Challenges Of International HRM For Multinational Organizations: An Essay.

Discuss the following statement: Working in a global landscape, multinational organisations are faced with challenges that are related to human resource management. Identify and evaluate a selection of these challenges. Suggest ways in which multinationals can work to address or deal with these challenges.

In this report challenges are discussed that occur while working in a global landscape or in multinational organisations related to international human resource management. Every organisation is expanded beyond borders thus there are various problems associated with international  human resource management. Thus for making sure that business works effectively a systematic approach is developed for working cultural awareness of an organisation. This report will depict the advantages as well as challenges that need to be enhanced for achieving the success of an organisation in global environment. Thus it is important to resolve these challenges by adapting to technological changes and meeting all the issues of globalization.

According to (Saravanan and Vasumathi, 2015), there are different dimensions in which people work the reason could be their history, topology or climate. It is difficult to explore the organisation at global level as every group have different cultural norms. From the perception of international human resource helping an organisation to grow globally is difficult as well as important. The major building block of an organisation is communication, building trust in the international market, understanding the target audience and making decision accordingly. To avoid such complication international human resources managers are introduced to deal with the cultural as well as potential clashes. These issues need to be resolved as they cause difficulty in understanding. The multinational companies design innovative plans to resolve the negative issues. It was researched that many companies are struggling the issue of compensation that is how to provide best structure of compensation to every employee. Multinational organisation not only suffers in terms of companies’ size but also in terms of big payrolls.  Additionally, organisation need to offer additional benefits in terms of training, taxes, accommodation and other expenses which  is higher than employee’s salary.

In the views of (Taylor, Beechler and Napier,  2016), some trends that affect the global trends of international human resource management include increasing global trade by expanding cross cultural workforce. To do this some concerns are that technology need updated to resolve the problem of training and development. Most of the companies face the challenge in change management thus a proper training need to be developed by understanding the needs of employees and developing a proper strategy for management. One of the biggest challenge faced by multinational companies are leadership development as proper structures, tools and strategies need to be initiative to make best possible selection and progress by making future leaders. There are challenges associated in the transaction system, staffing, learning and development sector and measuring the effectiveness of an organisation.  In today’s era the significant challenge is adapting to new innovation as technology changes rapidly. While expanding the organisation at international level, businesses must be swift to adapt to the innovation and risks associated in the competitors market. The challenge is to make all employees learn about the new technologies.

Staffing Policy

In the perception of (Tayeb, 2014), staffing policy is a noteworthy challenge for exploring the business in international market as the growth of company is directly related to the retirement of employees that have talent. But recruitment process is difficult in international market due to demographics changes. Apart from that there are cultural differences associated with top members of an organisation and the new entities in the company. These problems where very critical in past years but now a days these issues are resolved as some frameworks are adopted such as catalytic learning. Other than that various systems were designed including location planning, HR planning and relocation management (Brewster, et. al, 2016).  Also, to overcome from the issues in staffing plans a selection process is decided to eliminate the conflicts additionally plans associated with training and development are revised.

According to (Schuler, Dowling and De Cieri, 2010), the major challenge faced by multinational companies is international compensation that deals with collecting all the practices as well as identifying ideas from all the perception. The most common challenges faced by IHRM department when expanded an organisation globally is compliance with laws and regulations as changing employment laws act as a struggle for owners as they are not able to access the audits or important information (Cron, 2018). Apart from that as business tends to grow internationally the structure, strategy and various processes are associated with it. Thus employees go through hardships in coping with the time during changes. It was researched that many organisation experience downfall in productivity due to these changes.

In the view of (Geringer and Frayne, 2010), challenges faced by multinational companies in terms of IHRM are performance management, managing the rewards and appraisal system and managing the diversity. In an organisation there are multiple generations with different ethnic and cultural factors. Thus it is important to create a unique culture that emphasis the rules and standards of an organisation (Harzing and Pinnington,  2010). IHRM need to be carried out to facilitate effective communication between employees, and eliminating the uncertainty.  It is also important to maintain the talented employees in the company for a longer run so that issue of international human capital doesn’t arrive.

According to (Long,  Ajagbe and Kowang, 2014), one of the major challenges faced by companies in terms of international human resource management is to recognize the basic culture so that business policies can be set accordingly. As many organisation do not adaptive to changes in the modern world as they need to deal with the challenges like customers demand, implication of new technologies, information sharing as well as dealing with job security. The biggest problem is poor response to innovation which leads to low productivity and decrease the effectiveness of an organisation. Thus to overcome with this problem it is necessary to introduce western technology as well as new management skills to achieve by equity ventures in an organisation.

International Compensation

In the perception of (Saunders,  Gray and Bristow, 2017), a business face complications in terms of global marketplace as they recruit employees from different geographical area and cultural background, so whenever changes occur in the laws it is very difficult to adapt to changes especially in terms of taxes and liabilities. For example while hiring employees who are not from international market are required to pay additional taxes which are very difficult to implement. Hence for an HR department it becomes difficult for working with the economic data. Also whenever businesses start to expand an international market, they occupy a global marketplace because they have employees from every geographic background (Altlas, 2018). The other challenges involve legal and political regulations as they changes according to the external regulations and laws. These factors are the major concerns in the implication of business at international market and manage the normal functioning of a company without any breakdown due to human resource management.

In the concern of (Nasir, 2017), it is important to know about the ethic associated with the companies in the history. Thus in present it is the task of human resource team to take ethical decisions to offer high level of efficiency by conducting conferences regarding the diversities and giving knowledge about the international market. Apart from that it was stated by (Ellmer and Reichel, 2018),  to overcome from all these challenges the human resource team need to educate the employees along with managers for mitigating the challenges. This could be done by promoting all the workers in a workplace to communicate with each other to remove the diversity between the countries. Apart from that development of technologies affect the performance of an organisation and helps in competing with the other organisation. One of the challenges which cannot be ignored is human capital and requires lot of efforts to manage the human capital of an organisation. Once the company is globally explored if any employees leave an organisation in initially period, it will be a loss for the company as they have spent lot of time and money in their training and development.

Conclusion

Thus it can be concluded from the report that there are various issues regarding the human resource department in an organisation. Especially when an organisation is expanded to global market various factors affect company like the organisational structure along with different interpersonal skills of employees. It can be stated that when an organisation enters a global landscape, conducting training sessions for an employees is a challenge to attain better globalization. Other than that there are various challenges include leadership, diversity, e- commerce policies, selection of recruitment policies, managing the empowerment, innovation of new technologies. These are some challenges that are caused by human resource management and hence measures need to be taken to improve and enhance the efficiency of an organisation

References

Altlas, S. ,2018. 10 of Today’s Common Human Resource Challenges. Available from https://www.atlasstaffing.net/blog/10-todays-common-human-resource-challenges Accessed on 03 April 2018.

Brewster, C., Houldsworth, E., Sparrow, P. and Vernon, G., 2016. International human resource management. Kogan Page Publishers.

Cron, 2018. International HR Issues. Available from https://smallbusiness.chron.com/international-hr-issues-61937.html Accessed on 03 April 2018.

Ellmer, M. and Reichel, A., 2018. Crowdwork from an IHRM Perspective–integrating Organizational Performance and Employee Welfare.

Geringer, J.M. and Frayne, C.A., 2010. Human resource management and international joint venture control: A parent company perspective. Management International Review, 30, p.103.

Harzing, A.W. and Pinnington, A. eds., 2010. International human resource management. Sage.

Long, C.S., Ajagbe, M.A. and Kowang, T.O., 2014. Addressing the issues on employees’ turnover intention in the perspective of IHRM practices in SME. Procedia-Social and Behavioral Sciences, 129, pp.99-104.

Nasir, S.Z., 2017. Emerging Challenges of IHRM in 21st Century: A Theoretical Analysis. International Journal of Academic Research in Business and Social Sciences, 7(3), pp.216-223.

Saravanan, P. and Vasumathi, A., 2015. The Impact of Demographic Profile on Strategic IHRM Practices and Its Challenges Faced by HR Managers in IT Firm, India: An Empirical Study. World Academy of Science, Engineering and Technology, International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 9(9), pp.3214-3223.

Saunders, M.N., Gray, D.E. and Bristow, A., 2017. Beyond the Single Organization: Inside Insights From Gaining Access for Large Multiorganization Survey HRD Research. Human Resource Development Quarterly, 28(3), pp.401-425.

Schuler, R.S., Dowling, P.J. and De Cieri, H., 2010. An integrative framework of strategic international human resource management. Journal of management, 19(2), pp.419-459.

Tayeb, M., 2014. International human resource management: A multinational company perspective. OUP Catalogue.

Taylor, S., Beechler, S. and Napier, N., 2016. Toward an integrative model of strategic international human resource management. Academy of Management review, 21(4), pp.959-985.