How Global Environment complicate the practice of HRM
According to Keegan if a business fails to turn as global player then it is in the peril of loosing its local business opportunity to MNCs who have advantages like lower costs, quality products ,can offer more value for customers and having an efficient HRM which could build an efficient human capital that could take them to new heights. [Briscoe et al 2004]. Human Resource Management [HRM] has been regarded as a vital element in an organization’s capability to build and sustain competitive advantage. HRM can play a crucial role in a business that operates on an international level.
Companies doing business in various countries around the globe has to explore the unification and divergence of national systems of international relations as well as human resource management. Coping with the ever increasing competition, multinational companies may pursue some management practices which are then implemented and practiced across countries. [Bounfour 2003]. If human resources of a business are tactically aligned to accomplish the firm’s objectives, good human resource practices will assist to improve firm performance. [Becker and Huselid, 1998].
Further, firms with efficient HR systems would promote continuous upgrading and innovative discoveries. Huselid  revealed that companies with efficient HR practices when tactically introduced would enhance productivity and company’s performance and minimize employee turnover. HR system contributes to a company’s competitive advantage since they will assist to foster apt human capital and thus generated tacit organizational knowledge. The tactical role of HRM within a company connotes to the significance that business gives to the HR department in its key strategies.
For instance, in China, many MNC’s – encountered with a paucity of capable management talent and that too in a highly competitive market atmosphere and this has compelled to develop their local staff through intensive training programs. As the result, now companies are giving top priority to HR strategies in China. Likewise, in Korea also, HRM is regarded as a fundamental within an organization as they now understand that any underestimation of HRM role may affect company’s performance [Law K. S et al 2003:255].
Communication and information technology are transforming business processes and organizational structures, breaking down geographic and organizational boundaries and more competition is now created by use of technologies. E-commerce has already opened new vistas and opportunities for the delivery of international HR services. [Harris et al. , 2003]. The strategic international HRM [SIHRM] perused by MNCs can be classified into the following categories. ? The strategy –structure configuration of international organizations.
? The difference between local or domestic and international HRM. ? The approach of MNCs for staffing and management of their subsidiaries. ? The role of organizational features in evaluating the degree of internal consistency or isomorphism. [Sparrow et al. , 2004:5]. Different kinds of HR function: Majority of the international HR directors were of the opinion that there were no much difference between an international HR manager’s role and domestic HR in terms of its ability to influence the business agenda.
About 40 per cent considered that HRM on an international scale was more influenced than on a domestic scale. For example, HQ HR professionals may be to recognize strategic components of policy and practices but may not have the information to visualize how it influences at local level. Under ethnocentric outlook, subsidiaries will be staffed with expatriates in top executive positions and these businesses will anticipate that expatriate managers to transform headquarters philosophy and cultures by closely working with host nationals.
In contrast, under a geocentric outlook, staff positions are filled with local talented people despite of their nationalities. Since head office and their foreign subsidiaries of any geocentric MNC will visualize themselves as integrated part and parcel of a global organization, the corporate cultures will be largely unified, but have free hands in administration without any interruption from headquarters. [Sparrow et al. , 2004:164].