Globalisation's Impact on International HRM: Trends & Considerations
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Globalization's Impact on International HR Practices
Q1 Explain how Globalisation has influenced the development or International HRM. Identify and discuss two recent trends that have also affected International HRM
Answer to Q1.
Globalization entails the unrestricted movement of technology and human capital across national borders, resulting in a dynamic and competitive commercial environment. Globalization refers to the process of bringing together individuals from all over the globe into a single community that is connected by an extensive network of communication technologies. This feature of globalisation has had ramifications for human resources management in today's corporate environment (Agarwal and Al Qouyatahi, 2018). To face the global challenge, HR managers no longer have to depend on a small, local market; instead, they may hire individuals from all over the globe. Organizational future success hinges on managing a varied group of people who can add fresh perspectives, thoughts, and points of view to their job. As a result, an HR manager should exercise caution and, in many cases, use a 'Think Global, Act Local' strategy. In order to better encourage a team of highly skilled but culturally varied professionals, many national HR managers must undertake culturally-based Human Resource Management training (Khan and Khan, 2019). To ensure that local workers may advance in their careers, HR must reassure them that imported talent does not pose a danger to theirs. The HR manager's ability to strike a delicate balance is crucial to the success of workplace diversity management.
Human resource management methods that deal with maintaining a global workforce are referred to as global HRM.
Globalization has the following impacts on international HRM:
Managing Cultural Diversity: Controlling diverse personnel from various cultures within the same company is a challenging task. Employees from various countries have distinct perspectives on work culture, and their impressions are shaped by the languages they speak, their vocabulary, and their nonverbal communication styles (Mahmood, Absar, and Uddin, 2018). Over this, human resources departments have a difficult job to do.
Expatriate Management: Preparing personnel from the home nation to work in a foreign place is a tremendous undertaking. Thoughts, values, and cultures are all different, as are attitudes. Employee recruitment, retention, and motivation all have a significant influence on a company's bottom line. The human resources department is particularly interested in learning about the needs of expatriates.
Different Employment Laws: Different countries have different employment laws or labor laws. Human resource policies must come into consideration non-monetary perks such as paid time off and flexible work schedules as well as monetary ones.
Managing Employee Outsourcing: Another of the biggest effects of globalization is the use of outsourced personnel to operate the firm. It's a new paradigm in human resources to manage BPO and KPO staff from distinct cultural and linguistic backgrounds who operate in polar opposite shift schedules (Hack-Polay, Opute, and Rahman, 2020). Today's HR has a problem in managing the expectations of these workers, and that issue is a consequence of globalization.
Managing virtual workers: The preponderance of information technology-based businesses has staff that work "on-site" at a client's location that they are unfamiliar with. In opposed to "off-shore" personnel, virtual employees must always be managed, kept, and rewarded differently. Organizations expanding worldwide necessitated this method of managing virtual staff.
Corporate Social Responsibility (CSR): Western nations have pioneered the practise of corporations actively engaging in activities that benefit society as a whole. It's a good strategy to establish a presence in the country you're visiting. Employees who work for multinational corporations (MNCs) are urged to take part in stress-relieving activities.
Adapting to flexible working hours: The practice of flexible working hours has arisen as one of the retention initiatives for workers, particularly women workers who can preserve a work-life balance (Brewster, Smale and Mayrhofer, 2017). Working across time zones necessitates this kind of scheduling flexibility. It is impossible for all personnel working a continuous shift to pay attention to companies with a worldwide presence. As a result, this HRM practice arose as a result of globalization and is beneficial.
Evolution of more part-time and temporary work: There will be an increase in the number of people working part-time or on a temporary basis Part-time employment and contract labor have developed from the practice of multinational corporations (MNCs), since having a full-time, permanent employee on the payroll is too costly for these businesses (Wailes etal., 2020) In the information technology industry, the majority of big MNCs use contract workers to keep costs down.
Adapting to new technology and quality standards: Employees at the world's most prestigious companies are taught on the most up-to-date technology, including ERP concepts like SAP and Peoplesoft. MNCs have undertaken this step to provide their staff with cutting-edge technology so they can keep up with the rapid changes in technology. Employees have access to worldwide management certifications like Six Sigma.
Shifting from a subordinate to a business associate perspective: Today's MNCs are undergoing a cultural transformation, with the subordinate culture rapidly disappearing. Employees are regarded as business partners, which means that each one is held accountable for the company's progress and is seen as a stakeholder (Kramar and Mariappanadar, 2019). Globalization has had this effect.
Increase in Employee Quality: The quality of employees has increased as a result of the increased number of applicants for job opportunities. Due to globalisation, work options have expanded while geographical limits have been reduced, making this feasible.
Higher Disposable Income: The rivalry in the market has risen due to the growth of global MNCs, and as a consequence of this competitiveness, every MNC offers attractive pay packages to attract, engage, and encourage workers with a variety of benefits to stay involved with the company (Wailes etal., 2020).
Two Emerging trends in international HRM:
The trend of Remote Working (WFH):
As a result of the Coronavirus outbreak, business models have shifted around the globe. Because of this sudden transition to remote employment, employers place a great importance on adaptability(Kolah, 2021). According to HR managers, four out of five workers have reduced absenteeism since working remotely and being accessible online when required.
Many companies will provide full-time remote employment opportunities in 2021. In order to keep workers engaged and on track, HR departments must adapt to changing working circumstances.
Programs for the Health and Well-being of Employees:
Workplace stress is on the increase, owing to the quick pace and competitive nature of the workplace. Workplace wellness activities should be promoted by HR professionals to help employees maintain a healthy work-life balance and maintain their mental health (Kramar and Mariappanadar, 2019). Employers who are cared for and nourished will be more driven, engaged, and loyal. Healthy meals, team-building events, counselling sessions, joyous celebrations, fitness courses on-site, and interactive video chats every week are all examples of possible activities. Making mental health disorders, such sadness and anxiety, more understandable to workers by teaching them how to cope with them.
Q5 Discuss the factors that Multinational Corporations need to consider when attempting to standardise their Performance Management and Reward processes across all the countries in which they operate.
Answer to Q5.
Due to its international expansion, multinational corporations (MNCs) are becoming more familiar with the variety of cultures, traditions, and procedures found across each country where their subsidiaries are situated and acquiring expertise in these areas as well. According to this theory, one of the ways these behaviours spread is via multinational corporations (MNCs), who are key players in global trade (Hooi, 2019). When faced with the dilemma of whether to standardise their human resource practises internationally or regionally, many MNCs are quickly stymied. For these businesses, the issue of convergence vs. divergence becomes very important. HRM practises in multinational corporations are moulded by the active interplay of competing forces for internal consistency and isomorphism with both the local institutional context, according to earlier research on HRM (human resources management). Many HR methods are also highly sensitive to institutional and cultural variations, which makes sense. The performance evaluation is one of these procedures (PA). As a mechanism for ensuring uniformity in information between the headquarters of MNCs and subsidiaries, performance assessments are used to keep things under control and encourage good conduct among personnel working in subsidiaries all over the globe. However, the extent to which performance evaluations are standardised is questionable (Boselie, Farndale, and Paauwe, 2018). Others argue that the procedure should be tailored to the MNC's environment and strategy rather than being standardised.
Among the most important aspects of management is the identification, observation, measurement, and development of human resources. Using international performance evaluation, an MNC may assess and constantly boost the effectiveness of its personnel to meet specific, established objectives that benefit the firm as a whole. A decrease in information discrepancies between the parent firm and the overseas subsidiary may be achieved via the use of standardised performance assessment (Li et al., 2019). To make matters worse, there is no set procedure for evaluating the performance of workers in other nations. This makes it a very difficult task. The performance evaluation process may be substantially impacted by environmental and subsidiary company variations, such as sociological, economic, legal, or physical requirements. When assessing in a foreign nation, there are numerous more factors to take into account, such as language hurdles, variances in values, and cultural differences that complicate the process even further. This means that anybody assessing a performance of the employee in a subsidiary firm must consider the employee's sensitivity to other cultural norms, laws and traditions, in addition to how well they can adjust in the face of changing circumstances (Hooi, 2019).
It is challenging for subsidiaries to deviate from local conventions, regardless of the fact that MNCs seek for uniformity throughout their subsidiaries in HR procedures. These policies are formed by local traditions and subsidiaries normally recruit from the host country's labour market. Furthermore, national values may create some initial difficulties when transferring "foreign best practises" to MNC subsidiaries.
Consequently, many proponents of localization consider that actions that are specifically tailored to the area are more successful. Performance evaluation is often cited as the most culturally sensitive technique, and as such, it has been deemed the most challenging to implement across cultures. To put it another way, it's the most "culture-bound" method of handling employee issues (Abugre and Nasere, 2020). It was found recently that western performance appraisals could not have been applied uniformly in China and had no positive impact on the Chinese setting due to the employees' inability to set their own objectives and expansion plans, as well as their negative perceptions of fairness inside the performance appraisal system. Hofstede's dimensions of culture have been employed in other research in order to explain why performance assessment primarily concerns workers and not managers in nations with substantial power distances. Only managers in these nations have the authority to rate the performance of their staff (Hooi, 2019). Low-power distance nations utilise multiple source assessment approaches and performance appraisals that include personnel of all levels. 360-degree systems, that utilize a variety of raters, are one example. A short distance and significant involvement are required for this strategy. This form of evaluation is especially disliked in nations with strong collectivist values since it is seen to be disruptive to group cohesion. Performance standards are often objective and measurable in individualistic societies, with an emphasis on the production of the person. Loyalty trumps production in collectivist settings, therefore underachievers are shielded as long as they retain good connections with the collective.
The methods used to evaluate employee performance are also different in different countries. It's not uncommon for informal, unsystematic methods to be utilised in collectivist or high-power distant cultures. For example, the 360-degree performance assessment approach cannot be used universally across cultures. People in lower positions (such as subordinates in the workplace) should refrain from expressing views that are in opposition to those of their superiors in Chinese culture. As a consequence, this approach works better in cultures where power distance is minimal and values are individualistic rather than collectivist and high. Furthermore, evaluations may be interpreted differently in various cultures(Hooi, 2019). As an example of a culture that employs implicit signals, consider Arab culture. Flexibility, social harmony, and collaboration are highly valued in high context cultures and businesses.
Formalized and "explicit" kinds of performance reviews are key challenges for HR managers because they make the implicit apparent. Even in collectivist nations, self-appraisal is seldom accepted since self-presentation requires humility. Feedback is often started by the superior, who is trusted in cultures with a great deal of power distance (Abugre and Nasere, 2020). Because it's subtly delivered, it's not confronting. Face-to-face performance interviews are exceedingly unusual in collectivist societies. Negative feedback is difficult to give or accept. Negative criticism on one's job performance is seen as an assault on one's personality in societies where the line between home and work is blurred (i.e. diffuse cultures). Negative feedback is often avoided in these cultures in order to minimise embarrassment for the employee. It's fairly uncommon for good feedback to be maligned in socialist societies since it threatens group cohesion and incites jealously. Even if it's not frequent, the idea of providing feedback should indeed be done so in a non-aggressive, confidential, and non-directive manner. For instance, performance evaluation systems in the United States are often based on management by goals (MBO) (Boselie, Farndale, and Paauwe, 2018). Together with their employer, employees create goals, evaluate their own performance, and discuss whether or not their supervisor has helped them reach their objectives. The application of these performance appraisals would indeed be different in subsidiaries operating in Eastern countries, in which open responses to seniors are disheartened, where confessing faults (by employees) or criticising (the employees) is seen as a public embarrassment and were criticizing the boss in front of every person would have been seen as some sort of Organisational suicide. In comparison, in collectivist societies, the individual providing comments should have a senior position and be well-respected for his or her knowledge and experience. In addition, feedback should be given to a group instead of an individual.
In MENA (Middle Eastern and North African) nations, devotion to the superior takes priority above successful performance as assessed by Western standards (Li et al., 2019). Loyalty to the in-group is much more important than productive output in collectivist cultures. Some members of the group may detest high-performing workers because they disrupt group peace or incite jealously. As a result, in the Chinese evaluation framework, "soft" performance factors like loyalty, sincerity, and maintaining positive interpersonal relationships were highlighted.
Q6 How can a CSR approach help Multinational Corporations develop ethical abour practices and standards for all subsidiaries:
Answer to Q6.
With regards to Corporate Social Responsibility, or "CSR," corporations must be good corporate citizens in order to be considered "CSR." CSR entails going over and above the obligations of the law in terms of environmental protection and social welfare contributions. Almost everyone agrees that it's a need for doing business in today's world(Aguilera-Caracuel, Guerrero-Villegas, and García-Sánchez, 2017). CSR is about more than just increasing shareholder value. It aims to safeguard the interests of all parties involved, including workers, consumers, suppliers, and the communities in which enterprises operate. Examples of corporate social responsibility (CSR) include humane employment practices, environmental stewardship, and charitable activities. As the usage of corporate social responsibility (CSR) grows, having a socially responsible image becomes more crucial (Khaleel et al., 2017). Selecting a brand or company is increasingly driven by CSR considerations for customers, workers, and stakeholders who hold firms responsible for making a difference in the world via their corporate principles, policies, and profits. Companies may exhibit CSR by treating their workers fairly and honestly. Businesses that operate in countries with labor rules that vary from those in the United States face particular challenges.
Many corporations in the private sector now have enormous political, financial, and social influence. The consequence is that CSR programs are becoming more beneficial to communities in a charitable setting since they play a critical role in environmental protection and service provision (Aras-Beger and Ta?k?n, 2020). Philanthropy and private sector activities are increasingly seen as critical in Australia by the community for creating long-term good change. For local community businesses like sports teams and community organizations to operate indefinitely, private support is essential (a crucial part of CSR). Businesses have the chance to constructively connect with communities at all levels of society via CSR programs. CSR has a number of advantages besides helping local communities. It also offers new and diverse options for companies, and the two may frequently benefit from one another. Companies may access a variety of government subsidies and funds by proving a commitment to CSR (Khaleel et al., 2017). When a company is bidding for government contracts, its CSR practices may work to its benefit since evidence of a company's beneficial community involvement is often seen favorably.
Positive customer opinions of brands and organizations may be shaped with the aid of effective CSR efforts as well. When consumers trust, purchase, and support a brand because they believe it is "good," they are more inclined to recommend it to others. While CSR may be viewed as a way to improve a business's brand, it can also be seen as a way to separate a firm from its competitors, giving it an advantage in the market (Schlipfenbacher, 2021). Modern CSR emphasizes sustainability, environmental preservation, and reducing a company's environmental effect. However, for the planet's long-term well-being, corporations must embrace these ideals and values. In recognition of these realities, the "United Nation's 2030 Sustainable Development Goals" (SDG) aim to use the notion of CSR to assist achieve beneficial results worldwide.
Inclusive hiring policies are an excellent place to start when it comes to integrating corporate social responsibility into all elements of an Organisation. An advertisement that encourages applicants from all backgrounds to apply isn't enough. In order to achieve long-term success, recruiting procedures must change in a way that recognizes the unique contributions that individuals with varied traits may make (Pham and Tran, 2019). A competitive labor market attracts workers to organizations that have a history of responsible behavior, including such environmental protection. When a corporation acts as a positive role model for its employees, it attracts those with qualities like creativity, leadership, and the capacity to operate well in groups. Employee turnover may be kept to a minimum if one treats them well. It's also beneficial for a company to stay ahead of the competition long as it's for the correct reasons. Doing the right thing as a business may help a firm stand out from competitors. An enterprise that commits to solving social issues like the growing high school dropout rate, for example, demonstrates that the organization prioritizes constructive social change (Schlipfenbacher, 2021). Customers who want to do business with a firm that cares about young people will be drawn to this picture. Improved environmental policies also demonstrate to customers and the general public that a firm values its community, the earth, and the future of the enterprise. This may aid in forming and sustaining client loyalty. In addition to helping a business comply with environmental standards and avoid fines, better environmental practices also assist a business stay in compliance with them.
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