Human Resource Management in Appar8us - Case Study Example

Background of Appar8us Appar8us is a US owned company started in 1972 .They are producing medical tools used in surgery and the company has an annualturn over of $250 million. About 3000 staffs are working in Appar8us which include both skilled and unskilled workers.Appar8us began exporting to Europe in 1980 and in 1990s decided to set up plants first in UK and followed by Sweden and later in France. In 1992 a medical engineering company acquired the UK subsidiary .The Swedish subsidiary was set up in 1994 employing 300 staffs. In 1997 a new plant was set up in France employs 250 staffs. 1. International Human Resource Management in Appar8us The Appar8us has good approach towards International Human Resources Management., The Director of Human Resources , Jane Ford believe that IHRM is able to complement the new business strategy and is also possible to solve the problem in the overseas subsidiaries. "International human resource management (IHRM) is the process of procuring, allocating, and effectively utilizing human resources in a multinational corporation." (Fisher et al 2005). The manager must integrate the human resources policies and practice across number of subsidiaries in different countries for the purpose of achieving the common goal. The human resources manager wants to integrate the human resources policies and practice around the number of subsidiaries in different countries in order to achieve the corporate objective. Moreover IHRM consists of many functions, it is heterogeneous, involves constantly changing perspective, it requires more involvement in employee's personal lives and is also influenced by external sources. The International HR manager have to deal with the issue of international taxation, administrative services for expatriate's i.e. to have Selecting, training and appraising local and international employees. The HQ based HR manager deals with employees that have different cultural background. "The HQ manager must coordinate policies and procedures to manage expatriates from the firm's home country (parent country nationals, PNCs), host-country nationals (HCNs), as well as third country nationals (TCNs, e.g. a French manager working for an American MNC in the firm's Nigerian subsidiary) in subsidiaries around the world." (Manage Wise: International Human Resource Management). The importance of International human resources Management: 1 The markets were opened for competing from both domestic and foreign firm. 2 A large portion of employees are located at different countries away from the home countries. "The IHRM developed by Taylor and Beechler and Napier who argues that multinational competitive position is shaped by the organizational competencies that it possesses and how the firm transfers these across the nation." (Almond & Ferner 2006, P.225). The main purpose of IHRM is to have efficiency, locally responsive, being capable to transfer knowledge and learning across globally. The Appar8us is having a high control over subsidiaries having thorough use of expatriate manager in technical and managerial area of the business. A strong Appar8us culture is reinforced by regular staff bulletins and local company magazines in the language of the subsidiary company country. The Perlmutter's EPG model says that senior management of an international organization want to hold three primary functions such as Ethnocentric, Polycentric, Geocentric in building and expanding multinational capabilities. "Organizations are building IHRM functions that are shifting from the management of expatriation towards supplementary services to the business aimed at facilitating the globalisation process, and this involves capitalising upon the fragmentation of international employees." (Sparrow 2006). 2 Appar8us have strong control over the subsidiaries by way of expatriate manager in area of both technical and managerial area of business. The manger's opinion is to keep the union influence as little as possible .Also the company has introduced various schemes available for all subsidiaries. The total quality management is introduced to have better team working system. The company had good mission statement and also have strong public relation image. The Jane noted that there are several problems relating the HR field and said this will be able to overcome through IHRM strategy. One of the problems is relating to diversity of condition of the subsidiaries. The problems are of industrial relation, management style, performance management system, degree of control allocated, they main problem is relating to their communication barriers. Common problems are of their culture is not matching with other and the practice of working. 2. "The different IHRM activities include normal HR activities like human resource planning, performance management, compensation management, training, etc., but at a higher level of complexity. The specific IHRM activities include expatriate assignment management, expatriate training, management of cross-cultural work-teams, cross-cultural training etc." (Introduction to Human Resource Management 2007). The IHRM strategies play an important role in gaining competitive advantage through global leadership development. There are different IHRM models that the MNCs are using to manage their people worldwide. Two important IHRM models are Perlmutter's polycentric strategy and Bartlett & Ghosal's translational orientation. 1. Perl mutter's polycentric strategy Dr Howard V Permutter is the first academic who identified the distinctive managerial orientation of international companies. The main focus was on managers mind sets and identifies four major mindsets. They are Ethnocentric, Polycentric, Regiocentric, and Geocentric. According to polycentric strategy each subsidiary is treated as a distinct national entity with autonomy to make some decisions. "The drawbacks of this attitude are that it can limit career mobility for both local and foreign nationals, isolate headquarters from foreign subsidiaries and reduces opportunities to achieve synergy." (Perlmutter 2005-2008). 2. Bartlett & Ghosa's translational orientation: In this model the local responsiveness and global integration are balanced. Since this is a very complex model and very difficult to implement it. Before developing an appropriate IHRM strategy the organization has to consider many factors. These factors include ascertaining the nature of international operations in the organization, assessing the effect of cultural, social, political, legal and economic factors on the implementation of IHRM in the organization, determining the extent to which the HR policies and practices are standardized in accordance with overall organizational strategy. The IHRM is the basic fundamental to organization success and globalization is forcing the organization to design and implement a global strategy. The IHRM is related with planning, staffing, appraising, compensating, training and developing and labour relation. The management practice is to be transferable between cultures, different culture project different management style. In order to overcome the cultural difference they has to introduced the achievement by the IHRM, they policies and practice is to be said so that they will be able to know the importance of the changing the culture Management operating in ethnocentric perspective well help to overcome the influence of foreign culture. Hence management style is highly based on the value system. "Selecting high potential employees, making decisions on job and career moves, and determining the appropriate reward and leadership styles are all quite difficult when working in multiple languages and cultures." (Briscoe 2005). To overcome the following problems in implementing the IHRM policies the HR managers has to take the following steps. 1. Recruitment and selection of subsidiary managers: The recruitment and selection of subsidiary managers is important for the coordination of all the HRM activities. These managers should have specific experience that enables them to coordinate all the activities in different sub units in of different countries. 2. Training of subsidiary managers: The subsidiary managers have to balance the needs of local responsiveness and global integration and they have to take some decisions that will enhance the global efficiency. So the subsidiary managers have to get additional training to carry out the functions effectively. 3 International teams: The objectives of integrated transnational networks (ITN) cannot be met by the individual managers. So they have to work as international teams to ensure global efficiency and local responsiveness. The teams should consist managers from different cultural background which will help them to enhance the globally integrated activities. 4 Performance evaluation and reward system: Performance evaluation and reward systems are important factors in implementing IHRM strategies. It will motivate them to perform their functions with efficiency and commitment. The IHRM strategy starts with manpower planning so in order to hire personnel for future they have to participate together in order to formulate and implement IHRM strategy. This will help to arrange long term and short term goal. "The culture skill include planning, organizing, directing, controlling the international enterprises are universally essential and must be included in the management development process for overseas managers." (Vaghefi et al 1999, P.154). The process by which one system value, norms are passed from one individual to another. So manager must be trained to upon the realities of enculturation and cope with them. Performance management system helps the business to sustain the profitability and the performance by the way of linking the employees to pay competency and contribution. It gives an opportunity to all for expressing their views. The performance management system of different countries has to coordinate and have a timely view on it. And with the help of technology will help to simplify the complete process for an effective information management. The management style of different countries has different management style. "The more technological and qualitative aspects are probably most quickly accepted and utilized than the more subjective , qualitative aspects such as marketing and components of IHRM." (Vaghefi et al 1999, P.153). The communication problem is a severe problem faced by the MNC this can be overcome by way of having a proper understanding of the message receiver with careful and clear reporting, clear expression and the avoidance of jargon or abbreviation. 3. Recommendation: The International human resources management is essential for the organization success. The Appar8us is following a good IHRM for the company in achieving the objective. The HRM policies is modifying according to the culture. The human resources are the most valuable asset so the management requires special skill to cope with all types of behaviour. The IHRM practitioner wants to adopt the human resources policies and practice of the local context or have to maintain the parent company globalize. IHRM involves greater diversity in activities. So the HR managers should be involved in decision making activities in order to have overall improvement in the strategy for international growth. There are many problems in integrating the activities of different countries. They are cross cultural communication, cross cultural management styles, and conflicts etc. The communication between different cultures is very difficult and the cultural and language problems influence the performance of MNCs. The effective communication between the business partners is important for the success of the business. To solve this problem they should give cross cultural training and diversity training to the culturally different employees. Communication training is also important to reduce the communication barriers. The training should be given by focusing on the difference in their communication style rather than similarities. The managers should try to understand the problem from the workers perspective. This will help the managers to understand in a better way what the worker is trying to communicate. Creating a third culture is a solution to the problems due to cultural difference. It means that both cultures needs to work together in order to create a third culture which woks for both cultures. Effective performance appraisal system is will enhance the performance of employees since they get chance to correct their mistakes and learn new skills. So the management should formulate an effective performance appraisal system in order to improve the performance of employees. The management style is different to different countries; this can be overcome with the help of technology. Conclusion Appar8us is showing a positive approach towards IHRM activities. Appar8us exerts strong control over its subsidiaries and the goals are set by them.Appar8us implemented feedback mechanism and training programme for all its employees. They introduced many programmes for the benefits of the subsidiary companies. There Appar8us is experiencing some difficulties in their overseas HRM activities and wanted to create an IHRM strategy. The problems are related to the diversity of conditions and difference in language in the subsidiaries. For dealing with these problems the company should implement a good IHRM strategy. They should give training to the expatriate managers in cross cultural communication and dealing with diversities. Effective performance appraisal system should be implemented in order to improve performance of the employees. If Appar8us follow these recommendations they can improve their overseas HRM activities. Bibliography Almond, Phil., & Ferner, Anthony (2006). American Multinationals in Europe: Managing: Innovation and the Transfer of Organizational Learning. P.225. [Online]. Oxford University Press. Last accessed 17 April 2008 at: http://books.google.co.in/booksid=-WNIBJzdbuoC&pg=PA225&lpg=PA225&dq=Edwards+%26+Ferner%E2%80%99s+(2000)+in+IHRM&source=web&ots=oSzjlGgyNG&sig=7nUY8oweoeq3uv4w7tx5UbajDUc&hl=en#PPA225,M1 Briscoe, Dennis (2005). Why IHRM. [Online]. International Human Resource Management. Last accessed 17 April 2008 at: http://www.internationalhrm.com/about.html Fisher, Cynthia D., Schoenfeldt, Lule F., & Shaw, James B (2005). International human resource management. [Online]. Express Computer. Last accessed 17 April 2008 at: http://www.expresscomputeronline.com/20050103/technologylife05.shtml Introduction to Human Resource Management. (2007). [Online]. 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Last accessed 17 April 2008 at: http://books.google.co.in/booksid=XTXj7VMxEGIC&pg=PA153&lpg=PA153&dq=how+the+management+style++in+IHRM&source=web&ots=jx_bXlepkn&sig=oUlKJCE6lsldvf6mn9KItZ4coSY&hl=en Manage Wise: International Human Resource Management. [online]. Express Computer. Last accessed 17 April 2008 at: http://www.expresscomputeronline.com/20050103/technologylife05.shtmls Vaghefi, Mohammad Reza., Paulson, Steven K., & Tomlinson, William H (1999). International Business: Theory and Practice: Practice: The Functional Environment. P.154. [Online]. Taylor & Francis. Last accessed 17 April 2008 at: http://books.google.co.in/booksid=szY1BFq5eFsC&pg=PA154&lpg=PA154&dq=IHRM+strategy&source=web&ots=TifKKHF9KV&sig=pUy_bYrUzuN7THtgrytgvC4m9cA&hl=en#PPA154,M1 Read More