Human Resource Management - Thinking Globally, Acting Locally - Essay Example

Human Resource Management: Thinking Globally, Acting Locally Introduction How can an international corporation headquartered in the United s overcome its cultural challenge when it has operations in Japan? What about if it replicates its human resource policies in the oriental countries? These dilemmas represent the typical worries of 21st century corporations that are struggling to find an optimal balance between globalisation and localisation despite operating globally (Drori, 2013:15). The biggest challenge in global expansion, as is many multinationals have found out, is not business development, but the streamlining of human resources systems. Multinationals often learn the hard way when it comes to integrating HR systems to function optimally across the world, and some have spent enormous sums of money to solve this problem. Discussion Even for the biggest and most innovative companies, this problem still worries them because the transition requires time to manage successfully. Time is something multinationals do not have. For most international corporations, the question is not an option between globalisation and localisation, but the delicate balance between the two. On one hand, business resembles an organism; it must build a global brand to maintain its organisational attributes in international expansion (Badie, 2011:39). On the other hand, global variation in cultural and institutional settings demands multinationals to establish local responsiveness. Overemphasis on global control and consistency can only impede domestic vitality and result in what is commonly referred to as the “headquarters syndrome.” This paper will examine how multinationals can implement and practice glocalisation – “think globally, act locally” – to balance its local HR needs with global HR systems so that overemphasis on one does not cause negative consequences for them (Kaynak and Fulmer, 2013:11). Glocalisation requires HR managers to combine both global and local strategies. When implemented correctly, the rewards can spread evenly between local divisions and the multinational headquarters based abroad. Despite the global recession that followed the 2008 financial downturn, glocalisation surges on steadily. Scholars have argued that the core driver of glocalisation today is international corporations, which is true because they are the ones who need it the most. According to Drori (2013:18), as many large companies set up local or regional divisions in emerging and culturally rich markets, HR practitioners are required to implement sustainable HR practices that respond to local needs. HR departments traditionally depend on tools like training or rewards to match employee conduct with organisational objectives. Despite these tools being quite effective locally, there is an urgent need to glocalise and streamline these initiatives on the international arena (Pudelko, 2006:129). In addition, simply focusing on behavioural change, particularly in companies with highly diverse cultures, is not likely to bring long-term change, even if initial success is experienced. Enforcing a new HR strategy from headquarters is basically an exercise in modifying behaviour. However, trying to spark behavioural change directly is futile and does not have any long-term effects. Such a strategy does not address the fundamental driver of behaviour and people will ultimately go back to old common ways. This is because the motivation to change does no trickle down to the deeper layers of culture (Drori, 2013:23). The deeper layer of culture comprises the shared meaning and purpose within an organisation, in addition to employee’s values and beliefs. Studies show that trivial attributes of culture are just the tip of the iceberg; analytical drivers of change cannot be easily seen, but they are the ones with the power to alter behaviour completely. The way to reaching these analytical layers of culture is to first comprehend that culture extends beyond the most perceptible aspects of the day-to-day activities of companies and are instead manifested through company systems and symbols, company norms, and structures. Scholars have identified General Electric’s organisational culture as an example of how multinationals should operate to change organisational behaviour (Coe and Lee, 2006:74). The company has combined inspiration and purpose, norms and trends of interaction of teams that drive both employees’ and leaders’ behaviour and results, and the beliefs and motives of individuals to create an organisational culture that extends beyond its American headquarters and remains stable even in other countries across the world. In other words, organisational culture is the concept is the foundation that offers meaning, and when clear directives are missing, acts as a yardstick for HR managers to implement HR systems in other countries. According to Drori (2013:29), this means that in the quintessential multinational, local and regional divisions can be relied on to operate on their own instructions while still sharing one roof of meaning with the parent company. But how do companies go about enforcing HR instructions that come from headquarters in a local or regional division that may have highly diverse cultures and beliefs? A potential remedy occurs in the progressive concept of glocalisation, which combines local and global thinking. To think globally, HR managers should ask themselves what the personalities of their organisations are as a whole. Many senior HR managers fail to analyse this question, but critically defining this personality impacts multinationals’ operate. This personality is key to multinationals global culture and is a vital element in not only accomplishing their goals, but also in hiring and retaining the best workers, enhancing stakeholder relationships and developing a positive public image (Drori, 2013:33). On the other hand, thinking locally involves a dedication to comprehending local cultural variations, particularly those that define the business setting of the host country. In this case, multinationals should ask what factors make this specific area distinct when it comes to operating. For example, a French subsidiary of an American multinational, staffed with mainly local workers, cannot be sassumed to symbolie the corporate culture of the parent company in its entirety. Apart from the socio-cultural variations that may occur, absence of close supervision from headquarters means local or regional divisions may establish their working styles and schedules (Pudelko, 2006:127). An approach that is locally sensitive, when used to implement parent company’s initiatives demands that HR teams acknowledge aspects of local culture convincing enough to demand some degree of accommodation. When acknowledging the need for equilibrium between local and global operations, HR executives might be tempted to view glocalisation as a bridge between a state of international consistency, under which globally standardised mechanisms are enforced as-is domestically, and a state of local sensitivity, under which completely domestically-engineered policies are created (Drori, 2013:35). However, in reality, multinationals should not view the two states as elements of a continuum. For HR managers, the first step in glocalisation involves thinking about what makes their firms what they are. What are the personalities of their firms? This should be viewed as a precondition in organisational culture; it should be non-negotiable. For instance, a multinational that assigns high value on personal merit in its management strategy cannot, without causing internal cracks in its culture, start viewing personal relationships as the core determinant of professional development simply because it is under pressure to absorb local customs. According to Kaynak and Fulmer, 2013:13), multinationals’ personalities are key considerations in the quest to tailor global HR perspectives to local scenarios. However, their overarching objectives, as well as the motive behind any new drive to be implemented, should also be taken into account (Kaynak and Fulmer, 2013:12). Around or in the initial stages of the glocalisation process, HR managers must question themselves: as long as a policy remains true to its objective or to the objectives of the organisation as a whole, how can this directive from headquarters be adapted to suit local norms? Consequently, the route to effective glocalisation is not to view – and approach – international consistency and local sensitivity as a simple process in which one is pursued to the detriment of the other (Drori, 2013:39). Instead, there are specific issues that require strict international consistency, such as the corporation’s meaning and objective and the “why” basis of the new policy. On the other hand, the “how” of implementation can be steered towards local sensitivity. Having a good comprehension of how to begin the glocalisation process is more than half of the goal accomplished. Of course, to be assured of victory HR managers need to shift to the planning and execution phases. This is where magic wand or blanket solution will not be found; any detailed discussions must be driven by the specifics of each host nation and case, which will vary greatly (Drori, 2013:41). A model contrasting the global and local cultures will be useful to HR managers in this phase of the glocalisation process. In this regard, Hofstede’s cultural dimension is one effective model for evaluating and distinguishing national and organisational cultures. By defining the impacts of a society’s culture in its individual members’ beliefs and values and how they relate to behaviour, HR managers can categorise a region’s cultural ideals into measured dimensions that enable comparisons with other cultures (Kaynak and Fulmer, 2013:18). According to Dickmann, Müller-Camen and Kelliher (2009:17), once the multinational has determined that a change of the HR policy is in the best interests of local staff, glocalisation plans must be conveyed back to global headquarters for approval. Although HR managers might implement changes, it is ultimately vital that headquarters determines the glocalised type of the initiative complimentary to the larger organisation’s goals. Otherwise, the international aspect of the initiative would be futile. Stressing the “win-win” feature of the initiative will go a long way in persuading headquarters to drop its approval to the plan and make sure glocalisation efforts are adequately supported in the long term. Case Study In 1984, Volkswagen partnered with the Chinese government and investors to set up its first plant in China; the new venture was called the Shanghai-Volkswagen Automotive Company. This partnership is often cited by HR experts as an example of how standardised HR mechanisms can be enhanced by adapting them around the local culture. When the Chinese partnership was first established, performance management mechanisms of the venture were still harmonised across all geographical divisions (Faulconbridge, 2008:204). However, within a few months of setting up, Volkswagen headquarters identified obstacles arising from local cultural variations, particularly in the area of staff development. For the German headquarters, customer satisfaction was the main goal (i.e. Volkswagen’s “personality) in all its business units. One German HR executive noted that when the firm expanded into the United States twenty-nine years earlier in 1955, the firm had no challenges with customer service as “Americans are open and act more cordially and naturally to customers.” However, in China, the biggest issue was to enhance customer service skills. The same executive stated that customer service was not a major attribute of Chinese (Drori, 2013:58). According to him, Chinese are somehow reclusive and conservative, a bit “passive.” They do not just start talking to strangers. To fix this and ensure that Volkswagen headquarters’ goal of customer service remained intact, a local training company was hired to teach and train Chinese employees on customer service skills. To further instil customer service in staff, management held competitions between departments and best salespeople were given bonuses. The effect of China’s reticent traditions on Volkswagen’s staff development program can be explained using Hofstede’s cultural dimensions, particularly the Uncertainty Avoidance Index (UAI). The UAI estimates the way people handles the fact that the future is unpredictable – ambiguity comes with anxiety, and different societies have learned how to manage this anxiety in various ways (Brewster, Wood, and Brookes, 2008:335). At that time, China’s high UAI score of 601 meant that locals were very keen on preventing uncertainty, and also tended to be wary of strangers. As a result, from a socio-cultural angle, Hofstede’s cultural model enabled Volkswagen to understand why Chinese employees were passive and did not actively engage customers. Ultimately, Volkswagen’s basic indoctrination and development practices for staff were similar in both home and host countries (Germany and China), but employee development programs in China were tailored to remedy the lack of customer service resulting from the reticent local culture in China. While Volkswagen’s main goal – customer service – was non-negotiable in all its regional units, the performance management and training systems in China were negotiable and adapted to realise this primary goal (Pudelko and Harzing, 2008:396). Conclusion For HR managers to think globally and act globally successfully, they must approach the whole process with the dynamism and gravity it requires. The whole approach should be results-oriented, objective, holistic and purpose-driven. HR managers should also employ better methods of understanding local cultures by encouraging employees to interact with locals. According to Drori (2013:65), a personal approach from employees goes a long way towards making the settling-in process a success for multinationals. HR managers should learn to apply the hard and soft aspects of HRM, especially the latter. Employees always feel appreciated and motivated when management acts in an empathetic but firm way. Glocalisation is a complex process that needs time and enormous resources to import and export HR systems; that is why it is common in multinationals than other corporations. However, even small and medium-sized enterprises can learn something from glocalisation in terms of flexibility. The ability to adapt to different situations is not just restricted to MNCs, it can help small firms implement HR systems and policies that are dynamic and flexible. Finally, more research is needed on how MNCs and other corporations can improve their HRM systems to find an optimal balance between global ambition and local sensitivity. References Badie, B. (2011) International encyclopaedia of political science, Thousand Oaks, Calif., SAGE. Brewster, C., Wood, G. & Brookes, M. (2008) Similarity, Isomorphism or Duality? Recent Survey Evidence on the Human Resource Management Policies of Multinational Corporations British Journal of Management, vol. 19, no. 4, pp. 320-342. Coe, N. & Lee, Y. (2006) The Strategic Localisation of Transnational Retailers: The Case of Samsung-Tesco in South Korea, Economic Geography, vol. 82, no. 1, pp. 61-88. Dickmann, M., Müller-Camen, M. & Kelliher, C. (2009) Exploring standardisation and knowledge networking processes in transnational human resource management, Personnel Review, vol. 38, no. 1, pp. 5-25. Drori, G. (2013) Global themes and local variations in organisation and management perspectives on glocalisation, New York, Routledge. Faulconbridge, J. (2008) Managing the Transnational Law Firm: A Relational Analysis of Professional Systems, Embedded Actors, and Time-Space-Sensitive Governance, Economic Geography, vol. 84, no. 2, pp. 185-210. Kaynak, E. & Fulmer, R. (2013) Executive development and organisational learning for global business, Hoboken, Taylor and Francis. Pudelko, M. & Harzing, A. (2008) The Golden Triangle for MNCs, Organisational Dynamics, vol. 37, no. 4, pp. 394-404. Pudelko, M. (2006) A comparison of HRM systems in the USA, Japan and Germany in their socio-economic context, Human Resource Management Journal, vol. 18, no. 2, pp. 123-153. Read More