How Meaningful Is The Concept Of International Human Resource Management Business Essay
In today’s world, it has become an intense requirement for us to manage the human resource when taken in a global context. A lot of companies all around the world have started climbing the ladder of success by efficiently managing the human resource. As national markets have chained up together to form one large global market, it has thus made managing human resource more crucial and unpredictable because of the uncertainties when it is taken in a global context. A its impact, the human resource management has been categorized into general HRM, Comparative HRM, Strategic HRM and Comparative HRM (Schuler, 2000), which has been discussed further down.
Human Resource Management
The three different types of HRM are mainly derived from the general HRM, which forms the basic functional unit of any developing organisation, which needs a special attention in this section of the study. HRM enables every person of the organisation to carry out a task that matches his/her job profile thus manages time as well.HRM needs expertise to manage the people and time in the most efficient way which would have a positive impact on the function of the organisation. HRM should be updated not only for the improvement of the organisation, but for the development of the future perspective as well.HRM, thus continuously involves itself in the development of tasks which are essentially needed for the proper function of an organisation. A number of continuous improvement tools like Kaizen, 5S, TQM etc are available which should be implemented in the organisation to improve its function and performance at a very higher level. Thus, the work of HRM mainly includes managing and developing those features of the organisation for example, its people and its practices, which the organisation can stress on considering it to be its skill helpful in making its stand in the global market.
They also help the organisation to focus on factors such as its competition in the market, the arriving technologies, the way it could structure the business to better suit the environment and its legal implications which would help the business to know where it stands and to improve the ways it could prolong its sustenance in the market.
Personnel versus HRM
HRM which was earlier restricted only to a domestic focus has now shifted to a wider global focus. In the context of an organisation, HRM, which used to have an impact on the operation, has now started having a strong impact on the strategic issues of the organisation. HRM department which was only restricted to recruiting people has now grown closely connected to the operation department of the organisation. They in addition to recruitment have started working in a close contact with the managers and the customers of the firm. Thus the HRM has climbed from a domestic issue to a more global issue, and so have their goals. The role of the personnel management is restricted to attracting people to the organisation, whereas, the HRM deals with making the workforce competitive and obliges itself to the profitability of the organisation as well. (Schuler, 2000).
Earlier the real concern was given only to the development and improvement of human resource products and services when compared to understanding how it might imply on the strategy of the business. "Consequently, human resource expertise has become more generalists" (Schuler, 2000). HRM operates at both individual and department level. At individual level, it concentrates on making individuals multi-skilled, on contrast to which, at the department level, it tries to work with a group of skilful expertise to serve the customer needs. As seen, the personnel management thrives on practices that focus on an individual level, whereas the HRM focuses on teams when compared to individuals. Figure 1 provides a clear distinction between the personnel Management and Human Resource Management.
Fig 1. Comparison between personnel and Human Resource management (Schuler, 2000)
As the world today runs on a intense battlefield, business practitioners have started paying due considerations to the factors that would affect and influence an organisations’ ability to get adapted to the socio- economic changes that it is subjected to. For instance, "various success stories have started surfacing about the economic performance of organisations because of its contribution towards forming a flexible labour market". (Budhwar and Debrah, 2001).
Developing countries have started restructuring their labour markets to increase recruitment and productivity. However, there had been a lot of variations in the comparative HRM, because of the difficulties in the methods adopted for carrying out the comparative researches which yield and develop theories. (Schuler, 2000).
There has been an alternate view as well. The idea of comparing the human resource management of various countries has not come along so well. Though there has been an extensive study of HRM, neither there had not been any good comparative studies of the HRM practices between two different countries, nor there any study of HRM in relationship to the business strategies and its impact on developing competitive skills. Though there has been an extensive study of HRM, neither there had not been any good comparative studies of the HRM practices between two different countries, nor there any study to examine the relationship of HRM to the business strategies and its impact on developing competitive skills. Thus a lot of attentions need to be focussed on the practices of the HRM when it comes to a global context (Brewster, 1999).
Every organisation adapts itself to the national culture it is subjected to, however, when firms move globally or in other words, globalise, there becomes an intense need to shift their HRM practices that would suit the culture of that particular nation they exist in. This is the positive challenge faced by the organisations all around the globe. The more the firm tries to globalise, the more intense it has the impact of the culture, which is represented by its workforce. (Brewster and Harris, 1999).
As an organisation moves from a domestic level to a more globalise level, it starts confronting different cultures which has said earlier represented by its work force. Thus it becomes difficult to do business because of the practical issues related to the cultural implications. This might create a lot of dilemma. For instance, which religious holiday must the organisation regard which further depends upon the workforce employed. Also, the organisation might have problem in accepting a particular standard language as the workforce would be multi-linguistic. Similarly, many other legal and political aspects needs to be noticed while taking the comparative HRM into consideration. (Brewster and Harris, 1999).
Strategic HRM, which is largely based upon the business strategies, concerns the following: (a) HRM has become a inseparable constituent of the organisations as it decides over the strategy taken up by the firm. (b) HR policies are practiced consistently across all the levels of hierarchy in the organisation and (c) HR practices have become so essential component of success that line managers and employees have retained it at all levels in the organisation in the day -to -day life. These points explain that the strategic HRM gets itself involved from the top to the bottom order of the organisation. These ideas also state that: "it joints, it integrates, and it connects across all levels in organizations" (Jackson and Schuler, 2000). Its main purpose is to form a proper balance between the human resource and the strategy of the organisation, and decides over how the human resource of the firm could be efficiently used to attain all the required strategies of the firm. The main components of SHRM are illustrated in Fig. 2.
Fig. 2. Main components of Strategic HRM (Jackson and Schuler, 2000)
Generally, firms are required to define, obtain and retain the business strategies during agitations and these requirements mainly decide over the overall growth, flexibility and the profit margin of the organisation. Various factors such as the economic state and the culture to which the business is subjected may decide over the requirement of the firm and would influence it to establish its business strategies. Human resource managers have repeatedly been working on combining the HRM activities with the strategic activities, so that they could state what the requirement is in establishing the business strategies. Not only in the agitations, but also in the non-commotion times, there have been distinct linkages found between HRM and Strategic HRM. These linkages are favoured by the organisation, which helps in implementing these strategies. (Jackson and Schuler, 2000).
To initiate a particular act, the business has to convert itself into a state of action, which further decides upon its "strategic business goals" (Schuler 2000). To attain these strategic goals, the business relies on the fact that "the statement conveys a more specific action element, starting with an influence on a variety of human resource activities."(Schuler, 2000).
The world has been undergoing constant changes every single day. No matter what the size of the market is or no matter how intense the market is, an organisation has to take risks in globalising itself to taste the fruit of success. And also, the success of many products and services depend upon the location and taste. However, many multinational enterprises still have hurdles thriving upon a diverse environment. The MNE’s as their name suggests, are globally competitive and are managed nationally like they were one large market with distinctly separate and similar market and internationally as one large market. (Brewster and Harris, 1999).
Though these trends provide a lot of opportunities, they had put a lot of challenge at the front as well about how the MNE’s can compete efficiently and attain success. Having understood the scenario clearly, it becomes the job of the international HRM to management the firm locally and internationally as well. The ability to withstand in an unknown global market and operating with a multinational workforce marks the main difference between the domestic and international HRM. (Brewster and Harris, 1999).
5.1 Approaches to International HRM
There are three main approaches that distinctly mark the international HRM from the others. "Work in this field signified a cross-cultural management approach and examined human behaviour within firms to form an global perspective" (Adler, 1997). The second approach involved itself from the close relationship between the HRM and the industries and provides a comparison and analysis of the HRM practices in various countries (Brewster and Hegewisch, 1994). Finally, the third approach provides its complete focus on the different aspects and ideas of HRM in organisations operating in global markets. (Dowling, Welch and Schuler, 1999). Thus, these approaches help us to find what the implications of the HRM practices are, when the firm is internationalised or globalised. Each of the given three approaches function with a different view towards the international HRM.
5.2 Defining International HRM from the perspective of a MNE’s:
Before stepping up with the international HRM, one should make oneself clear with the definition of the general HRM, which refers to those policies or practices undertaken by any organisation to consider and manage human as its resource in the most efficient way. There are a wide range of activities that the HRM might include, mainly, "Human resource planning, staffing, performance management, training and development, compensation and benefits and labour relations." (Dowling, Welch and Schuler, 1999).
Initially, what is required here is to analyse which of the above mentioned practices mainly is affected and changes when HRM is internationalised. "This question could be easily answered by analysing the model which was first presented by Morgan (1986) and was provided with three different aspects. (a) According to his model, the three basic practices or activities of the human resource mainly include possession of the resources, allocating resources and using the resources and the above mentioned six activities are just the expansion of these basic activities. (b) When the business is internationalised, the nations that are involved in the activities are categorised as the host country which locates a subsidiary, the home country that accommodates the prime head quarter of the operation and the rest of the countries that are utilised for obtaining finance and for profitability. (c) As we have already seen. Something that makes an internationalised firm distinct from a domestic firm is its multinational workforce. The employees of the workforce can be categorised as Host country nationals, the ones belonging to the nation where the subsidiary is located, Parent country nationals, the ones belonging to the country which accommodates the head quarters and Third country nationals, the employees from the rest of the countries" (Morgan, 1986).
For example, let’s take the strategy followed by one of the most powerful and successful multinational organisation named IBM (International Business Machine).When it has its operations based in Australia, for instance, which becomes its home country. It employs the Australians as its home country nationals and sends its American and for instance Indian employees who are the parent country nationals and other country nationals respectively on projects or similar works outside. Thus keeping a proper balance.
Morgan (1986) states International HRM as "the interactivity between three main activities namely the practices of the human resource, the type of the employees involved and the country in which the operations of the firm are undertaken". It is further noticed that the basic activities of the domestic and international HRM are all one the same. For instance, both involve activities such as "HR planning and staffing" (Morgan 1986), however, what differentiates both is the workforce. The domestic HRM involves employees only from the country its operations are based.
Thus, the variation between domestic HRM and international HRM is seen only in the workforce employed (belonging to different nationalities), not in the human resource policies are practices undertaken, which sort of remains similar. Though we speak about the success stories of multinational organisations, there are still a lot of companies that have neglected the complexities involved in the internationalising the operations, which may be evident from the examples of a number of firms which have tasted failure as a result of poor human resource management.
Not to be surprised, today the domestic HRM has started adopting the features of international HRM as it has started employing people from different nationalities even within a country’s boundary. Thus the gap between the domestic and international HRM has narrowed down because of the increased focus given by the domestic organisations on the management of issues raised due to employee diversification, thus bringing them a step closer to the practice of the international HRM. Though diversities may arise in organisations within a single nation, it necessarily doesn’t happen the same way in the case the firm moves global. The Scenarios might be similar, but not exact.
5.3 Strategic international human resource management
SIHRM is stated as " the policies and practices of the human resource management which are extracted from the strategic activities of an international firm which further determine and have an impact on the functions and objective of the organisation" (Schuler et al., 1993). As there is a lot of consistency between the strategic activities of domestic and international HRM, a lot of "factors have been discussed in literatures in the field of International management and business and international HRM" (Dowling et al., 1999). These factors and their linkages have been discussed in the figure 3.
Fig. 3. Factors in SIHRM (Schuler, 2000)
HRM, which was traditionally pertained only to activities related to recruiting people has now moved into a diverse field which is more significant and decides over the strategic activity of the firm. Not only the human resource managers, but also, the line managers have started getting themselves involved in HRM, making it an inseparable part of the organisation. As it has become a key success factor, everyone in the firm has started making a considerable contribution to its practices of managing diversity of people. As discussed earlier, the HRM has not only become intense in international grounds, but in domestic grounds as well. The discussed four different types of the HRM shows that the HRM activities and the management activities must go hand on hand to obtain the strategic objectivity of the firm.