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The importance of Human Resource Management in domestic and global business

Question:

Discuss about the Business Globalizing Human Resource Management.

Human resource management comprises the employment practices and firm’s work systems embracing a common aspect of the people management. Human resource management encompasses recruitment and selection, training and development, human resource planning, employee performance assessment, payment and reward systems, and most important to align employee development corporate strategies  (Sparrow, Brewster, & Chung, 2016).  International human resource management is all about the relationship between the foreign environment and human resource activities in which the firm operates. Due to the globalization, there is an integration of the economy globally. Competitive advantage as result of the untouched market segment makes companies to expand to their market to the other countries (Bratton & Gold, 2012). The determinant of firm’s performance and competitive advantage depends upon the effectiveness of the human resource management. International human resource management can be termed as a process of acquiring, designating and using human resources in a global company, while trying to maintaining differentiation and integration balance of human resources management activities in other countries. This essay seeks to discuss the international human resource management in relation to the key elements of the HR strategy.

The success of the domestic business relies on the human resource management. Human resource managers are responsible for managing a various range of employee. Managers of the internal business, have regular responsibilities with an addition of extra tasks that is unique to the business operation  (Sparrow, Brewster, & Chung, 2016). International director’s responsibilities cover many activities about the employees. One of the crucial responsibilities is staffing on the company employee. Recruiting and training the staff ensures their performance meets the expectation levels, handling and making certain managerial policies meets and conforms to the regulations and laws. International human resource managers manage the employee’s records, personnel’s practices and policies, and benefits and compensation (Budhwar & Debrah, 2013). Both primary human resources and human resource development are very vital functions; it has undergone evolution for the past decades so that they play the roles of the managing, staffing and training the individuals. Currently, the international human resource is the fastest-growing subsection of human resource as a result of increasing trends in global business activities. Other HR activities include the safety in the workplace, ergonomics, employee’s assistance, diversity, and spirituality.

Business internalization makes the IHRM a valuable tool to grasp a concept of the globalization of the business activities  (Sparrow, Brewster, & Chung, 2016). There is a vast difference between the domestic management from the global management with the variance of the problems associated with boundary spanning and cultural differences. As the business ventures in the competition globally, the IHRM should be ready for the business corporation challenges  (Bratton & Gold, 2012). Globalization of the firm requires the IHRM   to use appropriate knowledge management and human resources policies considering the cultural differences.

Globalization and its impact on Human Resource Management

Building on the same idea, there is a rapid increase in the global operation and competition. Thus, international HRM should grow insignificant as the international companies grow in the influences and numbers.  The primary determinant of the failure or the success in international business is through efficient management of human resources internationally. According to the research, the biggest problems for the foreign firms are the shortage of the global managers.

Scholar argues that central practices of the HRM have evolved due to globalization (Sparrow, Brewster, & Chung, 2016). Business tends to operate in an international environment that has led to the development of the international HRM.IHRM is management technique used by the managers on a global scale. The primary purpose of the IHRM is to manage human resources at international companies to gives companies opportunities to grow while remaining competitive within its host country. Similar to the HRM, the International HRM comprises the training, development of programs, recruitment, performance appraisals, KPI’s, reward schemes and disciplinary procedures  (Bratton & Gold, 2012). There are three strategies which help the international managers in reducing the complexity of the company’s management.

The main strategies are global, polycentric and ethnocentric  (Bratton & Gold, 2012). The polycentric policy is when an organization follows the local human resource practices in its overseas activities. Conversely, an ethnocentric strategy is a method in which group uses the same kind of the human resources overseas as it operates at home  (Sparrow, Brewster, & Chung, 2016). Finally, global strategy is where an organization tries to implement universal human resources plans for the operations in overseas. In contrast, the international HRM does not fix itself on these strategies; they can do a combination of the two or all strategies. Global strategy selects employees based on the competency and not nationality. The international company combines strategies to come up with global-implemented human resource strategy.

As earlier mentioned, the ethnocentric approach is human resource staffing policy that the HR uses in general strategic direction. The manager uses the system to send the employees from the parent country to the overseas host country. For instance where the companies want to set new plant or to train the personnel on the usage of the new system, therefore, the managers can send its team members to the host country  (Sparrow, Brewster, & Chung, 2016). One of the advantages of sending staff overseas is to gain an extra knowledge and skills which are useful for the senior human resource management.

Strategies for International Human Resource Management

The polycentric policy comprises the promoting and hiring the personnel of the host country to reduce the hiring cost  (Sparrow, Brewster, & Chung, 2016). Similarly, hiring the employees of the host country will not have an issue with the communication problems and cultural diversity. When the managers use polycentric approach, there is a decline of the home employees going abroad and therefore their role changes to coordination and communication strategic objectives  (Bratton & Gold, 2012). The company can create the local human resource managers to manage the activities in their own country because of their familiarity in local and business ethics. Hence, the local managers get the autonomy role to develop and implement their management practices for the branch.

Egocentric staffing strategy involves promoting and hiring employees depending on the particular region of the location of the organization on the host country (Sparrow, Brewster, & Chung, 2016). The approach used in hiring the local employees is useful in important positions. One of the disadvantages of the region-centric staffing is that the international may not hire the host or home employees hence creating the cultural differences in the third country employees.

Of utmost importance, IHRM assist in providing a series of the statistics and facts on the population, attitudes of the workforce, how to appraise the employees, life-cycle stages of the firm, and the economic difficulties they are likely to face. And so, the IHRM does not only assist with an ideal situation to expanding globally, but also valuable research on the regular human resources activities  (Budhwar & Debrah, 2013). As earlier mentioned one of the key advantages of the IHRM is to enable business to become more competitive globally; thus generating a high return on investment. In addition, the companies will increase the public perception of the enterprises for acceptance of the company worldwide. Because of the international trade growing globally, the companies are having their staff members working across the borders to enhance perception and generate revenues for the firm  (Sparrow, Brewster, & Chung, 2016). Numbers of the companies have expanded internationally and therefore employee’s work across the globe. However, the IHRM   requires developing and improving the IHRM strategies which are also problematic and expensive too. Consequently, the following are the challenges that the IHRM faces and strategies to counter them.

Apart from the financial benefits, there are some key issues that internal human resources must address to be successful. The nature of critical issues can come from cultural differences, cross-culture management, and work and diversity cultural differences  (Budhwar & Debrah, 2013). The following are the strategies on how to counter the challenges of the international human resource management.

Challenges faced by International Human Resource Management

Cross-cultural is the process that target in managing the differences in culture that comes in the company  (Budhwar & Debrah, 2013). The organization operating globally needs to understand the importance of the balancing the learning differences. Thus, the cross-cultural is one of the key strategies an international human resource manager needs to implement, to acquire a relevant knowledge on the cultural diversity and geographical location. Cross-cultural management provides the ways of managing people and how to work. Every country has a set of the values and philosophies, and is shown in the economies operation  (Sparrow, Brewster, & Chung, 2016). Values can interrupt on the international human resource in the process of organizing, conducting and delegating tasks to their staff; because values vary from country to another. International HR manager should ensure the HR activities reflect the practices of the host countries. Therefore, HR manager should delegate resources and time in learning the cross-cultural management and cultural diversity of processes. Therefore, IHRM should provide its employees with the following as they move abroad; cultural orientation, environmental briefings, cultural assimilation, field experience, language, and sensitivity training  (Bratton & Gold, 2012).

The differences in the cultural and language will have an impact on the success of HR manager in the negotiation across the global. Language is important as it helps in the preparing the IHRM across the cultural interactions. It is necessary for the IHRM to prepare their staff for the learning cultural values and language, because they vary from one country to another  (Budhwar & Debrah, 2013). However, there is no certain guideline that employees from the IHRM should consider. The staff members should be clear about the language they choose to communicate. Language and communication can be thought of the set of the values, ideologies, and beliefs which happens in all organization and are brief descriptions of the ways individuals should work in an organization. Language and communication is the key strategy because it influences the way people communicate in any setting  (Bratton & Gold, 2012). In contrast, the group should share the national culture and correctly understand the languages spoken in another country.it is vital for the International HRM to delegates the resources and time in making sure all the team can communicate in the international language. The cross-cultural management comprises the cultural diversities like the language spoken, working hours and time zones differences.

Cultural differences can affect the management strategies of an international HRM. Cultural issues such as political views, international labor legislation and international trade unions bodies are important to study in the IHRM activities. For instance, the companies trying to expand across the Spain, they need to know the siesta period, which is habitual for the large number of the Spanish people to sleep during daytime  (Budhwar & Debrah, 2013). Therefore, it could have impact on the employee’s hours that they are willing to work and business trading period. International HRM encourages the acceptance; understanding, and level of cultural empathy by making sure the staff learns new cultures which promote the personal knowledge.

International HR manager should address the flexible reward system in the business. Incentives are techniques that business uses to attract employees attention to motivate and inspire  (Sparrow, Brewster, & Chung, 2016). Among the consideration that the IHRM   should address is immigration law as they hire the foreign workers, medical requirement and working permit. Through effective IHRM, the reward system can assist the company to control and address cross-cultural problems affecting the workforce  (Bratton & Gold, 2012).  International HR manager should also engage the local managers of the host countries to perform activities such as international relocation, administrative support of the expatriate workers, hosting government relations with various countries, selection of local internal applicant, and training of employees  (Bratton & Gold, 2012).

For the international human resource manager to design an effective reward strategy for the workers, taking their roles in the international requires factors such as; firstly, clearly understanding the allowances for a particular country  (Sparrow, Brewster, & Chung, 2016). Secondly, knowledge of the customs, environment, employment practices and laws of the foreign countries are necessary. Finally, the familiarity with inflation effect on compensation and the currency relationship are vital.  For instance, there is a need to understand the employment-related legislation in the country for the managers to structure the active international reward structure. For example, India has 45 labor laws at a national level and four at the state government level  (Budhwar & Debrah, 2013). The manager can use a balance sheet approach to draw up an employee compensation package. For the managers to achieve balance in the reward system, the firms should take into account the following; income tax incurred,  housing allowances, cost of living allowances,  medical, emergency and security cover, relocation benefits, education allowances for expatriate children, and contribution to the pension schemes and savings  (Bratton & Gold, 2012). Appraisal of the employee in a foreign country is crucial since it identifies employee’s strengths and weakness; appraisal provides feedback for the firm to improve the human resource planning. Finally, the evaluation shows the obstacles blocking the organization progress and improves communication.

Appropriate selection, recruiting and training method in the international HRM is important factors that counter issues relating to the globalization of the business activities that affect HRM.IHRM involves the management of the recruitment process from the home country of the firm and the countries where the company obtain its workforce  (Bratton & Gold, 2012). The enterprise should adopt a uniform recruitment system to find a skilled employee with right cultural norms and behaviors  (Bratton & Gold, 2012). Therefore, it will help to have uniformity of goals and objectives with the human resources from one country to another. Both the domestic and IHRM have the recruitment responsibilities, IHRM should have a higher degree of the cultural sensitivity with efficient communication.

Complex in training and development increases as the companies moves internationally. The types of development and training depend on the following factors; cultural expectations of the training,  the extent of centralization of management,  types of the staff working in the subsidiaries, extent and concentration of the brand so that the suppliers, distributors and employees are aware of the brand image  (Sparrow, Brewster, & Chung, 2016). Therefore, if it is a polycentric approach, the training will be more local to correspond to the local culture.

Conclusion

The roles of the IHRM are challenging, complex and quite broader than the domestic human resource management. IHRM involves the internationalizing the standards of the selection, training, recruitment, legality of the employment system, compensation and reward system. Cultural difference and diversity are the common problems challenging IHRM system; it is an also a major issue that the company should take in training its staff in dealing with the broad concept of the human resource management.

There are challenges that international HRM should address in international business. Several strategies such as polycentric, ethnocentric and geocentric are critical in dealing with the international HRM hitches. Polycentric policies procedures are used in hiring the local staff within the host country of the firm. Therefore, the companies will adapt to the traditions and customs of the host countries.  The local workforce will help in creating awareness and assist the firms to change to the local setting. The other main strategies are the cross-cultural environment which is primary goals in eliminating the cultural conflicts. Similarly, to avoid the cultural conflicts, the firms may use an internal coherence policy approach when dealing with staff members. International HRM should focus on how different international organization manages their employees across the national borders. Geocentric strategies are crucial when reducing the organization overheads. For instance; high operating costs arising from employee working permits and managing visa. IHRM can opt to transfer a small percentage of the workers to the other country to share an experience with the rest of other employees. Due to globalization as a result of technology, it helps the organization to reduce the cost by sharing the knowledge and experiences across the host countries. Use of low-cost video conferencing, Skype and interviewing staff internationally, is as a result of globalization.    Although the cultural differences are the challenges confronting IHRM system of a company, it is a challenge for the manager in training their managers and executive, in dealing with a human aspect of business globalization.

References

Bratton, J., & Gold, J. (2012). Human resource management: theory and practice. Palgrave Macmillan.

Budhwar, P., & Debrah, Y. (2013). Human resource management in developing countries. Routledge.

Sparrow, P., Brewster, C., & Chung, C. (2016). Globalizing human resource management. Routledge.

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My Assignment Help. International Human Resource Management: Strategies And Challenges Essay. [Internet]. My Assignment Help. 2018 [cited 16 June 2024]. Available from: https://myassignmenthelp.com/free-samples/international-human-resource-management-strategies-and-challenges-essay.

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