Will MNCs be Able to Adopt Unified Cross-National HRM Strategies - Essay Example

Will MNCs ever be able to adopt unified cross-national HRM strategies, policies and practices? Human Resource Management Human resource management (HRM) involves the basic practices of business supported by intellectual skill. The first and foremost principle of HRM is to treat the employees as humans rather than sheer instruments for running a business. The company should strategies a technique for implementation of its business goals by understanding the psyche of its employees which brings out the quality of the HRM in it. The parameters of HRM have evolved to a larger dimension, where its policies are not limited to personnel, but involve the preventive factor of a company’s possible setbacks. A company’s beliefs should be of such a nature that all the employees, including the managers, should be well versed with the policies and philosophy of the HRM. Amongst the various functions of the HRM the most prominent ones are: the kind of staffing, whether employees to be recruited or independent contractors to be hired, engaging and training the best employees in the company and making sure of their higher performance, and handling of performance issues. The activities of the HRM include even the managing of the company’s approach to achieve profit, taking care of employees’ accounts and the personnel strategies. The personnel policies include in it the guidelines as to the behaviour of an employee in the company, the basic knowledge that an employee should have during joining and the various rules and regulations that should be followed by all the employees. This piece of literature is provided to all the employees by the human resource department. Thus, they should be well versed with the basic needs required by the company from its employees. The functions of the HRM have changed a great in the near future. Earlier the personnel departments in companies took care of the paperwork company and they also dealt with the various recruitment functions and concerned themselves with the payments of the employees. Organizations, (1) now-a-days are considering human resource as an advantage that can grant continued competitive benefit. The changing situations in the business environments have augmented the importance of human resource. These changes result from predominance of globalization, alteration in the demographics of the employees, attention on accomplishing greater profits by means of technological changes, growth, intellectual capital and unending alterations that all companies today are undergoing. In such circumstance if a HR department exists that is extremely supervisory in conduct but lacking integration, then it becomes difficult to provide for the competitive benefit prerequisite for any company. Studies show that, companies whose HR systems have attained the excellence in operational matters, and are associated with the strategic business goals have had very fine financial returns. Nature of HRM in multinational corporations Multinational corporations are huge business organizations which have their distribution or production processes spread all over the world, through holding or subsidiary companies. The offices of such MNCs are situated in major metropolitan areas, international cities and cities having ports, in order to meet the needs of the local consumers and to gain access to find the resources like cheap labour and raw materials easily. The role of the HRM differs in every company in the multinational sector. There is also difference in the functioning of the HR manager in relation to the varied companies. Another dependant factor is the location of the manager. The manager may either be located in the headquarters or it may be onsite. The obtaining, assigning and efficiently exploiting the human recourses in a multinational company may be defined as international HRM. If the MNC is a smaller one and its only job is to export products, having small offices in foreign locations, then, the work of the HR manager is quite simple. But in case of international companies, the role of HRM intensifies and it requires accomplishing the inconsistent strategic purpose. Their first priority should be to incorporate human resource practices and policies across varied subsidiary companies located in various countries so as to achieve diverse corporate objectives. Along with it, the HRM’s approach should be flexible enough so that it may go for the important differences found in the HR practices and policies that are more effective in other cultural settings and businesses. The problem of balance integration, i.e. controlling and coordinating from the headquarters, and the problem of differentiation, have since long been identified as the common problems that the HRM faces in the global setup. Many people argue that international HRM is very much similar to that in the domestic setting, yet others point out that there is considerable disparity between the two. The nature of HRM in MNCs can be described better by bringing forth the varied disparities in its functioning in view of the domestic HRM. The HRM in the MNCs or rather the international HRM include in it more tasks, it has to deal with varied types of functions, includes in it continuously changing perspective, needs more interference in the personal lives of employees, it has more pressure from the outside sources and takes into account a greater risk than its domestic counterpart. As compared to the domestic HRM, international HRM has a broader perception of even the most basic HR policies. This is basically found suitable for those HR managers who operate from a MNC headquarters. According to various economists, the MNCs have varied dimensions attached to them and thus they can be viewed from the various perspectives of ownership, strategy, structural, management, etc. Many people have a view in defining MNCs such that, if the managers of the parent company are of different nationalities, then an international company can be called a multinational corporation. But in usual practice it has been found that the managers of the parent company belong to the home country of the company itself. The MNCs may formulate policies that are either home country, world country or even host country oriented. But broadly speaking an MNC is that parent company, which deals in foreign production through its associates situated in various other countries, which directly controls the policies of its associates, and which goes beyond national boundaries by implementing business policies in marketing, productions, and finance. Contrasting national and regional models of HRM It is an overwhelming feeling to think about the variety and number of activities assigned to the international HRM. The variety of functions are: international orientation and relocation, international taxation, variety of administrative services for deportees, choosing, training and assessing international and local employees, and lastly managing good relations with the host governments of the varied countries in which they operate. It so happens sometimes that while dealing with the simple area of compensation, as one of the functional aspects of the HRM, the HR manager faces varied pay issues of national and international level. Moreover in providing edging profits to the employees of the host company, there may arise certain complications. For example, in the United States, it is a common thing to provide for health insurance benefits to the employees including their family, which consist of the spouse and children but there are various countries where family includes more relatives like – many spouses, grandparents, parents, uncles, aunts etc. This becomes a question for the HRM in dealing with the benefit plan with such varied definitions of the term family. Speaking of the broader scope of the international HRM, it can be said that the HR manager sitting and operating from the headquarter deals with varied groups of people having diverse cultural backgrounds. Thus it is imperative, for the headquarter based manager, to put together procedures and policies to manage deportees from the company’s host country nationals, parent country nationals and also that of the third country nationals in the subsidiary companies across the world. These issues may seem to be classically made for headquarter based manager but in fact they are also germane for the subsidiary HR manager. The subsidiary manager must extend its systems in such a way that it is not only acceptable to the host country but also to the world-wide networks of the company. These practices and policies should be designed keeping in view its utility in all the three segments – local employees, parent company nationals and also the third company nationals. It should have the capacity of balancing the needs and demands of all these segments of employees. It cannot be argued on the fact that the in the subsidiary level the involvement of the international HRM in the private lives of the employees is not obvious. The subsidiary HR manager takes care of the various needs and demands of the host country employees, like providing healthcare facilities, housing facilities, educational opportunities, transportation facilities, and various recreational activities. The IHRM activities are more prejudiced by a number of external factors as compared to the domestic HR activities. The headquarter manager may have to make policies for equal opportunity of employment so that it meets the legal necessities of both the parent country and a number of subsidiary countries. Since it has been studied that foreign companies have a tilt towards having subsidiary business in host countries which are basically of developing nature, the domestic HR managers may have to make dealings with the various ministries, various political figures and a diversified group of people concerned with various social and economic interests, which would have not been found in a situation where the company is of pure domestic nature. Importance of national culture in relation to HRM The much of the work culture of the international corporations are based on the national cultures and the result of employment practices in a host country. There are also certain limitations created for transferring the work of the MNCs to host countries due to the national culture of that country. The key ingredients of national culture can be summarized as that of beliefs, faith, norms, rules and regulations to be followed, and the perpetual orientations that are typical to the members of the nation. If there exists such policies which go against the national culture of the host nation then the MNC will face a great failure. It may be provided here as an example that, if there would have been any such management policy that, all the female employees in a company would have to wear only western dresses, in a country like India, then this would prove fatal for the company since there would arise much controversies regarding this situation since there are still many people in India who have high regard for their ethical values, norms and cultures. Comparative research of national culture crossways a varied number of countries are narrow because of the considerable expenses connected with data collection. There are varied kinds of cultural dimensions which can be recognized and measured nationwide by the help of surveys. Four of such work behaviour related dimensions are Individualism/collectivism, Power distance, Masculinity/femininity, and Uncertainty avoidance. Individualism and collectivism- this deals with the perspective of the extent to which the group versus personal objectives presides over a person’s life. It can be clearly argued that the western industrialized countries possess individualistic cultures and the rest of the countries of the world including the developing countries, possess the collectivist cultures. Power distance- this deals with the perspective of the extent to which a person of comparatively lower status accepts and identifies the influence and powers of the person of a higher status. Individualism and collectivism are correlated topics so that the individualist cultures are found to be less hierarchical and the collectivist cultures are found to be typically, more hierarchical. Here again it can be pointed out that the western industrialized countries are less hierarchical and the other countries of the world are more hierarchical. Masculinity/femininity- this area deals with the extent to which forcefulness and well-being of materials are appreciated in a culture versus the good interpersonal associations and universal quality of life. Masculine cultures are found to be more patriarchal while the feminine cultures are found to have greater instability between both the sexes. This aspect is neither related to geographical locations nor the economic development. Japan shows the highest record on the masculinity aspect as known by studies, although various other East Asian countries have scored in between the scale. The Egalitarian societies, like the Scandavian countries, shoe greater degree of the feminine cultures. Uncertainty avoidance- this aspect or dimension deals with the cultures where there is always a trouble for people resulting from change and risk. Thus national culture plays a vital role in the working of the HRM. All the policies that are to be made by the HRM department have to be taken great care of so that they do not mess up with the national feelings of the employees in the company. The role of national culture is best seen in the field of subsidiary companies or the host companies. These are different from the parent company and can thus vary in thought, beliefs and rules and regulations and even the norms of the society. If there is a slightest of difference found in the policies and the culture of the respective society then the company has to face a grave problem and there would be initiated aggression of the employees with the management. Thus it is the best possible way to conduct a clear survey of the cultures of the countries where the parent company wants to capitalize on and then of course make rules or policies suitable to those, for its own company. All these give a clear picture of as to how the national culture influences the HRM in a multinational corporation. Issue of convergence and divergence of HRM systems The debate of convergence and divergence is an outcome of the occurrence of uniformity and diversity of the HRM across the world. When the HRM department is controlled by the headquarter of the parent company with smooth functioning under its guidance, then the situation is regarded as the situation of convergence. But where erupts the differences between the cultures of a country, subsidiary to the parent company, and the managers in the headquarters formulate certain policies which are contradictory with the local norms and values, a difference of opinion and the divergence of the local HRM department with that of the headquarter department is created. Convergence and divergence greatly depend on the nature of the culture a company has. Even the economic conditions and the various social factors of the country, where the multinational corporation has situated its branches or subsidiary offices, play a vital role in the convergence or the divergence of the HRM systems. There are basically two models of HRM. One is the national model and the other is the international model. The national model is that department of the HRM which deals with those of the domestic companies either subsidiary or parent. Whereas the international model deals with the HRMs of the MNCs. Thus there is a vast technical difference between the two of them. Talking about convergence, it is attaining greater significance in the present scenario. There are various MNCs starting to function in every metropolitan city and in every developed and developing nation. This has become a growing trend as people are ready to work for a different nation sitting in their own country. Thus the scope of convergence is greater than that of divergence. The world today is seen as a new creation with very limited differences between the various parts. Thus convergence or the uniting of all the management units of the companies situated in various countries would not be a difficult thing to be done. Moreover, the attitude of the people is changing day by day and they are ready to work in an environment very much unlike from those of their own county’s. For example- the growing trend of call centres every where has changed the whole situation today. People get recruited very easily and they get very well paid for their services. The call centres even provide them with the best possible facilities like that of transportation, subsidized meals, medical benefits and various other things. All these are managed by the HRM of the company. They frame a structure where the people are guided to get changed or convert themselves according to the demands of the parent company. This proves to be a very good example of convergence where, the people are willing to be as the parent company wants them to be. They are ready to do whatever they are instructed to do. This shows tat the cultural values of the nation at this point of the time have diminished. People are even willing to go to perform their duty in the company even on their national holidays. This shows how changes have taken place in the very fast world of today. Along with the convergence situation it can also be clarified that though there are many countries which would easily help their HRM departments to catch up with the managers sitting in the headquarters yet there are various countries even in today’s world that would defy all these fuss happening in their countries. They would revolt against all the odds in the company policies and thus create difficulty for the Human resource management team. This gives rise to divergence and thus prove to be a hindrance in the growth of the multinational corporation culture which is wide spread in today’s context. The factors which seem to be useful towards convergence are globalization in the first instance, then, removing of the cultural differences in the second place and forming a strategic program to bring about convergence in the systems of the HRM. Globalization is the comprehensive term in the context of escalating interdependence between people and corporate in contrasting locations. The agenda of human resource across the world has been established by the Globalization of Human Resource Management, as has been observed by many leaders of the corporate world. The broad rational general idea of International Human Resource Management is to practically analyse, course out an efficacious method to successfully approaching the essential areas of modern management. Intercontinental companies can flexibly transfer their resources from one country to another. This exercise has been adopted to cash in, the benefit of higher skills and availability of low cost labour. There has been major backlash in the above trend though, because of the, uneven distribution of its benefits and so also for the social problems associated with it. Some of the main reasons for the public outcry against globalization are, discrepancy and lack of uniformity in wage rates as a result of fixation of lower wage rates by one country as against another, decrease in job security since a project can be easily be transferred from one country to another. There are loads of discussions taken place in regard to know whether globalisation actually is present or just an analytical myth. The term although being widespread, many authors are there for argument that the attributed characteristics of globalization have been already seen at various other times in history. Many persons even argue about the fact that whatever increase in the international trade and increased role of multinational corporations are not as truly formed as they may appear. But since there has been evidence found on the extent of the growth of trade and commerce in the international level, and the greater extent of the growing rates of multinational corporations in the world, it can be held that globalisation has already formed a firm grip in the world today. With the rise of globalisation the MNCs can come forward and put their hands forth for bringing about a difference in the world. Globalization/internationalisation(2) has been known with a variety of trends, most of which may have evolved since the World War II. These have in it, information, money, greater international movement of commodities, and people; and the development of legal systems, organizations, technology, and infrastructures to bring into existence this movement. The existence of the factors listed above are many a times debated. Role of multinational corporations in shaping business systems and cultures Regardless of the various other functions that the multinational corporations perform technically, they have a wider role in the making of the nation’s pride and in building great cultures in various countries. The multinationals are the yardsticks for measuring how well versed a country is in the technical sense. It provides for the greatest possible business opportunities in the market worldwide and also brings about tremendous change in the cultural aspect of a nation. Since the MNCs have their base somewhere else and want to spread their business in various other countries, they are providing the various other countries with the opportunities of starting new ventures with less investments and having lots of profits from it. The business proposals that the MNCs provide for are very lucrative and involve great profits in it. These business ventures can provide great capital funds for the government concerned and thus the economic conditions of the country also improves. Moreover the MNCs have a culture of their own which teaches how to work effectively in the various fields in any business organisations. Now-a-days there has been an increased demand for following the footsteps of MNCs even by the national companies. The cultural difference present in the MNCs prove to be boon in disguise which guides national companies in cultivating their policies competing with the MNCs. Along with the diversified culture of mixing with people, calling every employee even the boss by their name having lots of entertainment through the various entertainment programmes organised by the HRM department, etc, the MNCs keep their employees very efficient and make them feel at home even at great pressure times. On the other hand, there are the national companies which have very different culture in them. They have to give respect to their seniors although there might not be the same feeling in their hearts. They are not allowed to discuss about their personal matters in the office which is just in contrast to what the human resource department does in a multinational corporation. They do not have the facility of entertaining themselves; they do not have indoor games in their offices as does the MNCs do. Even the canteens in the national companies are not worth having them for food requirement. Thus there exist a variety of difference between the culture of a host nation and the culture of a multinational corporation. References (1) Sandeep Krishnan, Manjari Singh, Strategic Human Resource Management: three stage process and influencing organizational factors http://www.iimahd.ernet.in/publications/data/2004-06-04manjari.pdf (2)The globalization of human resources, http://www.hrmguide.net/hrm/chap2/ch2-links2.htm (3)Indian express newspapers, http://www.expresscomputeronline.com/20050103/technologylife05.shtml (4)http://www.econ.iastate.edu/classes/econ355/choi/mul.htm (5)http://www.managementhelp.org/hr_mgmnt/hr_mgmnt.htm Read More