International Human Resource Practices - Essay Example

International Human Resource Management International Human Resource Management Box A 1 Effect of a National Government on the International Human Resource Practices The inevitably growing competition within the world economy is leading business enterprises into adopting more and more market-oriented methods of human resource management. Regardless of the method that firms use to suit their competitive needs, there are factors like national governments which will always influence the effectiveness of international human resource management. To begin with, a national government can also influence the effectiveness of implementation of the IHRM practices through establishment of state-owned education facilities intended to acquaint youngsters with the skills that are appropriate for employment relations that are extended to the global environment. A good example is the Nanjing university school of business which offers Masters of Science in Human Resource Management. In its portfolio, the institution describes the MSc Human Resource Management program as a program aimed at raising high-caliber fellows in order to meet the growing competitive needs in the global business environment (Bas & Zhao, 2012). Next, governments that decide to construct or re-construct states that function as per the rule of the law always lead to two contrasting movements. The first move constitutes nations involved in rebuilding their government institutions or building their government institutions from scratch. Examples of nations that have experienced this include Libya and South Sudan that have experienced internal conflicts and wars that have brought about state collapse (Natsios, 2012; LeRiche & Arnold, 2012). The second move constitutes of nations that have resorted to economic and political changes. A typical example of this measure is the action of the Eastern European nations to transform from a centrally planned economy to a market economy. In either case, a national government will only accept IHRM practices that are compliant with its bid to accomplish the restructuring endeavors. Another way in which a government can affect the effectiveness of implementation of HRM policies and practices is through issuance of guidance on the wages that employees should be receiving and simplification of the steps involved in forming labor unions. For example, the move by the Bangladesh government to appoint the tripartite minimum wage board whose duty is to significantly raise the lowest pay rendered to factory workers (Eyraud & Saget, 2005). To this end, the cabinet has approved a host of amendments to the labor laws therein in order to improve benefits in addition to simplifying the process of formation of labor unions. Presence of such wage targets implies that a transnational corporation eyeing Bangladesh as a foreign subsidiary might be compelled to adjust its wage rates to reflect that of the host nation (Bangladesh in this case). Similarly, in places where unions have been formed, collective bargaining is more likely and they often serve as avenues that employees use to channel their voices as pertains to wages or other issues. So, a multinational might not have its view on wages entirely reigning within its host country. Finally, a national government can also influence the effectiveness in the implementation of international human resource policies and procedures through formulation of national laws that govern organizational operations. The United Arab Emirates has, for instance, passed a legislation requiring health insurance for every employee. According to a report by the United Nations (2009), this bill issues fines for employers who fail to insure workers thus acting as an establishment of a new federal authority. A similar case is in Indonesia where the government has enacted a number of policies that reinforce the endeavors of the business entities like securing of fundamental funds, making organizational and managerial abilities stronger supporting access to global markets and heightening market opportunities. Another example is the 2004 go global national policy formulated by the Chinese government ended up stimulating a growing number of the Chinese business entities to venture and compete in the global arena. To conclude, firms that adopt international HRM practices in harmony with the norms of the national governments of their host countries are more likely to succeed in their IHRM implementation than enterprises that resort to an otherwise. 1.2 Divergence and Convergence Multinational enterprises are often left to decide on whether to adopt the HRM and labor relations that are common to their overseas subsidiaries or to diffuse their original home-based practices to their target nations. If a business entity resolves to diffusion, then the business shall have arguably attained international convergence as far as the HRM practices are concerned (Qi, 2013). On the other hand, if a business entity compares the HR practices of one country with the other prior to forming precursors from the identified differences, one can argue that divergence has taken precedence over convergence. Implicit in this latter approach is the idea that there will be substantial limitations as pertains to the abilities of the multinational enterprises to coordinate work abroad in their preferred ways (Qi, 2013). Adeleye (2011) reports that there is empirical evidence suggesting that nearly every MNC features a trace of its country of origin within its operations. According to Budhwar (2002), this could be a subconscious resolution under the influence of the institutional and cultural features associated with the MNC’s country of origin or it could be something transferred via people working inside the organization. In addition, whether a nation is of low or high cultural context determines the impact of the IRHM practices that pertain to their country of origin. As pertains to the operation in the foreign subsidiaries exhibited by many of the Chinese multinational enterprises, some studies have paid more attention to the IHRM practices adopted by the Chinese MNCs in the developing countries rather than the developed counterparts (Feng, Barry & Rees, 2014). More specifically, using factors such as flexibility, capital, culture and size a number of the Chinese MNCs are now committed to transferring their IHRM experiences to the less developed nations. Zeng (2013) reports of evidences positing that the Chinese multinational enterprises borrowed a lead from the advanced practices and procedures that are associated with the IHRM practices from the likes of North America and Western Europe. They then altered the practices to suit the broader Chinese global organizations. Considering that the Chinese transnational business entities have established functional subsidiaries within Africa, precedence is given to the IHRM practices that bear close association with enterprise-wide performance and competitiveness. As more of the Chinese MNCs still aim at exporting most of their home-based IHRM practices to the foreign subsidiaries within Africa, they are likely to try standardizing their IHRM in the global context. In order to guarantee effectiveness and efficiency in their operation, the enterprises also consider the individualized contexts of the host countries. 1.3 Relationship between National Culture and Human Resource Management HRM is socially and historically embedded thus it is the only management field that is vulnerable to cultural diversities. National culture, thus, impacts several perspectives of the HRM policies of an organization, covering leadership styles, employee relationship management, strategic decision making processes and performance appraisals among others. It is for this reason that Reiche, Lee & Quintanilla (2012) once argued that the ultimate HRM policies plus practices adopted by a nation are just but reflections of the norms and values relating to the culture within which the organization in question is embedded. While studies have depicted some multination enterprises to be transferring established HRM practices to the foreign subsidiaries, the limited efforts on contextualization explain the minimal acceptance of the practices within the target nations (Fan, Zhang & Zhu, 2013; Dowling, Festing & Engle, 2008). Thus, the policy of formulate once, use everywhere is no longer relevant for HRM practices that cut across different nations hence prompting the need to contextualize the management practices. Research has already found that the level at which a multinational enterprise tailors its HRM policy to fit the individualized cultures surrounding the foreign subsidiaries bears a direct relationship with an improvement in the general performance of an organization. Better still, HRM policies that are in harmony with a national culture often enhances employee motivation in addition to allowing an organization to improve in performance. A number of sources point to the idea that the HRM policies and procedures that institutions ultimately adopt are influenced by organizational, national and international constraints. The effects of such constraints, especially in the face of the growingly globalized community, turns to be of greater importance in the light of the increasing number of global business enterprises. Whilst business entities stretch their operations to cover national, regional as well as international boundaries, adjustment of HRM procedures and practices becomes a necessity if catering for the differences amidst nations is anything to go by. With the intensifying level of competition in the global arena, multinationals have found it necessary to do timely adjustments on their HRM practices in order to attain an appealing market share. Cultural differences impact the overall performance of an enterprise of a firm via a complicated interaction between an individual and an environment. In this regard, an environment could be treated as a sum of group and organizational forces. Group assumptions might affect an individual’s satisfaction and motivation degree along with behaviors and performance within a workforce. Equally, an individual has the potential to dictate the ultimate direction of a business. Pauluzzo (2010) identifies China as one of the countries whose population is deeply affected by cultural determinants. In an effort of the cultural determinants to shape the actions and thoughts of the individuals therein, the involved individuals also end up changing their perception about the organizational relationships and the business in general. Thus, proper knowledge of these perspectives along with their appropriate management within an organizational context could is a lever capable of drawing a company towards successful pathways within China. Overall, every multinational corporation wishing to remain competitive within the global market need to understand the relationship between national culture and human resource management then prepare to adjust their HRM policies and practices to suit the cultural practices related to a host country. Box B 2.1 How National Culture Affects Staff Selection Process To remain competitive, global enterprises have always attempted to set their talent and enterprise-wide strategies to be in harmony with the needs of the emerging markets. Though well intended, the issue has posed longstanding challenges, more so in the context of the principles to follow to estimate the skills that a business enterprise needs in each of its overseas subsidiaries to achieve the overall organizational goals. Employers all through the globe tend to use more or less similar selection procedures. The employee aspects that are evaluated only exhibit slight variation from one nation to another. For instance, employers in the U.S have the tendency of ranking personal interviews. This personal selection process adopted by multiple U.S-based enterprises basically commences with the assessment of a person’s capability in addition to the technical prerequisites associated with a job. Following closely is the assessment of the prospective employee’s previous work experience. Other than the aforementioned personal selection steps, it is recognized that in the People’s Republic of China, test score of the prospective employees take precedence. In addition, the country also assesses the level of familiarity of each of the prospective employees with the Chinese culture. In contrast, U.S-based selection procedures never have anything to do with an employee’s familiarity with the domestic culture. Within Australia, it is common place recruiting from within. Business entities often try using internal promotions as a way to fill job vacancies that surpass the entry level position. In so doing, a corporation reaps the best benefit of the funds that it has channeled towards developing its staff members since their selection. The selection techniques are interviews, tests and references checks. Further, a substantial number of private organizations plus all government agencies require every job applicant to engage in a physical examination before employment (Dickie & Dickie, 2005). In the United States, individuals are slotted job positions based on their age. For instance, most of the American employers have the belief that the position of a director or a chief executive officer (CEO) are better assumed by fellows whose ages tuning to 40 years and above. Underlying this course of action is the cultural belief that more elaborated ages come with advanced experiences. As Branham (2012) reports, this practice has breed some element of discrimination considering that young people can never be hired even if they have the best skills and ideologies. China borrows the steps followed by Australia and other western countries except that its staff selection processes often end up with Chinese returnees, overseas Chinese, local Chinese and repatriates. Efforts to understand the benefits and drawbacks of hiring a candidate from any of the groups has aroused a condition whereby the local Chinese have increased their knowledge on issues like staff training as ways to improve workplace skills (Dickie & Dickie, 2005). In addition, China often employs culture-concious methods when selecting its staff. The Global Bank forms part of the numerous firms that have come up with special programs intended to take care of the linguistic and cultural barriers that impair the local executives from assuming job positions at the international level. The move by Goldman Sachs to launch the Japanese program aimed at helping the local staff to associate more effectively and comfortably with their counterparts all through the world provides a better illustration of measures that can help to improve cross-cultural communication skills. To this end, the firm has expanded this culture-conscious recruitment process to South Korea and China, and planning to initiate the program in the likes of Singapore and Bangalore. 2.2 Variation of the Success Level of Implementation of HR Practices Business entities seeking survival in a multinational scope often try recruiting or selecting the best people to send in their foreign subsidiaries followed by provision of some of training ahead of sending the selected staff to the foreign subsidiaries. According to Snell & Bohlander (2013), this sort of training is not only beneficial to the expatriate managers, but also to the employees that the selected staff will eventually oversee. One big mistake that managers make as pertains to this matter is the assumption that people are the same all over. As consequence, this has led to implementation of international human resource practices in full in some countries, partially in others, and not at all in others. One of the reasons behind the variation is the language used in staff communication. English is in most cases reserved for formal discourse and meetings (MNCs, 2010). Often times, learning this language is only an individual factor as far as communicating in another culture; there are other complications surrounding effective communication within the international environment. For instance, in a number of the foreign subsidiaries, public display of anger is deemed as a taboo. In the United States, a normal way to seek the attention of a waiter would be through using the forefinger to point upwards, In Asia, lifting a forefinger signifies somebody calling a dog or another animal. The aforementioned examples illustrate how cross-cultural diversities end up affecting the success level of internal human resource relations. Variation in the effort devoted towards recognizing and understanding the work attitudes that international employees bear also explains the variation in the implementation of the employment relations. Bogićević-Milikić (2009) posits that these diversities eventually dictate the level of contribution of the individual staff members inside an organization. For instance, not all multinational business entities with branches in Latin America are aware that the people therein see themselves as working for an individual manager and the broader organization. As a consequence, only managers knowledgeable about this practice of the Latin Americans stand higher chances of using personal influences and individual members in a group to in order to attain an enterprise-wide performance. Finally, the variation is attributed to reluctance of the MNCs to consider the issues underpinning successful IHRM practices within the foreign subsidiaries. For instance, the Chinese MNCs established in Africa are expected to consider the institutional, cultural and social factors whilst implementing issues on IHRM performance management (Alden & Davies, 2006). The implication of this is twofold. On one side, the influences of the original country, coupled with the increasing globalization, makes the performance management practices adopted by the Chinese MNCs to be up to standards and headed to characteristics that are closely related to China. On the other side, considering the idea that employees have a higher likelihood of forming contrasting behaviors and attitudes in a practical perspective, contextual factors turn to be major issues influencing the implementation approaches adopted for the employment relations in the foreign subsidiaries. In sum, communication with fellows who feature varied cultural orientation and different language is very difficult. Thus multinational companies need to embrace sensitivity training as a pathway to overrule the prejudices that are typical of the overseas subsidiaries. 2.3 Attaining a Consistent Compensation Compensation at the most basic level refers to a systematic method used to provide monetary value plus other benefits to staff in exchange for services offered and work done. However, pay rates alongside the underpinning conditions make the concept to be more sophisticated for business entities whose operations span across varied locations and cultures whilst engaging different sets of personnel. Compensation stands out to be part of the most sophisticated perspectives of IHRM given that varied nations have varied norms when it comes to staff compensation. For instance, in the U.S, incentive plans like pay plans always pay attention to the achievement and the performance of an individual. On the other hand, collectively oriented cultures like Japan and China feature pay plans that attach more weight to personal needs plus international equity. This sophistication has led some firms established within foreign subsidiaries to set their wage rates to levels that surpass the prevailing wage rates in the local enterprises. However, some sources have opposed this practice whilst arguing that use of methods such as evading conflicts with the wage requirements of the host countries and periodic reviews of employee compensation scheme to attain a consistent compensation is the best way to survive amidst the variations in local environments (Cullen, J. B., & Parboteeah, 2014). One challenge facing most of the multinational firms is the striking a balance between maintaining global consistency while remaining responsive to the extreme local needs. This situation often calls for some level of local manipulation. Nonetheless, every moment of manipulation should fall within a predefined set of employment principles. Tata is one of the firms that pursue such a multi-faced balance by trying to understand the needs of its employees both at home (Home) and in the overseas. Going by a report once issued by the serving Vice President of the human resource department, the business features an employee value proposition that is tailored to suit all the major markets. In India, the company emphasizes the quality of managers to employees. In China, the company emphasizes development opportunities to its staff then offers interesting jobs in the United States. In other instances, companies can use outside-compensation methods to attain consistency. In given markets, especially Asia, employers are busy establishing associations between themselves and the families of their employees. 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