How to Improve Productivity in Asian Subsidiaries of Multinational Companies - Essay Example

? International Human Resource Management- examination Table of Contents Question 2: 3 Question 3: 5 Reference 7 Question 2: Discuss the extent to which incentive based pay systems can be used to improve productivity in Asian subsidiaries of multinational companies. Answer: Developing nations demonstrate great competition in the labor market and the unemployment rates in such nations also remain high. Under such conditions an incentive based system of pay would be effective in resulting into improved performance and making use of the high competition in the market. Moreover an important factor which causes low productivity of labor in developing nations is because they suffer from low motivation. The concept of motivation is linked to capacity and must be addressed and analyzed in all capacity levels, i.e., individual level, organization and enabling environment. Measures of incentives, like salaries, intangible rewards, secondary benefits, recognitions and sanctions are some of the conventional ways of motivating employees for increasing their performance (UNDP, 2006, p.5). Because developing nations are characterized by high supply of labor and excess competition in the labor market, an incentive system based on performance generally results in improved performance on the part of the employees through instigating motivation. Because of the high rates of unemployment in the nations, even the slightest of incentives results in employees delivering the best of their capacities to perform their jobs. In such a condition it is recommended that multinational organizations having subsidiaries in the developing nations incorporate incentive based system of pay for motivating employees and recognizing their efforts. There are certain cultural aspects that are common among developing nations. They are seen to demonstrate high collectivism which shows their affinity to remain and operate in groups. There is high degree of integration among the people in society which reflects through the organizations as well. Organizations can employ team work and group activities which employees are more comfortable with. However, such team activities generally undermine the individual efforts which might go unrecognized. This is the reason why an incentive based pay system must be incorporated in organizations in developing nations. Along with the group performance, such a pay system helps to recognize individual performance as well, such as none of the individual efforts go unrecognized. Also the intangible incentives like rewards; recognition plays a major role in motivating the employees. Since remuneration remains low in developing nations, cash awards are given major value in these nations. Some of the non financial incentives like rewards, gifts and travel also provide added stimulus to the motivation level of employees in developing nations. Some of the less tangible incentives which work for the developing nations are independence of working, work flexibility, career advancement possibilities, work recognition etc. Also an incentive necessarily means that the fixed salary of the employee is not dependant on the performance of employees. This provides a sense of security for the employees who can then perform their jobs without anxieties. It is important that a certain amount of the employees’ remuneration must be independent of performance while the remaining part can be performance based. This is especially applicable for the developing nations where the remuneration of employees generally remains low (Jain & Narayan, 2010, p.7). Question 3: Analyze the ethical dilemmas associated with human resources management in developing countries. Answer: Because of the volatile and fluctuating economic and political conditions in the developing nation’s organizations face difficulty in making long term plans. Also there are state dependencies with regards to policy and financial issues. Also there are frequent changes in government rules and regulations because of which multinational organizations are confronted with problems of making their human resource management strategies. Also there are high rates of inflation which is why the remunerations have to be high in order to compensate with the growing prices. However, the yields remain comparatively low because of lower productivity of organizations. Moreover the infrastructures in these nations also remain low. Thus multinational organizations opening subsidiaries in developing nations have to make huge investments in the form of infrastructure investments. Developing nations are characterized with lack of adequate educational institutes and infrastructure in the field of education. This is the reason why it is difficult to find the right candidates for the right positions in the organizations. Often the management has to cater to unfair practices in the recruitment and selection of candidates. Candidates might not be chosen through fair means and this might give rise to the selection of such candidates who might not be eligible. Also there are certain cultural barriers. Organizations established in a certain location might be under pressure to recruit a certain number of candidates from that particular culture and not from any other. This is primarily done to earn the goodwill of the people and the region. This might hamper the organizations’ plan for selecting candidates of certain profile. Ethical organizations must set the same rules and regulations for candidates from all backgrounds even though it might hurt the sentiments of certain cultures in society and create discontentment. Performance evaluation is one of the most challenging functions that the human resource management departments in organizations are faced with. As it is not possible for the parent organizations to evaluate the profiles and performance of all candidates in the subsidiary nation, performance evaluation is conducted in the organization itself. Most often the immediate supervisors are required to provide feedback of the employees working under him and this is primarily done through one to one interviews only. This assessment might not be correct or conducted ethically as the supervisors might provide better ratings for employees belonging to his culture and might rate unfavorably for employees belonging to different culture. Employers are also faced with staffing problems as most of the recruitment channels comprises of suggestions from the employees or other contacts. This also reflects the collective nature of the culture in nations like India and Turkey. Also the interviews remain highly unstructured and are influenced by the intuition and subjective evaluation of the interviewer which might lead to improper evaluation and selection of candidates. The above issues pose serious problems for the multinational organizations for handling human resource issues ethically in the subsidiary organizations located in the developing nations (Aycan, 2003, p.5). Reference Aycan, Z. (2003). Human resource management in Turkey. [Pdf]. Available at: http://www.fh-fulda.de/fileadmin/Fachbereich_SW/Downloads/Profs/Wolf/Studies/turkey/HRM_in_Turkey.pdf. [Accessed on June 21, 2011]. Jain, T. & Narayan, T. (2010). Incentive to discriminate? An experimental investigation of teacher incentives in India. [Pdf]. Available at: http://mitsloan.mit.edu/neudc/papers/paper_88.pdf. [Accessed on June 21, 2011]. UNDP. (2006). Incentive systems: incentives, motivation, and development performance. [Pdf]. Available at: http://lencd.com/data/docs/233-Concept%20Note_Incentive%20Systems.pdf. [Accessed on June 21, 2011]. Read More