Implementing International Human Resources Management Practices in Multinational Companies (MNCs)
At the turn of the century, HR managers have to face new challenges. The economy and markets are different from those of a decade ago. As paradigms have changed, the characteristics affecting HRM are also revised due to the adverse effects of the emerging internationalization of all industries especially to the ones that operates worldwide. Such organizations must develop effective structures and functions in order to keep up to pace with relevance, latest trends and strategies. With globalization at hand, every business must work more effectively in order to keep up with the higher demands of consumers and to go with the flow of the dynamics of international business competition.
The working principle behind HR that people are the best assets of a business organization remains true up to now. The achievement of corporate success can only be accomplished by people (1995). Due to the increased need of manpower over multinational corporations (MNCs), the demand to have a diverse collection of labor source is also taken into consideration. For example, Hong Kong is among the leading cities of that world that excel in economic and business enterprise. It projects an aura of opulence, efficiency, and high-tech competence (2002). Because of such potential and advantages, numerous international businesses choose to venture on this venue. Their managements need to focus on the process of recruiting and selecting the best and potential employees that will contribute to the eventual growth of the company and its performance. The role of International Human Resource Management (IHRM) in businesses operating in Hong Kong must be evaluated. The question on what are the most imperative considerations that are needed for the HR managers in effectively managing a culturally diverse workforce remains unanswered.
This paper aims to discuss the aspects of IHRM practices in MNCs taking Hong Kong-based businesses as an example. The aforementioned question will be answered in the succeeding discussions. It will also pay particular attention to the aspect of culture, cultural diversity, and its management in connection to the whole HR function as the main feature of IHRM. It will also focus of employee recruitment and selection since it is the first step in HR function. Further, this report will provide recommended actions that could be implemented to further improve the standards of the process.
Personally, I chose this topic to put further emphasis and reinforcement on the emerging function of IHRM especially the businesses operating in Hong Kong. The growth of the international labor force in Hong Kong initiated me to evaluate the implementations of HR policies especially in connection to cultural diversity of the workforce. The new information that will be evident to my report are the facts gathered though extensive research and inquiry as well as the recommendations applicable to this topic.
International Human Resources Management (IHRM)
As (1994) pointed out that HRM had transformed itself as more emphasis is stressed on commitment and control. Quality, competence and flexibility among the employees had efficiently replaced quantity of task accomplished and dumb obedience. Furthermore, the objectives of the management become concentrated on the adoption of modernization, quality and cost reduction. As HRM requires and demands more from their employees, work is then intensified resulting to less slacking of the management.
For example, China has become increasingly significant in international business decisions and ‘has become a focus of interest for Western organization and management researchers’ (1994). This is because the changes that have occurred in China hold profound consequences for different groups including managers, management researchers and policy-makers at both government and company levels ( 2005). In particular, the growth of the East Asian economies like Hong Kong was a product of a turbulent and competitive world economy ( 1997). The last thirty to forty years saw a rapid internationalization of production.
Aside from globalization, changes in the HRM have occurred due to cross-national dissimilarities. The diversities among nations are likely to develop practices that are different from other countries (1999). In reality, HRM practices are subject to distinctive sets of national rules as well as sensitive analysis of labor unions whose strength and thoughts towards management differ. Thus, this concept is contrary to the idea of HRM as a high managerial autonomy (1993; 1997).
Multinational companies need to manage human resources at an international setting. This “process of procuring, allocating, and effectively utilizing human resources in a multinational corporation” (2002,) is referred to as International Human Resources Management, or IHRM. The establishment of a new facility in another country entails that HR managers achieve two strategic objectives. One is that the managers must integrate HRM policies and practices across a number of subsidiaries in different countries in order that common, or global, corporate objectives be achieved. This means that the manager has to reconcile and incorporate local HRM policies with the existing company policy. Also the management approach must be flexible enough to allow for differences in the HRM practices of various countries, and yet adequate to be effective in various business settings. This is done to allow the head office control of the whole operation.
IHRM basically involves the same duties as domestic HRM. However, while the domestic HRM handles local (from one country) employees, IHRM handles international employees. IHRM personnel are responsible for the relocation and orientation of foreign employees and help them adapt to the new culture. IHRM encompasses more functions, involves changing perspectives, requires more involvement in the employees’ personal lives, is influenced by more external forces, and generally involves greater risks than domestic HRM ( 2004). IHRM staff deals with international taxation, international relocation and orientation; provides administrative services for expatriates; are responsible for the selection, training, and appraisal of international and local employees; and manages the host government relations (2002).
International HRM personnel need to address a variety of national and international pay issues. HRM personnel in the headquarters must coordinate pay systems in different countries with different currencies. These currencies change in relative value to one another with time. They also need to consider the fringe benefits provided to host-country employees as these benefits vary. Headquarters-based managers also need to deal with employee groups that have different cultural backgrounds. The headquarters manager must coordinate policies and procedures to manage expatriates from the firm’s home country, or parent country nationals (PCNs); host country nationals (HCNs); and third country nationals (TCNs). The domestic HRM personnel must also develop HRM systems that are satisfactory in the host country and also attuned with the company systems. These policies and practices must effectively balance the needs of local employees, PCNs, and TCNs.
Domestic HRM personnel must also arrange housing, health care, transportation, education, and recreational activities for expatriate and local staff. The headquarters-based HRM personnel have to set Equal Employment Opportunity (EEO) policies that meet the legal requirements of both the home country and that of the host country. Domestic HRM personnel may have to deal with government ministers, other political figures, and a greater variety of social and economic interest groups.
HRM personnel need to be aware and careful about unfair hiring practices, as they may result in the company’s being charged with violation of EEO laws and subjected to financial penalties. Failure to establish constructive relationships with domestic unions may lead to strikes and other forms of labor actions. High-cost problems like expatriate failure or the premature return of an expatriate from an international assignment need to be addressed by HRM personnel so it can be prevented. Expatriate failure is a high-cost problem for international companies. Direct costs like salary, training costs, and travel and relocation expenses per failure to the parent firm may be as high as three times the domestic salary plus relocation expenses, depending on currency exchange rates and location of assignments. Indirect costs such as loss of market share and damage to international customer relationships may be considerable. Clearly, if managers do not perform well and must be recalled to the home country, their failure represents a huge financial loss for the firm.
Another consideration is the expropriation or seizure of the MNCs’ assets in a foreign country. If HRM policies antagonize host country unions or important political groups, the MNC may be asked to leave the country, have its assets seized, or find the local government taking majority control of its operation. This will be a great loss to the company and needs to be prevented. All these are in line with the contextual paradigm, which is widespread in the UK and other European countries. This paradigm explores the importance of such factors as culture, ownership structures, labor markets, the role of the state and trade union organization as aspects of the subject rather than external influences upon it (2000).
Diversity of International Employees
The concept of diversity has been described roughly as groups of two or more individuals which characteristically denote demographic dissimilarities among group members (1995). Concurrently, recent studies have been created to describe the abundant dimensions for categorizing these demographic dissimilarities. Nonetheless, it is recurrent that hypothesizing diverse results for individuals and work clusters, particularly those relating to the level and disposition of those diversity. To illustrate, the study of (1996) created one set of calculations regarding the implications of ethnic diversity among the members of the group clusters. The study has also been able to post another assertion regarding the implications of functional background diversity, which is fundamentally centering on the manifestation of race as well as other work-related operating setting.
On the other hand, the works of other scholars were created to discern the implications of diversity dependent on the cultural differences of the group members ( 1993;1996), corporal (1992), intrinsic and unassailable, (1994) or those relating to role and job-related miscellany (1994; 1996). Similarly,(1993) noted that cultural identities originate from affiliation in factions that are socially and culturally divergent. They are time and again connected with specific physical (skin colour), biological (genitalia), or stylistic (dress) attributes, despite the fact that these may be comparatively exclusive, depending to a certain extent on people’s alternatives about whether and how they yearn for to be acknowledged by others. Affiliates of a cultural identity group have a propensity to contribute to certain worldviews (1982), norms, values, goal precedence, and socio-cultural legacy (1993). The cultural indicators of such clusters can be publicized through communication techniques, rules, communal connotation, and even vernaculars or verbal communication, which others may or may not admit as ethnically connected (1996).
The level to which one individually distinguishes with one’s cultural distinctiveness and the worth one consigns on them modifies transversely through cultural factions and across members within cultural groups (1993; 1993; 1995; 1997). Additionally, a human being may vary in the degree to which he or she associate with, principles, or articulate a specific cultural personality at any prearranged instance, dependent on the salience and denotation of that characteristics in the perspective within which he or she is in commission (1995; 1996). For this reason, cultural identity, as understood in this selection, is communally constructed, multifaceted, and self-motivated. The views on effective management of diversity in general and cultural diversity in particular, are scattered and it is hard to find a common line of agreement among the earlier.
Culture is one of the most important issues when managing human resources in the international arena in understanding behavior, attitude of different individuals from many parts of the world. In international management, it is essential a company should consider cultural issues to determine effective HRM practice as they enter the Malaysian market. Since, it is very possible that the company will hire culturally diverse individuals, specifically Malaysian employees. According to (2001), culture is inseparable form the nation of human society which makes defining it a complicated task. As a result, there are many definitions for culture. (2002, 8) define culture as “an integrated system of learned behavior patterns, characteristic of the members of any given society”. In addition (1991) identifies culture as “collective programming of the mind”. It is recognized the one of the most vital asset of an organization is its employees. And for the international organization to maximize its assets, IHRM should manage the employees’ working condition with intelligence and efficiency ( 1998). They must be allowed to be involved in making work-related decisions to further enhance the organizational structure (1996).
Furthermore, the structure of tasks among the employees strengthens the organizational performance ( 1993). It is therefore necessary for the management of international company to value their employees for the organization to be effective and competent (1990). The development, building, motivation, enhancement and enrichment of the employees of any organization largely depend on the leadership, mandate and vision of the organization (1999). People make or break the organization. Therefore, it is necessary for organizations to be proactive with regard to their employees’ needs and requirements. International management attacks institutional racism, reallocates power, and promotes justice in the work place while enhancing the work environment. Diversity is otherness or those human qualities that are different from our own and outside the groups, to which we belong, yet present in other individuals and groups. Dimensions of diversity include, but are not limited to: age, ethnicity, ancestry, gender, physical abilities/qualities, race, sexual orientation, educational background, geographic location, income, marital status, military experience, religious beliefs, parental status, and work experience. It’s important to understand how these dimensions affect performance, motivation, success, and interactions with others. Institutional structures and practices that have presented barriers to some dimensions of diversity should be examined, challenged, and removed (2002).
Working in a culturally diverse situation is challenging; managing a culturally diverse service presents even greater challenges. The rewards, however, are great in opening our minds and sharing experiences. Seeing ones own society, with its habits, customs, and beliefs that we may take for granted, through the eyes of an incomer heightens self-awareness and self-understanding. The two aspects of management: working with staffs that are culturally diverse and providing a service to a culturally diverse community must be given enough focus (1995). A healthy organization is one in which an obvious effort is made to get people with different backgrounds, skills, and abilities to work together toward the goal or purpose of the organization. While people have not accomplished this at a societal level, it is achievable at an organizational level (1996). An effective, culturally diverse organization is one whose culture is inclusive of all of the varying groups and constituencies it intends to serve, that is, in the case of the services, the people of the state. The organization’s values, vision, mission, policies, procedures, and norms constitute a culture that is manifested in multiple perspectives and adaptability to varying values, beliefs, and communication styles. People from differing cultural groups in one community have differing perspectives, manifested in their values, attitudes, beliefs, and behaviors.
Employee Recruiting and Selecting
Recruiting today is taken a lot more seriously and given a lot more thought than it used to be. Gaining competent employees at all levels of the organization is more than a matter of training. It stems from changes in recruitment and selection philosophy (1995). Recruiting the most competent employees for each and every organization is continuous challenge for the human resource management, specifically in the international arena. Faced with the problem of conducting recruiting effort to fill critical position in any level of organization, the international HRM practice must create an Employee Recruiting Policy to identify the critical activities in the recruitment process and monitor its results.
Recruiting new employees to fill existing vacancies is an important function within HRM. (1989) and his colleagues identified five interrelated stages in the recruitment process: planning, strategy development, searching, screening, and evaluation and control. These routine dimensions of the recruiting process are integrated into the daily routine of many HR departments and once a system is established, there appears to be little need for additional planning or analysis with regard to how the recruiting process should proceed. The IHRM must provide a comprehensive and understandable Employee Recruitment Policy so as not to make the applicant be confused in the job position offered. As mentioned earlier there is a step by step procedure in the recruitment process in which the Employee Recruiting Policy should be based so that the international HRM will have the assurance that the employee that they have recruited deserves the position allotted. In addition, Employee Recruiting program is done in order to have an appropriate and accurate recruiting and in order to have the most suitable and competent employees that will contribute to the success of the organization or institution (2001).
The planned HRM Employee Recruiting program should be able to clearly state the mission and objective of the recruitment process to be done. Specifically, the purpose of such policy is to offer a criterion and standard measure for recruiting new applicants or employees. The recruitment imposed by the international HRM o should also include a procedure so that the recruitment process should be accurate and correct. In this manner, the international HRM should always be aware if a new position is required or if a transferred/reassigned or terminated workers or employees would need a replacement. Further, IHRM shall complete the Employee Requisition form describing the job to be handled and obtains approvals from the department head. After which, the HRM is responsible in determining the most appropriate recruiting approach to be used. To let the applicants and employees be aware of the recruitment process, the IHRM should provide a means of advertising the activity to all the recruiters and agency. Further, the Human Resources Management must posts all requisition of regular employment are open (1993).
In addition, the International HRM Employee Policy shall also include all offers when the chosen applicants have been appropriately evaluated or investigated. The policy includes the right of the HRM investigate the background of an employee so that the organization will know and verify whether the employee has met all the requirements for a certain position. While the initial stage of recruiting is critical, the attraction of a worker to a firm may be significantly altered by his/her impression of the interviewer and the company (2000). A major concern of employees entering the labor pool is potential age discrimination and racial discrimination. The IHRM practice should take every possible means to ensure that a supportive working place is provided for employees, and that a positive impression of the company is conveyed, even in the initial interview. In designing an interview to attract workers, companies can benefit by reviewing and revising the specific content of interviews.
Conclusion
The concept of IHRM is regarded as an umbrella term that comprises (a) specific HR practices such as recruitment, selection; (b) formal human resource policies, which direct and partially constrain the development of specific practices; and (c) overarching human resource philosophies, which specify the values that inform an organization’s regulations and practices. Basically, these encompass a system that attracts, develops, motivates, and retains employees who ensure the effective functioning and survival of the organization and its members. It is true that managing people in organization, specifically in international environment is a very difficult task to handle because the employees that you will handle are subject with different culture, attitudes, values and norms.
In managing people, the IHRM should be able to have the ability to think more systematically and strategically in handling one of the most valuable factors within the organization, (i.e. its human resources). The IHRM should be able to develop a successful organizational culture and a stable organization by means of effective management of the people. In addition, communication is a very important factor to use in order to have a harmonious and smooth relationship between the management team and the employees in the international level.
All in all it is very crucial that an international organization should make a way in adjusting their management styles and approaches to adhere with the differences and similarities of the employees, specifically those in the international environment so that IHRM may catalyst the motivation among diverse individual. It is also important to note that IHRMt should have the ability to employ the principles and concepts of emotional intelligence and give emphasis to the importance of self-awareness in dealing with different kinds of people, winning their trust and to ensure that the people’s values and the organizations objective will intersect to a common goal and that is to incorporate good employment relationship.
Credit:ivythesis.typepad.com
0 comments:
Post a Comment