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Challenge- Strategy in Global Firms

An additional complication, conversely, for international HRM, entails the increasingly general headquarters strategy in global firms that wants as several managers as possible to obtain international experience. This often also comprises HR managers. So MNEs are starting to send HR managers on foreign assignments with other types of managers.

The consequence of this is that increasingly it can be possible to find HR managers serving in HR positions outside their countries of origin which could involve an HR manager either from headquarters or from a foreign contributory being posted to another country (that is, being an expatriate HR manager on task to a foreign subsidiary or regional office, in the case of a parent-country national or to another subsidiary or to headquarters, in the case of a host-country national).

This circumstance, working as a parent-country HR manager for an MNE, at head office or on foreign assignment, is the first – and most usually studied and written about – function in international HRM. As the first impulse of a multinational company might be to control human resources as well as other resources and functions of its foreign subsidiaries according to its home-base models as well as ways of doing things, as they

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are ‘logical’, work well and are known to origin (Black, Morrison, and Gregersen, 1999).

However, some international companies, particularly those from more developed countries, often resist acclimatizing to cultural differences as they believe their own ways of doing things is superior to those of others. The reason of local practices, in numerous cases tried and tested over centuries, is at times lost to a parent company from a diverse national background.

In practice, however, the multifaceted and diverse world in which the subsidiaries are situated imposes its own imperatives which cannot be ignored. Here, certainly, the issue of differentiation and assimilation is of the utmost significance. The question of how foreign subsidiaries supervise their human resources could be approached from as a minimum three angles. First, there are the parent companies in general HRM strategies.

Multinational firms have three extensive subsidiary management options at their disposal: they can prefer to implement similar HRM policies and practices to those usual in the home country and ignore local conditions wholly (an ethnocentric policy); they can mainly follow the practices prevailing in individual host countries (a polycentric policy); or they can work out and implement a universal companywide policy, fostered through its organizational culture as well as viewpoint (a global policy).

Explicit characteristics in the countries in which subsidiaries are located, though, might interfere with a simple choice of options and force multinationals to choose for a ‘hybrid’ strategy. In one study of manufacturing and service subsidiaries of Japanese multinational companies, for instance, differences were found in the level and nature of home-grown practices that these companies initiated into their US subsidiaries (Friedman, 1999). Another factor which might obscure HRM policy choices is the way in which subsidiaries are set up.

It is easier to inflict home-grown policies on a Greenfield subsidiary than on one which has joined the parent company throughout acquisition or merger (Greider, 1997). A pertinent point to make here is that there is a qualitative peculiarity between HRM policies and HRM practices (Micklethwait and Wooldridge 2000). Whereas multinational firms might find it realistic to have companywide philosophies and policies of a global or ethnocentric nature, they might get it essential to be responsive to local conditions while it comes to HRM practices and take on a polycentric style.

The guiding principle in such cases is to stay the company as a complete intact and integrated, while at the same time permitting for a measure of differentiation while required or desirable (Rosen, Digh, Singer and Phillips, 2000). There is also the question of the cross-cultural shift of HRM policies and practices. Whatever HRM strategies multinational firms take on, they are bound to deal with culturally-rooted ‘gaps’ which are expected to exist between the policies professed, from a distance, as desirable by home-country managers as well as what host-country managers are capable to implement productively.

There are also those who argue that technology takes its own imperatives: for an assembly-line automobile technology to be used properly a certain organizational design as well as management style should be adopted. An electronics company, conversely, would find a different design more suitable; and so on. As Ball, et al (2001) has argued, however, the different sides of the debate are not equally exclusive. Rather, they set off one another.

That is, certain aspects of organizations are more expected to be universal, such as shop floor layout (influenced in part by technological requirements), hierarchical structure as well as division of functions, whereas some areas are added culture-specific, such as human resource management. Besides, the fact is that organizations and their employees do not subsist in a vacuum, separated from their shared surroundings. National culture, as a set of values, attitudes as well as behaviors, comprises elements which are pertinent to work and organization.

These are accepted into the workplace as part of the employees’ cultural baggage. Work-related principles and attitudes, such as power-distance, acceptance for ambiguity, integrity, pursuance of group or individual goals, work ethic and consumerist spirit, form part of the cultural individuality of a nation (Dowling, Welch and Schuler, 1999), and though employees can be required to perform certain practices at work, they cannot be destitute of their values (Gupta, and Govindarajan, 2001).

Thus, HR managers is fundamentally in all forms of organization can and do deal with aspects of international HR. The degree of this involvement will diverge according to a number of factors and will consistently increase with time. But as internationalization of business increases in degree and intensity, HR managers will be called upon to put in increasing expertise to that internationalization. All of these situations form new and special concerns for HRM.

One of the basic problems in all of these situations is to get (recruit and/or train) HR managers who, although they are raised and skilled in one culture, can efficiently interact with and manage people raised in one or more diverse cultures, and who can build up effective HRM practices and policies in all of the diverse business environments in which the employer operates (as well as helping the firm’s executives plan for and administer effectively in these environments, as well).

Decisions have to be made regarding issues such as: (1) from a labor force viewpoint, which countries make the most sense for locate international operations; (2) the numbers and scope of international assignees against host-country employees desired to staff plants and offices around the world; (3) where and how to employ these individuals and how to compensate them for their performance; and (4) whether HRM practices as well as policies will be uniform transversely all locations or will be tailored to every location (or some combination of central and localized).

Whether the local HR manager is from the country of the parent company, from the country of the local subsidiary, or from a third country, he or she is sandwiched between his or her own culture and the “foreign” cultures of the firm. Human resource managers at the local, local and headquarters levels should integrate and synchronize activities taking place in diverse environments with people of varied backgrounds.

And they are typically looked to for expertise in helping other managers be successful in their international actions, as well. The point is, these days most firms experience one or more aspects of international HR management, and the accomplishments or failures of these firms are often a function of how well they hold their international HRM concerns. Because of these pressures, an entire new set of jobs within the human resource function have developed.

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