Discuss about the International HRM Function and Organisational Strategy n MNCs.
Many organizations have required going global for the past decades, and this has become vital if they can survive in their developing global economy. There has been little attention that has been paid to the human resource management despite having an acknowledgment in regards to the problems and the high failure rates in the process of internationalization (Harzing, 2001). One of the causes of the failure is the lack of understanding and the implementation of the policies for the employee's transfer from one country to another. The primary reason for the success of the MNC is the capability to be able to move the HRM practices from their parent organization to the overseas subsidiary enterprises. Therefore they must decide on the management of their HRM policies as well as practices in the parent firms and the country to where they are planning to internationalize (Morris, Snell and Wright, 2006). Moreover, their decisions in regards to the strategy they are adopting need to be taken into the consideration even though it is standardized or localized it short be a blend of the two. In this essay, it will describe the challenges of integrating of the global HRM function as well as organizational strategy in the multinational organization. Further, it will identify how the changes could be managed effectively (Novicevic and Harvey, 2001). It will show the benefits and the disadvantages in which a group could face in the adaptation of these strategies, whether it is a global integration or perhaps a local responsiveness. Additionally, the essay will examine on whether the decisions have been made on a decentralized level or centralized level (Paauwe and Boselie, 2003). To conclude, it will focus on the role of the human resource professional in delivering the global strategy to invest, design as well as provide on the HR practices.
Today many companies are operation at international levels due to the increase in globalization as well as the aspect of easy mobility and communication between countries. The principal purpose of the organizations that are operating at international boundaries is for the management of the different stresses of the drive for the integration and differentiation (Rosenzweig, 2006). Moreover, the international human resource has the same activities as the national human resource administration in areas such as planning and staffing. Nonetheless, the domestic HRM is usually operated in one nation while the international human resource is exploited in many countries. The IHRM is usually a branch of management studies which aims at examining the design and the effects of enterprises human resource practices in the cross-cultural contexts. The IHRM occupies a position in the interstices of the international business, human resource management as well as organizational behaviors (Scullion and Starkey, 2000). Theoretical studies have explored that academic studies explain that international HRM is the interplay in regards to three dimensions which are human resource activities, individuals being employed in the organization and the different countries that the group is operating (Scullion and Starkey, 2000). These complexities which differentiate these variables is what makes a difference between international human resource management and the domestic HRM.
The Concept of the IHRM
The IHRM has been defined broadly as the set of distinct activities, the functions as well as the processes which are aimed at drawing, acquiring along with sustaining the multinational human resources (Sheehan, 2005). This idea is a combination of the numerous system of the human resource management that is used to manage people in the MNC, at home and even overseas. International business is certainly one wherein the operations are taken subsidiaries in overseas and rely on the business expertise of the parent company (Stahl, Miller and Tung, 2002) .These organization when they are set abroad they bring their management attitudes and the business cycles.
The human resource manager of these organization has not ignored the international influence on the work they do. The IHRM is vital in the provision of a solution to the global business issues. Theorist have explained that IHRM can be regarded as an extendable of HR which is concerned with owning people functioning overseas (Storey, 2007). These individuals might be expatriate staff that are selected from or maybe work within their home countries or even from the several country nationals.
Functions of International Human Resource Management in MNCs
The major role of the IHRM entails recruitment and selection, development and training, labor relations, recruitment and selection and performance evaluation (Taylor, 2007). On recruitment and selection, the organization usually employ new and qualified individuals for international operations. The selection process entails choosing from a pool of people whose qualification closely matches the requirements of a given job. Staffing aspect is usually a complex function for the IHRM. The global organization is often faced with the problem of managing and staffing function in that it affects the type of candidate are preferred by the company. In essence, an organization that uses ethnocentric approach, the parent country nationals prefer to staff dominant positions at headquarters and subsidiaries. In the aspect of recruiting and selection methods, these firms prefer the practices of the headquarters to be widespread in the countries of the subsidiaries (Sheehan, 2005). The aspect of the local culture has gained a great impact on the practices of recruiting and selection. Nonetheless, in some countries, their local laws usually requires them to use the specific approach in choosing the right candidate. Thus they are expected to make a balance in regards to internal corporate consistency and the sensitivity to the local labor practices. Another important role of IHRM in MNC is to the development and training that is usually aimed in the offering of the sufficient training to the personnel in the company and enable them to be able to fulfill their goals, better performance, and growth in the workplace (Sheehan, 2005). On the global perspective, the human resource development experts are responsible for training and developing of workers who are located at the subsidiaries across the globe; there is a specialized training that is undertaken in preparing them for assignment abroad. Performance evaluation is another important aspect in MNC. This function is usually conducted by the administration or perhaps development intentions. The administration often performs assessment especially when they are in doubt on the performance of a given candidate and when they need to determine the working conditions of the employees, promotion aspect, rewards, and layoffs (Scullion and Starkey, 2000). Another point of IHRM is on the issue of benefits and the remuneration. This plays a significant role in the hiring of new employees since pay is the major source of why individuals live in the world. In the development of an international system of compensation as well as benefits the MNCs usually, have concerns. One of them is an issue of comparability. A system for payment that is good usually disperses the salaries to the workers that are internally equivalent as well as competitive within the marketplace. The second concern is an issue of cost. Many MNCs usually struggle in the reduction of the expenses, primarily payroll. Finally on the major concern of the MNC is the problem of labor relations. It describes the role of the management and the workers in the workplace. In most of the cases, it is the government that regulates on the labor relations practices (Rosenzweig, 2006). The international approach to the human resource management requires many steps. There is a need for explicit recognition by the parent organization, particularly when there is a need to reflect on some of the assumptions as well as values of the home culture. Organizations need to amend in their traditional ways for the management of people. The human aspect is acknowledged as the major factor to the success of the team. In the multinational companies, their major objective in regards to the human resource management functions is to make certain on the most efficient use is rendered on the human resource. In achievement of this, the human resource professional usually embark on a vast variety of activities such as sourcing , the growth , reward and performance management , and employee security as well as communications (Novicevic and Harvey, 2001) . In case the company possesses an important human resource function these routines will support as well as notify on the organizational technique. The human resource professional is normally utilized extensively in the adjustments in organizations and initiatives for the growth (Harzing, 2001). In the MNCs, the HR actions need to be coordinated each at home country as well as at different national subsidiaries looking at the necessity of parent country national, the host countries and third Nationals.
Figure 1: The figure below shows the international human resource management
Organizational Strategy of International Human Resource in MNCs
To respond to the challenges in the business, IHRM is forced to formulate strategies as well as the practices which will make the firms successful. On a macro level, the global strategy of HRM general to ensuring that the enterprise's overarching value, goals, as well as objectives, are catered for by the human resource policies, practices, and the procedures (Festing and Eidems, 2011). On the meso level, the executive of the human resource are concerned in dealing with the issues that relate to the unions more so the host country. The micro level, the executives of the human resource, are attempting to foster a mindset that is global among the workforce through the development of the human resource competencies and the business related issues. In the implementation of the IHR strategy, the management team usually ascertain on the current and the intended nature of operations of the organization in the international levels. It is the work of the managers to determine the extent to which the human resource policies as well as practices to be standardized based on the overall strategy of the organizations. They are responsible for accessing extent to which the culture, economic, political, and the statutory factors will impinge on the attempts to applying of the standard human resource if integration is the key element in the organizational strategy. Moreover, there is need to ensure there is a computerized database of the global human resource when integration is required. In the process of integration, it is recommended, to work with the senior management to manage to determine the competencies that are needed to attain the global goals of the organizations (Harzing, 2001). Additionally it is vital that you work with national human resource managers , in the composition of the International Human resource policies as well as practices particularly in regions of sourcing , reward and the develop.
Challenges of Integrating International Human Resource Management Function in MNCs
The major problem for the MNCs is the need to achieve the target about the aspect of competing demands of the global integration and coordination versus the local responsiveness (Festing and Eidems, 2011). The main challenges of the IHRM include the failure rates of the expatriation as well as repatriation, deployment, getting the right skill mixes in the firm in regards to the geographical location, knowledge as well as innovation dissemination. Additionally, there could be challenges to the labor laws, different political climate and the various values and attitudes (Farndale, Scullion and Sparrow, 2010). The IHRM issues include the extent to which the human resource policy and practices could vary in different countries, the problems of managing individuals in various cultures and environments, aspect for selecting, deployment, development and the reward expatriates who might be nationals from the parent company. Culture and environmental diversity have been the main problem associated with the international human resource management (De Cieri, Cox and Fenwick, 2007). According to Haley stated that culture in which individuals are emphasized, it’s the quality of the relationships internationally that are vital. Further, where cultures are regarded as the ideologies emphasize, sharing the common belief is more significant than the membership of the group (De Cieri, Cox and Fenwick, 2007). Other challenges are faced by MNCs in implementing of IHRM functions such as management of the international assignments, workers and the family adjustment, selection of the right individual for the international task, culture as well as communication barriers. The staffing policy is a significant challenge for the IHRM. The success of an organization relies on identifying as well as attracting competitive applicants through the process of recruitment. Nonetheless, this process was difficult to draw a significant number of the candidate. The relation in regards to attracting, recruitment, development and reward are competitive factors to the elaboration of a global talent management (Budhwar and Sparrow, 1997). Other aspects such as lack of the motivation, and the skills have decreased the strategic value of the multinational corporation. Lastly, the aspect of the international compensation systems is a challenge for the integration of IHRM functions which requires having international dialogue and collaboration.
The international human resource management has a significant role in the survival of the MNCs to survive in the global business. The human resource management usually scrutinizes on the process by which the international firms manages on their human resource across different national contexts regarding procuring , utilization and effectiveness in using of human resources in the multinational corporation whilst balancing the integration along with demarcation of the actions of the human resource in foreign locations . International human resource management helps the organization to remodel and plays the role of an innovator. The HRM professionals have begun to frame their research in regards to the theories of the structure and increased on international context to extend the use of these methods.
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