Globalization and International Human Resource Management
Introduction
Globalization is the process, which is associated with expansion of business operations from domestic market to international market.
Globalization is enhancing day by day with increase in level of Technology and implementation of factors like internet, focus on Educational Institutes, shared cultures and other related factors. Globalization not only includes the goods and services which are sold at international level other than the domestic market but it also involves the economic resources such as capital, technology and data. They are different significant advantages of globalization. One of the most significant advantages of implementing globalization policy is that it helps the organization to have diversification in the strategy which reduces the level of risk associated with investment.
In addition, the significant advantage of globalization is that it provides the organization a platform in which the organization can utilize the resources and staff available at Host Company in order to enhance the business operations of their home organization or home concept. That also helps the organization to enhance their market share, as they are able to offer their products and services in international market. It also helps the organization to effectively compete with competitors at domestic level as well as at international level. Utilization of shared culture approach in multinational organizations is a positive factor for the organization because different cultures contribute differently towards the success of the organization, which positively enhances the scope of available human resource staff with the company.
Another significant advantage of globalization implementation is that it helps to enhance political cooperation between the host country and home country. This is another significant opportunity for the developing countries and organizations to have access at international level and they can export their cheap products to International countries, which will help them to enhance their sales and will help to achieve their objectives in long term. Multinational organizations also provide a significant opportunity for the locals related to jobs as multinational organizations provide significant amount of job opportunities to people living in host country. It is important to understand that they are different advantages as well as disadvantages associated with implementation of globalization so it is very much important for the top-level management of the company to properly evaluate the prosperity is of globalization before formulating any conclusion related to it.
In recent times, free trade agreements are being find which reduces expenses related to value added taxes, barriers, tariffs and other related expenses. Due to this fact, competition for the multinational organizations in international market significantly increases which is a challenge for the globalization strategy of the organization, which is looking towards going Global (Collins, 2015).
PESTEL And Globalization
Different factors are responsible for positively as well as negatively influencing the implementation of globalization strategy for any organization. One of the most significant factors responsible for influencing globalization are political factors, economic factors, social factors, technological factors, environmental factors and legal factors prevailing in the host country in which globalization has been implemented. There are two countries in globalization strategy, which are host country and home country. Home country is the country in which the organization is domestically prevailing and is the local market for the organization while host country is the country where the international business has been extended. For example, Pepsi Corporation is one of the best examples of multinational organization. The home country for Pepsi organization is United States of America as it is the country of origin for the company. The host countries for Pepsi Corporation are different countries in which the organization has expanded its operations in order to enhance its market share and to effectively compete with the competitors.
If the policies and the rules and regulations of the government are in favor of globalization then it is a positive factor for implementation of globalization policy. It is also important that there should be a stable political and economic environment prevailing in the host country for a successful globalization strategy implementation. It is also important to understand the social requirements of the host country in order to effectively and efficiently introduce the product in that market. Technological advancement and implementation is another significant factor associated with globalization. It is important to have advanced level of Technology in order to have successful globalization. Legal factor is another significant factor, which is associated with success of globalization.
For instance, China provides tax relief to multinational organizations during their initial 5 years of operations in China due to which most of the organizations from other countries prefer to shift their manufacturing and production facilities in China like iPhone has recently transferred there assembling unit in China as the Chinese government provide significant amount of incentive for multinational organizations and the labor availability in China is also cheap and skilled. These environmental factors as well as legal factors play a significant role in the successful implementation of globalization. Trade agreements like North American free trade agreement and the association of Southeast Asian nations are positive for the success of globalization. Therefore, most of the multinational organizations analyze the free trade agreement signed between the host country and other countries before expanding the operations in host country (saylordotorg, 2018).
3 Ways Of International Recruitment
They are different types of staffing strategies. Most of the overseas markets are divided into three basic types of staffing strategies which includes home country National strategy, host country National strategy, and third country National strategy. All of the staffing strategies have their own specific advantages and disadvantages. The first strategy which is home country National strategy is associated with staffing the employees by using the employees from home country who are already living and working in that same country. The second strategy, which is called host country National strategy, is associated with employing employees, which were born in the country in which the business operations are being conducted. The third category of staffing strategy is third country National strategy. It is associated with recruiting employees from entirely different countries other than the host country and home country.
Uses of staffing strategy are associated with the objectives of the organization and the business operations of the organization. They are different advantages of these different types of staffing strategies. With the implementation of home country National strategy, the organization is able to implement greater control while with implementation of host country National strategy the organization does not pay issues related to language barrier. Third country National strategy is suitable when the organization is looking towards implementing the international perspective in their business. (Dennis, 2017)
Home country National recruitment strategy provides platform to managers in order to gain local market experience. Host country National recruitment strategy is successful for the organization because the managers in such situation are in a better position to understand the local rules and regulations prevailing in that specific country in which the business operations are being conducted. Third country National recruitment strategy is implemented in such cases where the cost of hiring staff by issuing visa is less expensive as compared to home country nationals. Different countries are following different recruitment strategies according to their economic situation and market situation. Most of the Middle Eastern countries are implementing third National country recruitment strategy in order to hire qualified and experienced staff from third countries other than the home country and host country.
One of the most significant disadvantages associated with implementation of home country strategy is that it might be difficult for the managers to adapt according to the requirements of foreign environment. Disadvantage associated with implementation of host country recruitment strategy is that managers may not be able to understand the objectives of the organization because of lack of training (University of Minnesota , 2017).
IHRM Function
Globalization is the process, which is used in order to integrate the business operations and the strategies across different cultures, products and ideas. It also influences the role of human resource managers during the implementation of globalization strategy. It is important for the human resource managers to consider the influence of workforce diversity as well as legal restrictions in implementation of globalization strategy. It is also important for Human Resource Department to review policies related to training and professional development in the organization.
There are five different and main functions of international Human Resource Management, which are closely associated with strategic operations of the business. These five significant functions of international human resource management are recruitment process, on the job training, professional development, benefits and compensation, and ensuring legal compliance. Ensuring legal compliance is considered one of the most significant functions of international human resource management. In any organization, Human Resource Department is not given much importance but its importance cannot be ignored during the implementation of globalization process. (Hanks)
It is important for the Human Resource Department to make sure that there is proper legal compliance with the local laws related to labor and tax in order to make sure that there is continued existence of Organization in local market. Laws, rules, and regulations related to labor and tax are different in different countries due to which it is important to follow the laws accordingly. It is important for the Human Resource Department to make sure that policies have been formulated in accordance with the working hours of the employees, tax allowance as per the national laws related to business, required break times and working hours according to National laws, minimum level of wage and rules and regulations related to discrimination.
By staying updated on rules and regulations related to these policies, the Human Resource Department is able to keep the organization completely legal at every time and is able to highlight the essential role of Human Resource Department in the success of the organization. It is important that employees should be given vacation, maternity leave, and flexible working hours according to the policies related to benefits and compensation in order to make sure that business operations are being conducted legally (Bradley, 2018).
Three Cultural Models And Its Linkage With Selected Function
As far as cultural modeling is concerned, it is categorized into broadly different areas of research. The first area of research related to cultural modeling is related with modeling of growth and distribution of cultural phenomena. It is associated with the evolution of norms or diffusion of beliefs. The Other category related to cultural modeling is associated with describing a group’s culture
Multinational corporations and globalization policies can be effectively used in order to study group culture. Multinational organizations have employees working from different nationalities in their business operations due to which it is relevant for the top-level management to study the overall culture of the group in order to associate it with the performance of the company. Every country has its own culture and the rules and regulations according to the culture prevailing in the environment of that country. (Jackson, 2002)
By formulating the policies related to local culture, the management is able to win the trust of the employees working in the organization and if able to effectively formulate a link between the business operations and the culture prevailing in the country. Another significant cultural model is that organization should collect the relevant data related to cultural inventories in order to conduct Research and identify the performance of the company from cultural perspective. Most of the multinational organizations faces significant amount of issues and difficulties in collecting the quality and information in time. This influences the analysis of the cultural boundaries and subcultures prevailing in that specific organization and in that specific home country.
For instance, in a country like China, there can be a single political unit but there are many different cultural values and aspects. These cultural values and aspects are different in different provinces of China due to which it is important for the management of the organizations in China to properly analyze the cultural inventories in their organization to associate them with the business performance. Another significant cultural aspects related to globalization is relative status of women. The status of women related to business and job opportunities is different in different countries. (Kok-yee, 2009)
Staffing Approaches Linked With Cultural Models
Staffing in Hr department is the most important and essential stage. The hired staff is the base of the success in the organization. Because the staff is going to work in the organization according to the format and the strategies that you will make for the betterment and the success of your organization. Staffing has three approaches accepted and implemented globally nearly at every place. First, one is ethnocentric staffing that focuses on hiring the staff first from the local place where the organization is situated. It promotes the local talent and makes them opportunities to explore their abilities. (Hugh Scullion, 2006)
The polycentric policy approaches the hiring of local staff which is extremely talented and transferring them to the headquarters or main and most hectic working franchises of the organization. This approach benefits the local talent to explore its abilities on high level. The geocentric policy approach related to the hiring of the employees from different places, different cultures just their qualification and abilities are checked through interviews that whether they are appropriate for the post or not.
Comparing theses approaches with the Cultural model it suits the best because it follows the norms and respects the culture of each employee whether it is from any place, any country. The policies and rules created in the organization are when followed by every employees then it removes the differences of different cultures but keep the respect of different cultured employees as a first priority. (Whitehead, 2017)
Conclusion
Globalization is considered one of the most significant aspects of most of the businesses in modern days. They are different significant factors, which are responsible for the success and implementation of globalization. Some of these factors include economic factors, social factors, political factors, environmental factors, technological factors, and legal factors. It is important for the host company to understand the environment of home country before making the final decision related to globalization. With increase in level of technological induction in businesses, policies related to globalization are becoming much popular. Globalization has Different advantages as well as disadvantages.
The amount of advantages related to globalization outnumbers the amount of disadvantages. With the implementation of globalization, the management is able to effectively compete with competitors and if able to reduce the level of risk associated with investment with the implication of diversification policy. The management is also able to enhance market share by going Global. Human resource management has significant role to play in the implementation of globalization policy in any organization. It is the prime responsibility of the Human Resource Department to make sure that all the rules and regulations in the home country are followed in order to make sure the continuity of the organization in home country.
References
- Bradley, J. (2018). What Are the Five Main Functions of Global Human Resource Management? Retrieved 04 04, 2018, from smallbusiness: https://smallbusiness.chron.com/five-main-functions-global-human-resource-management-61538.html
- Collins, M. (2015, 05 06). The Pros And Cons Of Globalization. Retrieved 04 04, 2018, from forbes: https://www.forbes.com/sites/mikecollins/2015/05/06/the-pros-and-cons-of-globalization/#3b073a3cccce
- Dennis, M. (2017, January 20). A new way of planning international recruitment. Retrieved from https://www.universityworldnews.com/article.php?story=20170116185846393
- Hanks, G. (n.d.). What Are the Five Main Functions of Global Human Resource Management? Retrieved from https://yourbusiness.azcentral.com/five-main-functions-global-human-resource-management-26686.html
- Hugh Scullion, D. G. (2006). Global Staffing. Abingdon: Routledge.
- Jackson, T. (2002). International HRM A Cross-Cultural Approach. New Delhi: SAGE Publications.
- Kok-yee, N. L. (2009). The stretegic Role of Cultural Intelligence for Executive Selection in IHRM . 97-113.
- (2018). PESTEL, Globalization, and Importing. Retrieved 04 04, 2018, from saylordotorg: https://saylordotorg.github.io/text_international-business/s12-02-pestel-globalization-and-impor.html
- University of Minnesota . (2017). Staffing Internationally. Retrieved 04 04, 2018, from University of Minnesota: https://open.lib.umn.edu/humanresourcemanagement/chapter/14-2-staffing-internationally/
- Whitehead, S. (2017, March 24). Staffing Policy & HRM Issues in International Business. Retrieved from https://panmore.com/staffing-policy-hrm-issues-in-international-business