International HRM: Achieving Balance Between Standardization And Localization - Essay.

Importance of HRM in Global Business Arena

The global economy is characterised by the presence of multinational companies, which tend to have a presence in more than two countries (Boxal & Purcell 2015, p. 271). Even with the growth of multinational companies, and the number of expatriates and locals working in these institutions, it is essential to consider the role that Human Resource Management plays, in the global business arena. Adaptation to the local perspectives is the one thing that foreign expatriates learn while in a global mission (Boxal & Purcell 2015, 2017). Standardization is also essential for consideration by the international business strategies. Both standardization and localization activities have had an impact on the function of HRM. The challenge that however exists is with the simultaneous integration of the concepts of standardization and localization, in the quest for propelling the global strategy agenda of MNCs. In the bid to understand the concept of international HRM, and the attributes therein, it is critical to look at the case of the Healthcare Group, one of the largest European pharmaceutical companies, and Wolfgang who is the firm’s new HRM, who is looking to make crucial decisions regarding important HR function of coordinating global compensation. Responses to the case questions are as identified below.

1. Should Wolfgang move some of the existing pay elements across the T account in Figure 2, shifting them from globally standardized to locally customize?

Wolfgang can consider moving some of the pay elements in figure 2 from the globally standardized to locally customized. Four pay elements are notable in the globally standardized and so Wolfgang can consider moving the compensation elements i.e. variable pay and the individual & my unit components to the local customized. This is because of the differences in the culture and firm traditions of the countries that host the Healthcare Group. For instance, Japan would not allow a high variable pay that is based on individual performance, thanks to the presence of high levels of risk aversion, which is a critical component under uncertainty avoidance, as pointed out by Hoftsede’s framework of national culture to be fundamental. Moving the individual and my unit components to the locally customized would address the national culture differences of Healthcare Group’s host countries, under the domain of individualism and collectivism. Wolfgang can also consider moving the items based on Maslow’s hierarchy of needs model. Here, wages act as a measure of security, and that people will feel unfulfilled without. When looking at financial bonuses in the model, they satisfy the need for esteem. However, the means of awarding them is fundamental. If they are not given in a praise atmosphere, but as a mere benefit for reaching a certain goal (common in individualistic cultures), they can be counterproductive given that they will be viewed as wages, and thus serve to satisfy someone's deficiency needs, or not.

2. Should he add or delete some existing practices from the T-account?

Challenges of Standardization and Localization in HRM

Wolfgang can consider adding the cost of living allowance to the T-account. This would be essential based thanks to the available statistics that identify respective countries and their employer and employee percentage contributions i.e. Japan (11.07%), Germany (16.90%), and the U.S. (6.20%), and so on.

3. Should he change the weights or emphases (percentages) of existing elements of the

It is essential to consider that culture tends to influence multiple dimensions that are associated with human behaviour (Soares, Farhangmehr, & Shoham 2007, p. 277). Wolfgang will have to pay attention to the culture and traditions of the Healthcare Group’s host countries to be able to determine the percentages of the current pay systems compensations that would work for employees in the respective regions. This is because it is somewhat tricky to make a decision that can be applied in a given region because of the differences that exist between the legal environment and the culture values. Given the tug of war that rests with the ratio between the fixed and variable pay of 65% and 35%, Wolfgang can consider adopting an 80% fixed pay and 20% variable pay for Japan (risk aversion, and uncertainty avoidance). A 20% fixed and 80% variable pay can be assumed for the individualistic cultures like the U.S., whose employees are motivated by meeting individual goals.

1. How can the firm communicate to the geographically dispersed executives the need to Acquire and maintain those management competencies that have been defined in the

It is essential to note that competency-based system has been in existence as a significant aspect of HR activities for quite a while, in many organizations, as noted by Neathy and Reilly (2003, p. 1). Competency defines the underlying characteristics, which determine the performance management of an individual (Buller & McEvoy 2012, p. 49). The firm can communicate to the executives in various geographical areas, to uphold and maintain the management competencies, which are noticeable in folder three. This can be facilitated when the Healthcare Group identifies and communicates the need for the acquisition, maintenance, and consistency of the adoption of the management competencies. Here, the firm can point out the pros that are associated with the adoption of the management competencies, which include the fact that these attributes are critical for the corporation, in bracing itself against the challenges that are likely to manifest in the future. In summary, the firm can make it known to the executives in other geographical branches that adopting and implementing the management competencies, is a somewhat proactive activity of preparing the company for dealing with future challenges, which will in some way promote the achievement of a competitive advantage for the corporation. In fact, the Healthcare Group can consider the management competencies laid out in folder 3 to be part of the corporate culture of the firm, which will require garnering the support of the management in the various geographical areas of the company. The communication should be in such a manner that adoption of the competencies will be likely to deliver desirable results to the individual subsidiaries and employees alike.

2. Would a purely competency-based system be somehow more flexible?

Case of Healthcare Group and Wolfgang

In a competency-based system, employees are encouraged to learn multiple skills, thus allowing them the ability to perform various tasks (Leritz 2012, p. 1). With that in mind, it is notable that a pure competency-based system would enhance some form of flexibility, but for the highly individualistic cultures, where competition is viewed as being essential to the achievement of productivity. The flexibility would be achieved in the sense that the organization would be able to assign employees a diverse pool of jobs in the cultures that foster individualism. This allows the organization in the regions that propel individualism culture to brace itself for instances of employee turnover or it can foster adaption to changes in the market demands. Productivity, improvement, and morale will end up being noted in the individualistic cultures that host the company.

3. But then again, what about the standardization Healthcare has just achieved through job descriptions across units?

Job descriptions allow a firm and the applicants to know what is expected of a particular role, and whether a job applicant is a perfect fit for a particular job (Rabinowitz 2016, p. 1). This is a form of standardization in organizations, and for the Healthcare Group, the same is true. However, using job descriptions as the indicators for flexibility and productivity in an organization may not be reasonable. This is because the procedures that may be used in the design of the job descriptions may be ineffective, and unrealistic in certain senses, thanks to the presence of cultural differences across the board. The adoption of this kind of standardization by the Healthcare Group is commendable, however, its implementation is somewhat difficult, which further points to the ineffectiveness of using the system.

4. How would he take these three competency-based categories and use them to develop a series of measurable, behavioural indicators to be used to assess an executive’s contributions to Healthcare?

Wolfgang can take the three categories of competencies and thus employ them to create a series of behavioural indicators that are measurable, which can be used to make assessments of the contributions of an executive individual to the Healthcare Group through the development of a competency model. The competency model should be in a position to create a mix of the organization's core competencies and the job-specific competencies, and it should be described in behavioural terms, as presented by Dent and Krefft (n.d, p. 1). The design of the competency model ought to be in such a manner that probing for evidence of performance from the executive in question can be achieved (Dent & Krefft n.d, p. 1). The following can be considered on that note.

These are concerned with achievement orientation, decision-making, and innovation and change. The following elements can be considered at this point;

• Propels the goals and objectives of the organization
• Identifies ways and thus implements activities that foster productivity in the organization

These are concerned with analytical thinking, business understanding, and self-development. The following elements can be considered at this point;

• Understands and employs the use of the policies erected by the Healthcare Group

These are concerned with team leadership, relationship building, influence and impact, and development of capabilities. The following elements can be considered at this point;

• Motivates others towards the achievement of goals
• Empathizes with fellow colleagues
• Strives to build and maintain working relations with colleagues
• Responds well to feedback

In what sense should these new behavioural indicators be customized to local (regional) contexts?

HRM activities at the local perspective tend to be affected by culture and institution-based factors (Dowling, Festing & Engle 2013). In the bid to have the new behavioural indicators achieve localization, Wolfgang will have to consider the cultural and institutional environments, concerning the context of the host countries. The behavioural indicators can be customized into local contexts in the sense that the cultural and institutional aspects are fully addressed.

How can Wolfgang go about this process to ensure a balance of organizational standardization and local relevance?
It is notable that both localization and standardization can result in success in the implementation of a global strategy (McCormick 2004, p. 6).  With that in mind, Wolfgang can go about the process of local customization of the new behavioural indicators, in such a manner that balance is ensured between standardization and local relevance. This can be achieved through the conduction of an accurate assessment of the market forces and factors that are facing the Healthcare Group at the country level, and how the firm can gain an advantage out of it through balance tactics. Wolfgang can make sure that the headquarters monitors all areas that are covered by the company, with reference being paid to the behavioural indicators and the acquisition of information about the effects of standardization in a particular country.

Conclusion

The case of Healthcare Group identifies that international human resource management is critical for multinational organizations. Localization and standardization activities have an overall impact on IHRM, as well as the global strategy for organizations. This is especially true when looking at various HRM functions that include compensation. It is apparent that localization and standardization of HRM activities have advantages; however, it is essential for companies to identify the role that striking a balance between the two concepts will play for firms like Healthcare Group and others.

References

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