HRM for organization
Strategic international human resource management [SIHRM] system is designed in tune with the MNCs strategic competitiveness thereby achieving the probable balance between local demand and global integration. [Taylor et al, 1996]. Manager’s expectations and objectives may be different as they hail from different nations. For instance, lifetime employment is more obvious in countries like India, Russia, Japan, Greece and Portugal. High job mobility is in prevalence in countries like Denmark, U. S. A and Hong Kong.
Majority of MNCs have cross national isomorphism and their HRM practices are based on the host countries customs. Despite of effect of the globalization process, which augments the interdependence and connectivity of the global business and markets, the ethnocentric policies are said to be still used by MNCs even today. 1. Empowerment and Participation: Global HRM offers an increased opportunity to integrate employee satisfaction with that of employee participation and facilitates to widen participation and control over their workload. 2. Sharing of Information
HRM under globalized scenario offers more downward exchange of communication across employees which will result in competitive advantage and bring successful results to the company. Despite of globalization, some MNCs are still hiring their home country nationals for the top positions and due to this, home country practices will be embedded in organizational cultures, processes and procedures in their subsidiaries in foreign countries. It is to be noted that culture education, managerial traditions and training of managers in the country of origin of MNCs have effect on management strategies in their foreign subsidiaries.
[Burke et al 2004]. 3. Cross Utilization, Cross-training and Multiskilling; It facilitates to look for best skills and use such skills for organization success by encouraging effective team work. 4. Competition If a business wants to remain successful in this globalized economy, business must transform themselves to transnationalism. Business must also internalize strategies and plans that will help them to succeed in global competition. 5. Government regulations and policies Host country’s government policies and regulations may help MNCs to expand their business globally.
Incentives offered to start and run business may act as a catalyst and demand MNCs to generate more employment to local people. [Jakupec 2000]. 6. To be monopolist A business may own a monopolistic product [examples Coca-Cola and Pepsi] and to retain its market share, it may have compulsion to expand its business around the globe. Challenges for the business that operates under globalized economy: 1. Culture Clashes; If a business operating from U. S. A wants to increase their operation in foreign markets, the first confrontation they meet is the cultural difference.
For a multinational company, managing employees with diversified backgrounds and cultures implies the burden on managers to manage results while acclimatizing to these variances among those they manage. There exists always variance between the culture of an organization and the culture of the local country and its management style also exist. [Kim 1999] For instance, a fortune 500 retailer that operates with U. S style of management frustrated when its Japan operation had made substantial delay in the implementation of a new computerized system.
However, when Japan unit installed the system, it success rate was 100 percent as compared to just 65 percent success rate in some other countries. It was realized by U. S management of that company that its Japan unit was rather slow to “pull the trigger” as it had tried to internalize ownership of the project before executing it. Likewise, business bosses in Mexico graded “an act with integrity” as the most significant proficiency, accompanied by “drive for results” and “sound management.
” In China, fostering teamwork is given more importance by business managers. In Middle East, business has a strong social element and face-to-face and personal communications are highly regarded. [Nilsen et al 2005] Another constraint is that centralization of HR activities from head office so that its business activities throughout the globe is effectively monitored and controlled from headquarters and it is being criticized that this will act as a mere pipelines to supply the firm’s objectives.
However, some argue that a business can operate more competitively and achieve expertise if local HR is given full freedom to operate and take decisions with out unilateral direction from its headquarters. Some argue that giving more independence to HRM at unit level may hamper the unity of direction that is significant to a business success in global market scenario. Further, it is being argued that in a decentralized perspective, provincial decision making may hamper the free flow of information and the swapping of knowledge. 2.
Legal and Political variances: MNCs have to tailor its management style in tune with host countries legal and political issues. For instance, local environmental laws, local labor laws should be given importance for the local administration by MNC companies. 3. Economic differences MNC may have to operate in underdeveloped countries like African countries and in well developed countries like UK. They have to design their HRM practices in tune with host countries economic situations. [Kraut et al 1999]. 4. Foreign exchange fluctuations
Foreign exchange rate fluctuations will have greater ramifications on operations of subsidiaries of MNC. HR managers should take into account while making important decisions like recruitment, promotion and pay revision. [Law et al 2003]. 5. Language differences There will be search for skilled and mobiled employees who are competent enough to execute their job in own or in foreign land. As such, it has become necessary on the part of the employee to master the host nation’s culture, language and customs. 6. Not understanding local issues:
For instance , if New York is the headquarter of an MNC , if employees working at India may be suffering from high rental cost and may ask for a wage revision to accommodate such increase in rental cost and its impact may not be properly understood if the HR functions are centralized at New York . [Lee 2003]. 6. Changed Work Force Composition: HRM has to concentrate on changed workforce composition due to skill deficiency and language variance and due to this, management is compelled to fine tune by changing management practices to accommodate a diverse work group which may include minorities, women, immigrants and others.