Human Resource Management is an organizational function that majorly deals with managing, recruiting, and directing workers on their roles within the organizational setup. Business organizations tend to source HR recruitment services through companies that offer the same. HRM ensures that business organization are adaptive, respond positively to change, are resilient, and are customer-centered. In relation to the same, this International Human Resource Management paper intends to define the meaning of HRM and IHRM. The activity will also solicit organizational performances related to HRM and IHRM including contexts and case studies that demonstrate their employment (Hair, Et al., 2018).
Human Resource Management (HRM)
As mentioned before, HRM is an organizational function that majorly deals with managing, recruiting, and directing workers on their roles within the organizational setup. HRM entails performance of wellness, compensations, development, benefits, safety, training, and motivational issues (Al-Shammari and Jefri, 20014, pg. 23). HRM plays a strategic role in improving the environment and culture of the workplace as well as managing workers. Otherwise, effective employment of HRM ensures that the overall direction of an organization and the objectives are achieved. In the current business world, HRM has a new role. Therefore, business organizations tend to source HR recruitment services through companies that offer the same. Such organizations ensure that HRM focuses on strategically utilizing the skills of workers then evaluating the impacts of management programs on business workers. Finally, yet importantly, HRM ensures that business organizations are adaptive, respond positively to change, are resilient, and are customer-centered (Dorfman, Et al., 2012, pg. 510).
International Human Resource Management (IHRM)
Unlike HRM, IHRM is defined as a set of operations that help multinational organizations manage their human resources. Such operations also help business organizations achieve competitive advantage and goals in the international markets. However, the typical HRM functions like selection, recruitment, development, training, dismissal, and performance appraisal are also part of IHRM functions. On the contrary, the difference between HRM and IHRM is that the latter more functions such as expatriate management and skills management among others. Therefore, IHRM is important for multinational organizations because it mainly helps in the management of human resources, and of which include three main employee types, home country workers, host country workers, and third country workers (Peterson, 2014, pg. 119).
Similarly, some of the roles associated with multinational companies (MNCs) include having the resource gap between savings that are domestically mobilized and desired investment filled, filling the trade and foreign exchange gap, as well as filling technological cum management gap among others. On the contrary, expatriates are associated with improving marketing knowledge in local markets, improving organizational cultures, developing talents on management, and transferring business management knowledge in the organization among others (Soon and Earley, 2013).
By definition, organizational performance is the determination of ways through which business organizations achieve their goals and objectives (Hall, 2017). The figure below shows a balanced scorecard model illustrating organization performance.
In relation to organizational performance, HRM and IHRM have certain similar processes including selection, recruitment, development, training, dismissal, and performance appraisal. Regarding the relationship between HRM and IHRM, it is worth noting that such connection is direct because both determine the existing operational strategies and performances of the firm. Both involve selection, recruitment, development, training, dismissal, and performance appraisal (Angelo and Michael, 2013).
Training & Development
Businesses thrive in international markets because of their competitive advantages over rivals. One such way of developing competitive advantage is by creating a superior human resource force to rival companies. However, creation of such human resource force depends on proper training and development. When the environment is competitive, businesses tend to develop training programs that enhance the knowledge of their workers. In this case, therefore, we shall consider two case studies. SABIC Corporation that mainly operates in the Middle East and Wal-Mart Stores that has its operations mostly based in the West (Rokeach, 2013). This activity realizes that the two corporations actively involve the participation of workers in several development and training programs. In SABIC for instance, employees demand that the HR Department to arrange for development and training programs every four to five months. However, Wal-Mart Stores has its HR taskforce dictate organizational performance and general success. In general, it is clear from both perspectives that the work force is a valuable asset (Rokeach, 2013). Below as some of the theories that SABIC and Wal-Mart Stores employ to emphasize on the importance of organizational development and training.
According to Wal-Mart Stores, reinforcement theory helps workers to portray continuously, behaviors that are attached to positive results or outcomes. Otherwise, this theory is aligned to ensuring that development and training programs get aligned to the objectives of an organization with outcomes that are positive expected (Branine, 2011). On the contrary, SABIC also employs this theory in that it offers rewards such as salary raises, bonuses, promotion, as well as certificate awards after completion of training programs. Such rewards have thus generated several positive outcomes for SABIC in the past few years. According to this theory, if the process effective, employers are likely to show more interest in development and training programs in the organization (Stoner, Freeman and Gilbert, 2013, pg. 8).
Learning Types Theory
This theory encourages intellectual skills learning. Wal-Mart Stores Corporation believes that such skills are found in few individuals and thus it encourages its employees to learn this skill by creating proper internal and external conditions. Learning categories would include verbal information, intellectual skills, cognitive strategies, attitudes, as well as motor skills (Stoner, Freeman, and Gilbert, 2013, pg. 8).
Experiential Learning Theory
This theory helps SABIC determine the needs and wants of workers. Workers are encouraged to undergo cognitive and experiential learning types. Afterwards, learners would be mature enough to tackle their work issues and gain the power to grasp knowledge. Wal-Mart Stores Corporation, on the contrary, uses this tool to help workers gain the insight of developing tests of self-evaluation and be able to understand and control their attitudes (Thite, Adrian and Dhara, 2012, pg. 255).
Social Learning Theory
Through this theory, workers gain a social view of operation. Otherwise, SABIC Corporation understands that the use of direct reinforcement is not effective enough in addressing or creating perfect learning conditions in the work environment. “Direct enforcement” refers to development and training programs used to enhance worker skills. This theory believes that such programs do not have all the necessary mechanisms to address all types of learning since there are particular social elements unlikely to be taught (Stoner, Freeman, and Gilbert, 2013, pg. 8). The surrounding teaches such kinds of elements. SABIC calls it observational learning and of which is associated with understanding alternative human behaviors. According to Wal-Mart Stores, working environment ought to be professional and encourage workers to learn skills out of it. Apart from that, behavior needs to change after processes of learning (Thite, Adrian and Dhara, 2012, pg. 256).
According to one report on expatriates’ failure in the US, it was clear that the case is rampant in western countries. By definition, expatriate failure is the premature return of managers from oversee assignments (Geisler and Hoang, 2013, pg. 39). Therefore, the expatriates in discussion herein are multinational managers such as those of Wal-Mart Stores and XZY Corporations sent on international assignments. Studies show that instances of expatriate managers’ failure account for 30% to 40% for managers assigned to assess developed markets. On the contrary, the case may account for up to 75% for managers assigned to assess markets that are still developing. Such rates depict that in western markets, direct failure costs runs between $300,000 and $1.5 million with the situation becoming alarming (Geisler and Hoang, 2013, pg. 41). Concisely, one American study on the same showed that US multinational corporations experience failure that may surmount to over $3billion annually with such losses resulting from expatriate failure being on the rise. Such multinationals also suffer from deteriorating relationships with customers, foreign government officials, local competitors, and other market stakeholders (Thite, Adrian and Dhara, 2012, pg. 253). In the Eastern and Middle Eastern markets, expatiates have been registered to return to their native countries with lost hope, low self-confidence, and self-esteem. On the other hand, the definition provided on expatriate failure herein, is more of ineffective since describing the same as a premature return from foreign markets gives a limited impression of a problem that is critical to strategic management. Issues that are ignored by such a definition include how expatriate managers work out their issues even after completing their stay or assessment periods. Studies show that about 25% to 50% of expatriates who complete their assignments are either marginally effective or completely ineffective. As a result, concerns should not revolve around premature return of expatriate managers. Rather, it should address expatriates’ characteristics as well as how such characteristics suit success in their international trips is as well important (George, 2016, pg. 212).
One issue that hinders IHRM operations is devising means through which expatriates can transition smoothly to foreign markets. Therefore, a proper means of endorsing adjustments for expatriates is by providing multinational workers with adequate training on cross-cultural perspectives before they leave their home countries. Provision of an overview that is comprehensive on the culture of the host country is one way of absorbing the shock that results from the first stages of being absorbed into new cultures (Geisler and Hoang, 2013, pg. 39). Some of the training areas are likely to include specific behavior studies, language lessons, as well as body language among others. Apart from that, there exists a direct correlation between adapting and creating realistic expectation when international workers provided with pre-exposure through prior training. On the other hand, the level of accuracy of their expectations in new markets, in turn, translate into higher adjustments in such foreign countries (Charles, 2018). Otherwise, having considered the above-mentioned point, it is clear that managerial expatriates are capable of enhancing their performances by developing skills of cultural intelligence by enhancing their negotiation, decision making, and managerial responsibilities. Since expatriates aim at developing their careers internationally, acknowledging the importance of creating adequate and proper response towards foreign cultures or intelligence is basic having considered that cultural intelligence supersedes cognition (Geisler and Hoang, 2013, pg. 40). Without cultural intelligence, managers are likely to fail in grasping the particularities of host country, which then translates to poor business management skills including the management of stakeholders. Concerning non-managerial skills, workers without cultural intelligence are unlikely to adapt to adapt in their workplace environments thereby underperforming (Daniel, 2016).
With discussions from previous segments, it is assumable that cultural concepts have different scores regarding such discussion segments. However, as processes such as developing, hiring, and retaining expatriates continue to create growing concerns, it is important to recognize effects of different cultures on businesses (Geisler and Hoang, 2013, pg. 38). With other factors put aside, an organization’s national culture has a massive impact on its reaction and perception of the world. Straight to the point, SABIC Corporation established that its Arab managers and expatriate operating in the area of the Arab Gulf showed different satisfaction factors and work orientation compared to those of Wal-Mart Stores Corporation working in the US. This leads to the comparison of two market cultures in the names of Arabic and American to illustrate how such cultural difference influence MNCs’ business decision. By examining SABIC Corporation’s operational strategies and policies, it is clear that Arabs are collectivists. Such a trait is associated with Arab traditions and Islamic teaching on family respect, group loyalty, and humility when interacting with others. Such traits, in turn, influence managers and workers in Arabic nations. On the contrary, locals in these Arabic areas are afraid of effects that expatriates are likely to impose on their identity and culture. According to studies on the same, it would not matter whether Arabic managers operated in foreign Arabic countries that have different cultures because they would still follow the doctrines of Arabic culture (Trompenaars and Charles, 1998). Therefore, it is established that Arabic cultures have participative and consultative tendencies. For British and American managers in UAE, studies show that they have a confusing time expecting to be questioned on the rational of their decisions and choices when that is necessarily not the case in Arabic workplaces. Therefore, such managers tend to suffer from subjective issues like deteriorating relationships with other stakeholders from the native country. On the other hand, the strategic policies of Wal-Mart Stores suggest that American managers and expatriates believe in justice and liberty. Apart from that, the American business environment encourages individualism. Such means that the corporations that base their operations in the Western countries depend on individual input to ensure success. Similarly, the American business society put a lot of focus on short-term goals to achieve short-term results. Wal-Mart Stores for instance, uses tools that measure short-term success and evaluate the general output from the same. Therefore, Western companies work hard on due processes (Trompenaars and Charles, 1998).
Finally, yet importantly, it is clear that for an expatriate to be valuable in an organization, he or she has to develop proper cross-cultural skills. Apart from that, an expatriate needs to understand the existing difference between low and high cultural contexts alongside the dimensions that construct help towards achieving suitable approaches of dealing with different cultures. Achieving a different understanding to the concept of cultural outlay of foreign markets enables expatriates to think of new approaches through which their organizations could interact with customers and workers from diverse backgrounds. Most importantly, there are several cultural differences solicited by comparing the business cultures of Western countries such as USA and the Eastern ones like Saudi Arabia or UAE. The dimensions provided herein concerning the differences between these two cultures explain why expatriates from either sides would struggle to settle in either of the two (Thite, Adrian and Dhara, 2012, pg. 255).
In HRM, resourcing is more than just recruitment. Recruitment can be described as processes of screening, attracting, and approving qualified individuals to get on-board one’s business operations. Resourcing on the other hand, is the strategic aspect of business operations including recruitment as well as brand development. The context of brand development is broad and entails issues associated with talent and worker management and employee offering. Therefore, resourcing is deliberate and strategic and entails the manner in which business organizations attract, source, train, select, retain, develop, move individuals from one organizational section to another as well as promote organizational performance. This approach provides an organizational mindset aimed at hiring the most suitable, valuable, and qualified recruits. On the other hand, resourcing put more emphasis on employee retention. Looking closely at the existing business models for resourcing, most of them look typically developed for recruitment processes. Even though such models are okay, it is worth noting that with the current rate of business growth and changing economies, organizations need to join to come up with new resourcing models and approaches that will ensure value delivery. Apart from that, new resourcing models are vital because of the existing cultural changes in foreign markets. MNCs should then be looking for workers with talent and quality to enhance business operations and have their strategic priorities delivered and not just the provision of quality. For MNCs therefore, a good resourcing model is one that embraces as well as develop talent management policies and strategies to realize success.
Resourcing is not associated with talent search forms like going hybrid, out-house, or in-house but rather concerned with determining issues that the solicited talent ought to be doing for the company now and in the future in relation to brand promotion. Resourcing is also associated with determining how hired talents feel and think and how such feelings and thoughts are likely to be congruent for the business both externally and internally. The reason behind starting MNCs is because the company can see itself reflected internationally at whatever local context or touch point likely to exist. In most cases, basic hiring processes leave MNCs on the dark, having forgotten the entre hiring and candidate experience process because the process focuses on time and cost as the main factors. Resourcing should be thought about in terms of long-term business alignment towards achieving needs, driving innovation, and ensuring that the built model is effective and efficient. However, in relation to MNCs, resourcing is likely to be complicated and extra procedures and processes built that actually never should have existed. MNCs should have policies and plans that create simple workforces and thus, allowing models of resourcing to have a seamless execution of the lain plan. Such plans should, however, be performed by MNCs yet supported by expert centers with knowledge on how to cope with marketing intelligence trends. Business managers also need to play part of such resourcing processes through highlighting of their management skills. MNCs also require having strong partners when it comes to business resourcing to enact proper management changes. Otherwise, career sites and social media platforms are the latest employable trends for business messaging processes and of which enable congruence and simplicity at every resourcing level in the company (Brewster, 2016, pg. 6).
In relation to resourcing and related MNC issues, associated theories have two main objectives in this matter. One is to create more efficiency and increase worker performance while the other is to increase employee commitment and motivation. According to resourcing theorists, employees will work more efficiently when they are managed with the same level of efficiency. Otherwise, efficiency is achievable through four main functionalities; organizing, planning, controlling, and leading. Therefore, renowned resourcing theories are the universalistic, contingency, configurational, and motivational (IDC, 2016).
This theory outlines the things that have individuals motivated. As argued by the theorist, Maslow, humans have their wants and needs hierarchically organized and illustrated into pyramids. Regarding this theory, SABIC an MNC, realizes that its workers basic requirements like shelter and food should be dealt with first. Therefore, it offers workers meals in workplaces and servant quarters where they could sleep (Robert, 2017). The second tier is that of job security, organizational relationships and mutual existence. This level explains the cultural aspect of SABIC’s working environment. Otherwise, other aspects include provision of recognition for outstanding jobs as well as creating self-actualization for workers. To achieve effective resourcing, all the theory levels must be practiced to ensure that workers provide high levels of performance (Trompenaars and Charles, 1998).
Wal-Mart Stores uses this theory to ensure best organizational practices as well as high performances. Such is because this theory operate under simple arguments or assumptions. According to such assumptions:
- A relationship that is linear exists between HR practices and performance of the organization.
- Best practices could be applied universally and still be successful.
- Best measurement tools for organizational success are indicators for financial performance such as market shares or profits.
Wal-Mart Stores’ resourcing strategies are a good indication of how the assumptions of this universalistic theory are put into perspective. In this argument, if MNCs use the existing practices attached to this theory, then MNCs are likely to be successful in their resourcing operations (Kluckhohn and Henry, 2013). Such practices include:
- Selective recruiting and Employment security
- Incentive pay and High wages
- Information sharing and Employee ownership
- Empowerment and Participation
- Job-redesign and Teams creation
- Skills development and Training
- Cross-training and Cross-utilization
- Wage compression and Symbolic egalitarianism
- Long-term perspective and promotions
- Overarching philosophy and measurement of practices
MNCs that practice this theory such as Wal-Mart Stores believe that there are practices that are universal to every organizational HRM regardless of the geographical location of the company. Such are also regarded as best practices of which MNCs are likely to adopt anywhere (Sharma, Ghosh and Raj, 2015, pg. 225). This theory is also against the employment of environment, culture, heterogeneity as well as behavior of people to determine best resourcing practices. Otherwise, it is acceptable to recognize MNCs that go for this theory as universalists because they assume that the ideologies proposed in this argument are 'universally’ proper in terms of HRM resourcing. This argument helps in deducing the fact that the universalistic framing of this theory is envisioned (Devanna, Fombrun and Tichy, 2014, pg. 44).
The developers of this argument believe that the relationship between an independent variable and a relevant independent variable vary regarding a number of influences as company age, company size, capital intensity, technology, unionization degree, ownership, industry sector, and location. In this context, there exists a complex set of interactions between performance indicators and HRM variables; contingency factors and HRM variables; as well as between contingency factors and performance. In line with MNCs resourcing operations, this theory describes the policies, aims, and strategies of multinational corporations. It also defines MNCs’ operations and HRM roles then determine if they are valid by relating the same to the circumstantial events of the firm (Brewster, 2016, pg. 4). Therefore, this theory creates the urge to achieve the best " fit" according to what a firm is as well as its needs to its:
- Level of technology and size
- Structure of operation and stakeholders
- Performance levels and external environment
- Procedures, general structure, and processes
In line with the same, this theory suggests a situational viewpoint that enable MNCs to work through opportunities and challenging circumstances. Managers are thus obliged to act in terms with external as well as internal environmental factors of the firm (Ganesh, Arnold and Reynolds, 2015, pg. 71).
According to the argument posted by the proponents of this theory, integrative perspectives and concepts that are relevant in HRM practices is important. Commitment and control HR mechanisms create better performances for the MNC. Such mechanisms could then be important in achieving the objectives and goals of the firm. However, this argument is a bit confusing since its holism notion is entirely unpredictable because of the new links of uniqueness that come with resourcing wholeness. The term ‘uniqueness” in this case, refers to the specific factors or HR aspects employed by a unit firm or entity (Brian, Mark and David, 2013).
This activity has discussed in depth, vital issues in IHRM some of which are employed by MNCs to ensure operational success (Peter, 2010, pg. 63). It is established herein that HRM is an organizational function that majorly deals with managing, recruiting, and directing workers on their roles within the organizational setup. It is also deduced that HRM improves environment and culture of the workplace as well as managing workers (Cynthia, 2013). On the other hand, this paper has discussed IHRM. First, IHRM is a set of operations that help multinational organizations manage their human resources. Nevertheless, typical HRM functions like selection, recruitment, development, training, dismissal, and performance appraisal are also part of IHRM functions (Hong and Javier, 2013, pg. 25). The most important section of the discussion revolved around the importance of IHRM to MNCs. According to the discussion, IHRM helps MNCs to manage human resources including three main employee types, home country workers, host country workers, and third country workers. The identified case studies were those of SABIC Corporation and Wal-Mart Stores.
The two Corporations, SABIC and Wal-Mart Stores were significant in arguing out the importance of training and development in the creation of competitive advantages for MNCs. As deduced, if the environment is competitive, businesses tend to develop training programs that enhance the knowledge of their workers (Peter, Et al., 2011, pg. 361). With SABIC Corporation mainly operating in the Middle East and Wal-Mart Stores operating in the Western parts of the world, this activity determined that active involvement of workers in development and training programs is important in creating competitive advantage. As study MNCs, Wal-Mart Stores and SABIC have been instrumental in discussing resourcing issues as well.
Al-Shammari, S., and Jefri, O. (2014) “Work-Related attitudes and Job Characteristics of Expatriates in Saudi Arabia.” Thunderbird International Business Review, 21-31.
Angelo, S. and Michael, A. (2013) Managing Knowledge for Sustained Competitive Advantage. San Francisco: Jossey-Bass.
Branine, M. (2011) Managing Across Cultures. Los Angeles: Sage.
Brewster, A. (2016) Reward Package Design- How Are Multinational Corporations Weathering The Storm? International HR adviser, Vol 68: p 4-7
Brian, E. Mark, A. and David, U. (2013) The HR Scorecard. Boston, MA: Harvard Business School Press.
Charles, H. A. (2018) Riding the Waves of Culture. New York: McGraw Hill. Print.
Cynthia, T. M. (2013) Society, Politics & Economic Development. Baltimore: Johns Hopkins Press.
Daniel, J., Z. (2016) Personality theories: business assumptions, research and applications. New York: McGraw-Hill.
Devanna, M. A., Fombrun, C., J. and Tichy, N. M. (2014) Strategic human resource management. New York: Wiley, pp.43-44.
Dorfman, P., Et al. (2012) “GLOBE: A Twenty Year Journey into the Intriguing World of Culture and Leadership". Journal of World Business, 47(4) pp 504-518.
Ganesh, J., Arnold, M. and Reynolds, K. E. (2015) “Understanding The Customer Base Of Service Providers: An Examination of the Differences between Switchers and Stayers”, Journal of Marketing, 64 (3). 65-88.
Geisler, E. and Hoang, W. (2013) “Purchasing Information Technologies: Behavior Patterns in Service Companies”. International Journal of Purchasing and Materials Management. 28(3), 38-42.
George, H. (2016). Cultural Differences in Teaching and Learning. International Journal of Intercultural Relations, Vol 1(2): 120-220.
Hair, J. Anderson, R., Tatham, R., and Black, W. (2018) Multivariate Data Analysis, 5th Edition. New York: Prentice Hall.
Hall, M. R. (2017) Hidden Differences: Doing Business with the Japanese. New York.
Hong, S. L. and Javier, F. (2013) “A Laboratory Study of Consumers’ Preferences and Purchasing Behavior with Regards to Software Components”. ACM SIGMIS, 33 (3), 23-37.
IDC, (2016) “It's Gut-Check Time as Disruptive Business Models Gain Traction” [Online] IDC Predictions. Available at: www.idc.com/ExecutiveInsights.htm [Accessed 3 November 2018]
Kluckhohn, C. and Henry, A. M. (2013) Personality in Nature, Society, and Culture. New York: Knopf.
Peter, C. M. (2010). Selecting Expatriates for Personality Characteristics: A Moderating Effect of Personality on the Relationship between Host National Contact and Cross-cultural Adjustment. Management International Review, Vol 3(8): 61-80.
Peter. C., Et al. (2011) "The Theory of Met Expectations Applied To Expatriate Adjustment: The Role of Cross-cultural Training". Int. J. Human Resour. Mgmt., Vol 12(3) pp. 357-372.
Peterson, R., S. (2014) "The Elusive Cultural Chameleon: Cultural Intelligence as A New Approach To Intercultural Training For The Global Manager.” Academy of Management Learning & Education, Vol 3(1) pp. 100-115.
Robert. H., J. (2017) Culture, Leadership, and Organizations. Thousand Oaks: Sage Publications.
Rokeach, M. (2013) The Nature of Human Values. New York: Free Press, 1973.
Sharma, S., D. Ghosh, P. K., and Raj, G. D. (2015) Encyclopedic dictionary of management. New Delhi: Anmol Publications, pp. 224-225.
Soon, A. and Earley, P. (2013) Cultural Intelligence. Stanford, Calif.: Stanford University Press.
Stoner, J. A. F. Freeman, R. E. and Gilbert, D. R. (2013) Management. New Delhi: Prentice-Hall, p.8
Thite, M., Adrian W., and Dhara S. (2012) "Internationalization And HRM Strategies Across Subsidiaries In Multinational Corporations From Emerging Economies—A Conceptual Framework". Journal of World Business Vol 47(2) pp 251-258.