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International Human Resource Issues

Describe about the Human Resource Management for Improving Work Condition.

Human resource management is a relatively new approach that has surfaced in the past few years. It helps management in managing their employees by improving the work conditions for them. The basic objective behind the approach is to optimise the performance of the employees by building better employee-employer relations using important functions, such as training and development, recruitment and selection, career management, organisational development, etc.

Human resource management has become an important concept for business organisations as the management of human resources is being looked upon as one of the best options to improve productivity and to achieve market competencies. The management of human resources becomes even more important and complex in international business ventures as there are a great number of resources at stake and it is crucial to achieve success.

ABC Company is an Australian multinational company that deals in manufacturing and retaining of consumer electronic goods, such as refrigerators, microwaves, toasters, vacuum cleaners, electronic kettles, etc. The company was started in 1967 and has achieved huge success since then. Its products are now available in more than 14 countries and has a diverse workforce of approximately 12,490 employees. The company also runs a helpline service that is aimed at solving the problems of the customers, which the customers might have been facing while using the products manufactured by the company and to register complaints related to products or services. The company has been facing a steep rise in the demands of its products and a consequent rise in the demands for its customer care services. As a result, the company has decided to open up a new subsidiary in India, where a pool of talented customer care executives would be placed to deal with the problems reported by the customers. As we all know, India and Australia greatly differ in terms of work culture and human resource practices, the company will definitely face a number of problems while trying to expand its business operations in India. Let us now discuss these issues in detail.

The process of management of human resources at an international level is known as international human resource management. International human resource management is usually carried out by those organisations that have their work operations running in more than one country. While operating at an international level, business organisations become vulnerable to a lot of external and internal factors, such as economic factors, social factors, economic factors, legal and governmental factors, etc. As a result, it has become very important for business organisations to ensure proper management of their human resources as it would become impossible to operate without them. ABC Company will also have to ensure proper management of their human resources while expanding business operations in India. Let us now discuss some important human resource management functional issues that the company will face while opening up a new subsidiary in India:

Staffing Approach, Selection and Recruitment

In a multinational company, there can be three types of employees:

Host country employees à (also known as the local employees) these employees are the ones that belong to the foreign or the host country where a company opens up a new subsidiary.

Home country employees à (also known as expatriates) these employees belong to the country where the headquarters of the company are located and are sent to foreign lands for completing business assignments.

Third country nationals à these are employees who belong to a third country i.e. neither to the country where the headquarters are located nor to the country where the subsidiary is located. These employees are generally recruited when the company is in search of some special skills.

In simple words, staffing approach can be defined the way or the method that the company undertakes to fulfil its workforce requirements through recruitment and selection. Deciding a staffing approach for an international business venture can prove to be a great issue for the human resource management of a company (Study.com, 2016). ABC Company might face a number of problems while selecting a staffing approach for its Indian subsidiary. The four possible options for selecting a staffing approach are described below:

Polycentric approach à in a polycentric approach, the management of the company fulfils the human resource demands of a foreign subsidiary by recruiting employees from the host country itself.

Ethnocentric approach à ethnocentric staffing approach involves selecting and recruiting staff from the home country of the company, in order to fulfil the important positions in the subsidiary. An important advantage of this approach is that the headquarters are able to exercise a better control over the subsidiary and are able to align the foreign subsidiary with the headquarters.

Regiocentric approach à regiocentric approach is an approach that involves recruitment and selection of employees that belong to a particular geographic region.

Geocentric approach à in this approach, a multinational company recruits and selects employees irrespective of their country of origin or geographical region.

ABC Company will have to select a staffing approach that will satisfy its business needs and expansion strategies. The company will have to select its staffing approach based on a number of factors. As it is planning to enter a foreign market, it will have to follow the employment and labour rules and regulations that will be set forward by the government of the country. Further, it will also be important for the company to have some expatriates in the foreign subsidiary so that it can establish a similar work culture inside the new workplace as is prevalent in the headquarters. Therefore, selecting a staffing approach is a potential issue for the human resource management of the company (Smallbusiness.chron.com, 2016).

Expatriate Management

As discussed above, expatriates are the home country employees that are sent overseas to accomplish a business assignment given to them. ABC Company will also have to start expatriate programs as it is important for the company to ensure a greater alignment between the foreign subsidiary and the headquarters. The management of expatriates is also an important task as the company will be sending expatriates to India. The issues that the company might face while managing expatriate programs are described below:

First of all, choosing the right employees for the expatriate program is the most important thing and a greatest issue for human resource managers. Expatriates with insufficient technical capabilities, cultural knowledge, determination and motivation can decrease the chances of success of the program, which can prove to be a great disadvantage for the company.

Secondly, taking a decision about the compensation and benefits of the expatriates is another important issue that the human resource managers face while working on an international level. Compensation and benefits have been considered to be a great motivational factor as well as a problem in expatriate management programs as a good compensation and benefit can help in keeping the employees motivated whereas a poor compensation or benefits can cause distress in the minds of the expatriates and they might not be able to perform well (Selmer and Suutari, 2011).

Thirdly, the company will also have to plan training and development programs for the expatriates. The company will have to train and develop their expatriates so that they become more cultural sensitive and are able to adapt better in the foreign lands. Further, the company will also have to ensure that the expatriates are aware about the working style of the host country and also about their communication patterns.

Finally, repatriating (relocating the expatriates back to their home countries) is another important issue related to expatriate management programs. It can be very difficult for the human resource managers to ensure proper repatriation for the employees who are sent overseas, once they have finished off the tasks assigned to them (Bowman and Meacheam, 2000).

ABC Company will also face an issue related to compensation and benefits of the employees while trying to set up a new subsidiary in India.  

It is an obvious fact that there will be a difference between the compensation and benefits that the company will provide to the Indian employees and to the Australian employees. The company will have to ensure that it offers a compensation and benefits to the employees that are according to the market trends. The company would also have to ensure that the neither of the employees (Australian or Indian) feel that they are either overpaid or underpaid (Smallbusiness.chron.com, 2016). The company will also have to ensure that it provides all the necessary benefits to the expatriates, such as housing allowance, standard of living allowance, hardship allowance, travel allowance, medical allowance, etc. Such allowances help expatriates in adjusting better in the foreign place and also ensure that their families are getting what they need while they are away on some foreign assignments. To achieve this, the company will have to conduct a number of surveys in the Indian market so that it can gain knowledge about the compensation and benefit that the competitors or other Australian companies are offering to both types of employees (Yousef, 2015).

Compensation and Benefits

Cross cultural differences are defined as the differences in cultural values between the people originating from two difference cultural backgrounds. Integrating the Australian culture with the Indian culture will prove to be a problem for the management of the ABC Company as there a lot of cultural differences between the two countries (Scribd, 2016).

When the company will expand its business operations by opening up a new subsidiary in India, it is obvious that there will be a lot of Indian and Australian employees working under one roof. The employees will have a lot of cultural difference amongst them, which might make it difficult for them to work with each other. If the cultural differences in the workplace will not be properly managed, it might lead to failure of the strategies and expatriate programs. The employees would find it difficult to work with each other because of a number of cross cultural issues, such as communication barriers, stereotyping, work patterns, etc. For example, the Australian employees might be punctual and demand the same level of punctuality from the Indian employees as Indian employees consider it to be fine if they are late by 10-15 minutes. Therefore, it will be challenging for the management of the company to eliminate or narrow down the cultural differences that exist between the two countries (Smallbusiness.chron.com, 2016).

Conclusion

Going multinational is a dream come true for any company as it takes a company to an entire new level but at the same time operating globally can be a tough challenge. In the case of ABC Company, expanding business operations by opening up a new subsidiary in the Indian market is a great strategy as it would not only help in bringing down the operating costs but would also help in serving a larger customer base. ABC Company will require a highly skilled and knowledgeable staff in its human resource management as it would not be easy to manage the human resource functional issues that the company is most likely to face while trying to expand its business through the Indian market.

References:

Bowman, P. & Meacheam, D. (2000). Current Issues in the Expatriate Management Literature--A Checklist for Practitioners. Asia Pacific Journal Of Human Resources, 38(2), 107-117. https://dx.doi.org/10.1177/103841110003800208

Dickmann, M., Brewster, C., & Sparrow, P. (2008). International human resource management. London: Routledge.

Difference between Global or IHRM and Domestic HRM - what is human resource ?. (2016). Whatishumanresource.com. Retrieved 7 October 2016, from https://www.whatishumanresource.com/difference-between-global-or-ihrm-and-domestic-hrm

Domestic HRM vs International HRM | eduCBA. (2016). eduCBA. Retrieved 7 October 2016, from https://www.educba.com/domestic-hrm-vs-international-hrm/

Dowling, P., Welch, D., & Schuler, R. (1999). International human resource management. Cincinnati, OH: South-Western College Publ.

Global Staffing Approaches: Ethnocentric, Regiocentric, Polycentric, and Geocentric - Video & Lesson Transcript | Study.com. (2016). Study.com. Retrieved 7 October 2016, from https://study.com/academy/lesson/global-staffing-approaches-ethnocentric-regiocentric-polycentric-and-geocentric.html

Harvey, M. & Buckley, M. (1998). Introduction: International issues in human resource management. Human Resource Management Review, 8(1), 1-3. https://dx.doi.org/10.1016/s1053-4822(99)80036-9

International HR Issues. (2016). Smallbusiness.chron.com. Retrieved 7 October 2016, from https://smallbusiness.chron.com/international-hr-issues-61937.html

International Journal of Human Resource Management. (1993). The International Journal Of Human Resource Management, 4(1), 246-248. https://dx.doi.org/10.1080/09585199300000014

Issues and Challenges in IHRM. (2016). Scribd. Retrieved 7 October 2016, from https://www.scribd.com/doc/30280964/Issues-and-Challenges-in-IHRM

Recruitment and selection Recruitment and selection business studies and business english | Business Case Studies. (2016). Businesscasestudies.co.uk. Retrieved 7 October 2016, from https://businesscasestudies.co.uk/business-theory/people/recruitment-and-selection.html#axzz4MOO4rtNA

Selmer, J. & Suutari, V. (2011). Expatriation – old issues, new insights. Cross Cultural Management: An International Journal, 18(2). https://dx.doi.org/10.1108/ccm.2011.13618baa.001

Vance, C. & Paik, Y. (2006). Managing a global workforce. Armonk, N.Y.: M.E. Sharpe.

Yousef, F. (2015). The Challenges of International Human Resources Management. Retrieved 7 October 2016, from https://www.linkedin.com/pulse/challenges-international-human-resources-management-farid-yousef

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