culture in order to align the existing variable factors like culture for the reason of attaining the overall objectives of a company in the other countries. References Becker, B. & Gerhart, B., 1996. The Impact of Human Resource Management on Organizational Performance: Progress and Prospects. Academy of Management Journal, Vol. 39, pp. 779-801. Ferner, A., 1997. Country of Origin Effects and HRM in Multinational Companies. Human Resource Management Journal, Vol. 7, Iss.1, pp. 19-37. Fey, C. F. & Bjorkman, I., 2000. The Effect of Human Resource Management Practices on MNC Subsidiary Performance in Russia. Stockholm School of Economics, pp. 1-29. Fiol, C. M., 1991. Managing Culture as a Competitive Resource: An Identity-Based View of Sustainable Competitive Advantage. Journal of Management, Vol. 17, Iss.1, pp. 191-213. Friedman, B. A., 2007. Globalization Implications for Human Resource Management Roles. Employee Response Rights Journal, Vol.19, pp. 157-171. Harvey, M. & et. al., 1999. The Impact of Emerging Markets on Staffing the Global Organizations. Journal of International Management, Vol. 5, Iss. 20, pp. 34-46. Hofstede, G., 1983. The Cultural Relativity of Organizational Practices and Theories. Journal of International Business Studies, Vol. 13, pp. 75-89. Ralston, D. A. & et. al., 1997. The Impact of National Culture and Economic Ideology on Managerial Work Values: A Study of the United States, Russia, Japan and China. Journal of International Business Studies, Vol. 28, pp. 177-207. Ulrich, D. & et. al., 1995. Human Resource Competencies: An Empirical Assessment. Human Resource Management, Vol. 34, Iss.4, pp. 473-495. University of Nice Sophia Antipolis, 2012. International Culture. The Environment of International Business, pp. 129-158. Zhang, M., 2003. Transferring Human Resource Management Across National Boundaries: The Case of Chinese Multinational Companies in the UK. Employee Relations, Vol. 25, Iss.6, pp. 613-627. International HR and Emerging Countries Introduction The companies have been observed to turn out increasingly global in terms of their respective strategic orientation in the recent times owing to which the requirement for building global managers is being considered to be vital. The particular characteristic related to the global companies which is considered to be most unique is the effectual management of the global or international business operations along with their respective taskforce in a quite steady way. The management of the international taskforce is becoming essentially significant as the employees are believed and considered to be a significant source of attaining competitive advantage with regard to the companies and their respective overseas subsidiaries (Hall, 1993). A rapid globalisation is being observed in a few of the emerging countries like China and other nations that form a part of the BRICS (Brazil, Russia, India, China and South Africa). These emerging nations are believed to lead in terms of recovery of the Foreign Direct Investment (FDI) and are providing assistance to a large extent for enlivening the international business as well as the economy (Dunning, 2001). The Role of International HR in the Emerging Countries The augmenting adoption of globalisation by the companies is believed to trigger the noteworthy adaptation with regard to the procedures as well as individuals related to human resources. This is for the reason of recognising those aspects that would be competent to ease the progress of the acceptance of international strategies by the companies while concurrently acting in response to the competition in the local markets (Edstrom & Galbraith, 1994). The emerging markets have been stated as the economic drivers that trigger development of the Multinational Corporations (MNCs) in the established and progressed economies. The markets of the emerging countries have been identified to possess huge potential in the recent century. The mentioned or rather these defined emerging markets are believed to be exemplified with the lower extent of economic progress but quickly growing economic development rates, population bases and a satisfactory ratio of opportunity to risk in order to lure investors (Arnold & Quelch, 1998; Garten, 1997). The emerging markets as potential countries for expanding business operations would hence, call for the requirement of a substitute way for the reason of dealing with the various requirements in terms of managing the human resources in the midst of the emergent multinational corporations. This is where the functions of IHRM (International Human Resource Management) come into the picture with regard to the management of the diverse taskforce as well the respective operations of the multinational corporations. The IHRM is referred to the particular system with regard to the multinational corporations which entails a collection of divergent functions, processes and activities that are aimed towards luring, maintaining and building up of the human resources or the taskforce of the multinational companies (Guest, 1997). The functions and role of IHRM is considered to be vital as they are believed to amass the assorted HRM (Human Resource Management) systems that is regarded as necessary for the management of individuals in the overseas subsidiaries or the multinational companies, in the host as well as in the foreign country in order to identify the imperative role of the mother company to manage and synchronise the employees of the entire units falling under the structure of the multinational companies (Ashton & et. al., 2010). The appropriate utilisation of the human resources of the companies are considered to be a significant asset for the reason of attaining strategic competitive advantage along with creating a point of difference for the multinational companies (Fennell & Alexander, 1987). The association between the strategic objectives and the HRM with regard to a multinational company is considered to be crucial. This is owing to the fact that with the surfacing of an international economy that is knowledge-intensive, the factor of human capital tends to get measured as the core competency of the companies in the competitive markets (Tushman & Scanlan, 1981). This unique form of core competency is given immense significance as it proves to be advantageous for making a distinction point for the company in comparison to the other multinational companies. To be specific, it can be stated that the functions related to IHRM deal with international recruitment, selection, policies as well as procedures, adaptability screening, designing the training process for the international taskforce, planning international compensation policies and ensuring the compliance of the business and labour operations in accordance with the laws of the respective countries on the whole. Therefore, it can be understood that IHRM emphasises on developing procedures as well as processes for the reason of making use of the personnel in the form of a replenishing competitive asset (Cieri & et. al., 2007; Bartlett & Ghoshal, 1995). Conclusion As the concept of globalisation or expanding business operations in the emerging countries turn out to be an overt objective for increased companies, an intensive endeavour needs to be made by those companies to ensure the efficient management of the operations related to its human resources with the help of the applications of IHRM. The transfer experienced in terms of the strategic emphasis from turning international from multinational is believed to entail noteworthy consequences with regard to international HRM. The functions of IHRM are considered to be imperative while spreading business operations in the emerging countries for the reason of attaining and keeping up the dynamic competencies in the international field. The functions with regard to international HRM aid in comprehending the international importance related to the specific network along with gaining relative social knowledge in order to become accustomed with the local situations directed by the environment of a particular country. IHRM also helps in effectually managing the workforce of the international companies in harmony with the local norms as well. References Arnold, A. & Quelch, J., 1998. New Strategies in Emerging Markets. Sloan Management Review, Vol. 40, Iss. 1, pp. 7-20. Ashton, D. & et. al., 2010. Skills Webs and International Human Resource Management: Lessons from a Study of the Global Skill Strategies of Transnational Companies. The International Journal of Human Resource Management, Vol. 21, Iss.6, pp. 836-850. Bartlett, C. & Ghoshal, S., 1995. Changing the Role of Top Management: Beyond Structure to Purpose. Harvard Business Review, Vol. 73, Iss.4, pp. 86-96. Cieri, H. D. & et. al., 2007. A Review of International Human Resource Management: Integration, Interrogation, Imitation. International Journal of Management Reviews, Vol. 9, Iss. 4, pp. 281-302. Dunning, J. H., 2001. The Eclectic (OLI) Paradigm of International Production: Past, Present and Future. International Journal of the Economics of Business, Vol. 45, pp. 173-190. Edstrom, A. & Galbraith, J., 1994. Alternative Policies for International Transfers for Managers. Management International Review, Vol. 34, pp. 71-82. Fennell, M. & Alexander, J., 1987. Organizational Boundary Spanning in Institutional Environments. Academy Management Journal, Vol. 30. Iss.3, pp. 456-476. Garten, J., 1997. Troubles Ahead in Emerging Markets. Harvard Business Review, Vol. 75, pp. 38-50. Guest, D. E., 1997. Human Resource Management and Performance: A Review and Research Agenda. International Journal of Human Resource Management, Vol. 8, Iss.30, pp. 263-276. Hall, R., 1993. A Framework Linking Intangible Resources and Capabilities to Sustainable Competitive Advantage. Strategic Management Journal, Vol. 14, pp. 607-618. Tushman, M. & Scanlan, T., 1981. Boundary Spanning Individuals: Their Role in Information Transfer and their Antecedents. Academy Management Journal, Vol. 24, Iss. 2, pp. 289-305. Read More