Developing an Ethical Culture through Multinational Organization HR Function - Essay Example

HOW MULTINATIONAL ORGANISATION HR FUNCTION CONTRIBUTE TO DEVELOPING AN ETHICAL CULTURE Developing an Ethical Culture through Multinational Organisation HR Function Introduction Development in the present days has been, to a larger extent, brought about due to globalization. Through globalization, countries around the globe can interact in efforts to build a global economy. Globalisation has also helped in breaking or minimizing global barriers to entry into the global market (Gopalkrishnan, 2001). In this sense, firms have come up that can do business in several foreign countries, including the domestic country. Such firms are referred to as Multinational Companies or Organisations. At the same time, people can work in different countries, thanks to globalization. This has helped in settling the unemployment issue and lack of sufficient human labor in different countries. However, there are a lot of critics about Human Resource Management that the Multinational Organisations have been facing. Some Multinational Organisations involve in ethically questionable practices in their HR functions that go against the ethical values of the community in the host countries. The ethical dilemma that faces these Multinational Organisations are in human rights, environmental, moral obligation and corruption, and employee rights. Under employee rights, there are various human resource functions including cash and compensation plans, employment issues, privacy issues and race, gender and disability issues that become of ethical concern in Multinational Organisations (Pedigo & Marshall, 2004). This paper will, therefore, analyze these HR function ethical dilemma facing the Multinational Organisations and how these organisations can adopt a culturally sensitive approach in addressing these issues. Main Ethical Dilemmas Facing Human Resource Professionals There is a way in which human resource functions are expected to be executed under certain guidelines in the labor laws of the domestic country. These form part of the cultural foundations of human resource functions in the domestic organisations. However, most Multinational Organisations overlook such guidelines and come up with their guidelines as they are used to operating in their mother countries (Csizmar, 2013). These practices expose the domestic labor market to various ethically questionable practices as far as their employment guidelines are concerned. On most occasions, the main practices that are faced with these ethical dilemmas include the cash and compensation plans, privacy issues, race, gender and disability, and employment issues. Cash and Compensation Plans There are various ethical issues pertaining to the salaries, bonuses, allowances, executive perquisites, and annual incentive plans that the Multinational Organisations are expected to offer. Increased pressure exists in such organisations to increase the incentives paid to the top management of the organization (MSG, 2013). This is usually justified by the fact that the top management is always, to a greater percentage, composed of specialists from the mother country of the Multinational Organisation. They, therefore, argue that the labor laws in the host country do not apply to these set of professionals since the company hired them from their country. Again, there has been tendencies for the Multinational Organisation to offer merger compensations in terms of salaries and benefits to the rest of the employees forming the workforce in the company. The main justification being that they are from the host country, and they are always incorporated in the lower management taskforce of the company, where some of them are hired on a casual basis. The compensation plans of the Multinational Organisation is, therefore, designed with a lot of business to benefit mostly the organization and the top management who are from the mother country of the organization. Therefore, multinational companies have only been perceived as organisations that are discriminative on the basis of employment and compensation. Privacy Issues In any organisation, the employees expect the organisation to respect and protect their personal lives. The organisations, especially the Multinational organisations, should expect any person working for them to have their side of personal life that they expect to be respected and not intruded. Such issues that contribute an individuals personal life include their religious, political, cultural and social beliefs (Fritzsche & Becke, 2004). Multinational organisations are, therefore, faced with a great challenge when they set into a new country that has totally different social, cultural, religious and political beliefs. When hiring employees, most of these organisations engage in activities that seem to be infringing in the personal lives of their employees. Some organisations do not provide a day off for an employee to attend to their religious functions. As we know, various churches have different days of worship, the employees, therefore, expect to be given days off with relation to their worship day so that they might attend the services. On the contrary, some multinational organisations put turf measures to its employees where they are not released on such days, or are not given any off day at all. Some organisations do not provide the employees with equal opportunities to their social life as well as involve in political activities while in the organisation (Hofstede, 2000). Cultural beliefs are also not expected to affect an employees duties in the organization, hence, infringing on the cultural rights and requirement of the employees. Some of these organisations have also involved in mail activities with efforts to track the employee activities that may not be in the benefit of the organization. Race, Gender and Disability Multinational organisations, till currently, have the tendency of differentiating employees with reference to gender, origin, race and their disability. Employees from some races and origins, especially those from the same country of origin as the Multinational organisations are given more preferences in various areas on the organisation as compared to other employees outside their race and origin (French, 2008). The employees who are the same race and origin as the mother country of the organisation are normally recruited to the top positions in the organisation. They are also given higher pay with better compensation plans than the employees who originate from the host country. Some organisations have also been seen to prefer employees from a particular gender and neglect employing other people from the other gender. In most cases, multinational organisations do not like recognize or give equal employment opportunities to disabled persons a particular gender in the society. Such organisations on many occasions operate in less recognition of the labor laws, and affirmative action put in place by the local employment authorities (Eandi, 2013). They also treat the local employees as less employees by offering them less compensation and only recruiting them to the lower management levels of the taskforce in the organisation. The local people, due to their race or origin, are also used in such organisations as casual employees and permanent employment benefits are only provided to the top management who originate from other countries and are of different races. Employment Issues Multinational organisations face bigger dilemmas in employee hiring. One such dilemma results from the pressure of hiring a certain percentage of workers from the host country. In most cases, these organisations do not consider hiring employees from the host country. They believe in the level of competence in the employees from their mother countries. Therefore, they tend to prefer hiring their people to the people found in the host country. This suggests the level with which the multinational human personnel do not have belief in the competency level of the human resources in the host country (Jones, 2001). The organisations do not, in many cases, meet the threshold of employees from the host country that they are required to hire, according to the guidelines and requirement put in place by the host country. In any case, they most of the employees in top management in these organisations are made up of employees that the organisation brought with it from its mother country. It becomes unethical that foreigners come to hold higher positions in your country while the host can only supply the support staff and casual employees to the organisation. The multinational organisations also prefer family members or friends to hold the top management positions, as opposed to the free and fair hiring regulations and requirements of the host country. Role of Human Resource Management in an Ethical Perspective Many multinational organisations have employed the use of formal programs to manage ethical behavior and legal compliance in the host country. Human resources management department have been charged with the responsibility of enforcing these formal programs to implement ethics management (Gary, 2001). Ethics management efforts are such problematic efforts and are not easy to enforce as they are likely to raise questions of fairness among the employees. Human resources personnel are, therefore, expected to handle the human resource functions with fairness to all the employees. The multinational organisation is, therefore, advised to adhere to the regulations and requirement of human resource functions determined by the host country while trying to ensure fairness among employees. Human resource personnel are well trained to ensure that they enforce affirmative action in such a way to ensure that employees are not discriminated against on the basis of race, origin, culture, religion, gender or disability. The human resource management personnel are expected to carry out fair and open recruitment of the employees based on the general requirement of the job position, but not on various discriminative factors. Therefore, for the multinational organisations to achieve ethical business environment on how they carry out their human resource functions, it is very necessary that their human resources personnel are well trained to act with non biassed and indiscriminative face on all the employees equally (Baker, et al., 2006). Culturally-sensitive Approach in Addressing Ethical Issues in Workplace For the multinational organisations to adopt a culturally-sensitive approach in addressing ethical issues in the workplace, the organisation should establish a code of conduct that does not only avert financial risks, but also that the shareholders, customers and employees have a long-term trust in the organisation (Buckley, et al., 2001). As the human resource department is the one in-charge of making ethical decisions related to employee training, recruitment, compensation and performance management, it is only wise that such a department be headed by a personnel who originates from the host country to provide the necessary cultural regulations as far as these human resource functions are concerned. The specialists from the host country are required to be incorporated in the human resources services for their cultural understanding of the ethical requirement of such services. These are the same people who should take charge of incentives compensation, talent management systems, and base pay and determination of benefits (Tara, 2014). These human resource personnel should balance the need to pay employees in a competitive manner while including the ethics pertaining the incentives plan. They also need to discourage the practice of differentiating employees on the basis of gender, origin, race, disability and other discriminative factors. They need to hire family members and friends with a lot of caution, and respect the privacy of its employees. Analysis of Situations at Work Looking at Nokia Company in Kenya, the top management is composed of all White people. These people have higher compensation plans as well as benefits plans. There is, however, a huge gap between the top management and the rest of the employees, which most of them work as sales representatives (Fritzsche & Oz, 2007). These people do not enjoy significant job enrichment since few of them are employed on a permanent basis, and there are few promotional chances. The employees are also required to work from Sunday to Sunday. In such an organisation, the management needs to involve human resource management that is sensitive to fairness and practices that are culturally ethical by the Kenyan government. It should ensure that the top management is composed of both Blacks and Whites in an equitable manner. The gap between the top management and the other employees can also be reduces by introducing other positions in between and increasing the compensation and benefits to those in the lower management level. Employees should also be given some time off so that they can attend to their religious and other functions. In this way, the organisation will be operating in a culturally ethical environment and will have no problem with the local people. Conclusion Multinational organisations are faced with a lot of the ethical dilemmas as they undertake their human resource functions in the foreign countries. Most of these dilemmas are on cash and compensation, employment issues, privacy issues and race, gender and disability issues. Their actions in these countries do not reflect the cultural groundings of the people in these countries. They tend to operate in ways that benefit them in most part of the operations, while the host country is usually discriminated against. These organisations, however, can adopt a cultural sensitive human resource management system in dealing with these ethical dilemmas as has been analyzed in this research. Bibliography Baker, T. L., Hunt, G. H. & Andrews, M. C., 2006. Promoting Ethical Behaviour and Organizational Citizenship Behaviours: The influence of Corporate Ethical Values. Journal of Business Research , 59(1), pp. 849-857. Buckley, M. et al., 2001. Ethical issues in human resource systems. Human Resource Management Review, 11(1/2), pp. 11-29. Csizmar, C., 2013. International Compensation. What is the competitive market price for position?. Orlando: CMS-WordPress Web Dev. Eandi, S., 2013. The Essentials of Managing Global Compensation Practices, Baker and McKenzie. [Online] Available at: http://www.bakermckenzie.com/ [Accessed 4 January 2015]. French, W., 2008. Human Resource Management in the Multinational Company. New York: Nochols. Fritzsche, D. & Becke, H., 2004. Linking Managerial Behavior to Ethical Philosophy – An Empirical Investigation. Academy of Management Journal, 27(1), pp. 166-175. Fritzsche, D. & Oz, E., 2007. Personal Values Influence on the Ethical Dimension of Decision Making. Journal of Business Ethics, 75(4), pp. 335-343. Gary, R. W., 2001. The role of human resources in ethics /compliance management: a fairness perspective. Human Resource Management Review, 11(1-2), pp. 113-134. Gopalkrishnan, R., 2001. International exchanges as the basis for conceptualising ethics in international business. Journal of Business Ethics, 31(1), pp. 3-24. Hofstede, G., 2000. Culture’s Consequences: International Differences in Work-Related Values. Beverly Hills, CA: Sage. Jones, T., 2001. Ethical Decision Making by Individuals in Organizations; An Issue-Contingent Model. Academy of Management Review , 16(2), pp. 366-395. MSG, 2013. Ethical Issues in Human Resource. Management Study Guide, 8(1), p. 1. Pedigo, K. & Marshall, 2004. International Ethical Dilemma Confronting Australian Managers: Implications for the Training and Development of Employees Working Overseas. Journal of European Industrial Training, 28(2), pp. 183-198. Tara, D., 2014. Ethical considerations faced by human resource practitioners. AzCentral, 3(2), pp. 1-3. Read More